Research On The Internal Mechanism And Profit Model Of Market Incubator

Market-oriented incubators are incubators set up by single individuals or by groups of individuals, who intend to help rising entrepreneurs to create and grow their business. The main purpose of market-oriented incubators is to make profit. They invest their own money in the new companies and always hold an equity stake.After nearly 30 years, China already have a quite large scale of incubators and also graduated startups. However, either the overall level or operational efficiency of incubators is at a lower level. Traditional incubators, which are set up by government, have shown low efficiency, poor quality of service problems, and these problems are caused by their nature of public goods. Traditional incubators can not meet the need of start-ups any more, while the market-oriented incubators can effectively provide services to start-ups because of its advantages. Therefore, China should develop incubator type to market-oriented government.Firstly, this paper summarizes the definition of market- oriented incubator.Compared with the traditional incubators, this paper sort out the characteristics and the nature of the market-oriented incubator. The most important feature of the market-oriented incubators is for-profit. Profit is the internal reason why market-oriented incubators arise. Technical requirement and capital need are main external causes to promote the appear of market-oriented incubators.Secondly, this paper analyzes the function of creating value of market-oriented incubators. Under the raise of market-oriented incubator, startups develop from business ideas to independent business companies. So, incubators have functions of value found, value added, process value realization: concept- products- independent business companies. From the value found to value added, to the final realization, the intrinsic reason is the profit motivation of market-oriented incubators.Thirdly, via the theory of value chain and industry chain, this paper analyzes the source of profit of market-oriented incubators and the internal profit-making mechanism of market-oriented incubators. The quality of incubators’ service, social networks and so on are Internal factors which affect the profitability of market-oriented incubators. The quality of startups, the level of capital market and technology market are the external factors which affect the profitability of market-oriented incubators.Finally, this paper analyzes YC incubator by the model of selection, business support and mediation.