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Host a Student Business Incubator

Heather Salko, Esq.
March 2022
Take these actions to host a student business incubator.

Student incubators require many risk management and legal considerations. They also provide unique learning opportunities for business-minded students, giving them access to institutional resources such as office space, funding, and business or legal guidance. Successful student businesses have operated in industries as diverse as internet commerce and online media, professional services, food and beverages, and sports and recreation.

If your college or university decides to host an incubator, consider these questions:

  • Will student businesses need to have a specific focus to be accepted into the program?
  • Will your institution take an ownership stake in the student businesses?
  • Who owns the intellectual property?
  • Will profits from businesses affect your institution’s nonprofit tax status?
  • Are operational licenses required?

These and other issues should be addressed in a lease, participation policy, or other contractual agreement between your institution and incubator tenants or participants.

Take the following actions when initiating an incubator program:

Create a Board of Directors

Most institutions establish a board of directors that is committed to the incubator’s mission and maximizing management’s role in developing successful companies. Board members are typically business faculty, community experts, and students. The board reviews and approves the applications of student companies, oversees management’s delivery of incubator services, and ensures the program mission is carried out.

The National Business Incubation Association recommends that boards of directors oversee a comprehensive self-evaluation once a year to ensure that the incubator facility, resources, methods, and tools contribute to the success of student firms and address each company’s developmental needs.

Determine Approval Criteria

Typically, applicants are asked to provide a written mission statement as well as a business plan. This plan should include concrete objectives that will directly contribute to the business mission.

Student applicants should be in good academic standing, but participation doesn’t need to be restricted by a major or degree program. Require all applicants to confirm that their operations will conform to all applicable federal, state, and local laws.

Ensure participation by students as well as faculty advisors is contingent on their adherence to your institution’s policies, such as those addressing conflict of interest and other forms of ethical conduct. Consider including in the lease or agreement a statement on the acceptable use of facilities, restrictions on using your university’s name and logo, contracting guidelines, and a statement of potential repercussions for noncompliance, including termination from the incubator program. Reserve the right to admit businesses at the incubator’s sole discretion.

Establish Guidelines for Termination

Your institution, through its board of directors, should reserve the right to terminate the tenancy or participation of students in the incubator program at any time and for any reason.

Failure to abide by the program guidelines and institutional policies should be among the stated grounds for termination. Other grounds may include the participant’s failure to use, or a lack of continuing need for, the incubator’s resources. Many incubators also establish a time limit for participation and require that the businesses are run by students who remain in good academic standing.

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