In the 1970s, economic restructuring left many formerly prosperous communities economically devastated and searching for responses. Faced with bleak economic prospects, federal devolution (budgetary and policy), and mounting constituent pressure, states transitioned their economic development policies toward more “entrepreneurial” strategies.
According to a study conducted by the U.S. Department of Commerce (A National Benchmarking Analysis of Technology Business Incubators), business incubation started when heavy equipment manufacturer Massey Ferguson pulled out of Batavia, New York, in 1959, leaving behind a hulking 850,000-square-foot facility. This catastrophic economic event seemed like the end of the line for the town. As it turned out, it was only the beginning, not just for Batavia, but also for a new generation of emerging companies that would change the composition of the American economy.
After the ax fell in Batavia, local resident Joe Manucuso bought the building the company left behind. He hoped to use it to bring new businesses and new jobs to the area. His idea was right for the times and caught on rapidly, as businesses (including an actual incubator, hence the name) attracted by cheap rents, flexible space, and shared services filled the building.
The business incubation industry in the United States grew substantially between the 1980s and the 1990s growing from fewer than 15 in 1980 to more than 500 in 1993. Of this number, 200 or more entered 1992 with more than 5 years’ operating experience. The success of these incubator programs and the failure of some incubation programs have enabled the industry to identify and recognize patterns that can be adopted or prevented in the future.
"Today," says Dinah Adkins, executive director of the National Business Incubation Association (NBIA), "business incubators offer comprehensive support to fledgling businesses." But the other important benefit that business incubators often provide is access to the kind of early-stage capital that emerging companies need.