Corporate Incubators: the Expert Guide.

A comprehensive guide to help you understand what corporate incubation is and how you can use it to accelerate growth, discover new markets, and expand beyond your core business. 

What is Corporate Incubation?

Corporate Incubation is when a corporation supports a new startup from concept development to a fully functioning business. 

They are usually set up as an associated brand of the parent company, to support new startups through mentoring and value-added services, investment, acquisition or by building them from scratch. 

Get all the key corporate incubation resources.

what is corporate incubation

1. Corporate Incubation: An introduction

Corporate incubators have become all the rage among companies looking to expand non-core growth and experiment with new business models. Multinationals like Google, RBC, Lufthansa, and Merck have already set up their own incubators with stellar results. And it’s not surprising! 

Incubators are a proven way to leverage corporate assets, explore new areas of growth, fuel innovation, and foster an entrepreneurial mindset – all with the end goal of making your company stronger and more future-proof. 

To give you a better idea of how they work, we’ve created this comprehensive guide illustrating what an incubator is, the benefits of having one, and how they’re positioned in the broader corporate venturing landscape (along with some other handy resources and examples).

So, whether you’re thinking about building your own incubator, already mid-way through the process, or simply looking to update your current setup, the insights in this article are sure to help you through your journey.

Location of corporate incubators

2. What is a corporate incubator, and what does it do?

Corporate incubators can help companies grow, operate more efficiently, and find disruptive solutions to traditional problems.

The term “corporate incubator” refers to an autonomous and agile business unit, created within a corporation. Its main goal is to stimulate innovation by providing expertise, resources, services, mediation, and funding. In exchange, the parent corporation gains access to new technologies and innovative business strategies provided by the new venture. 

Simply put, incubators transform ideas into working businesses. They foster a give-and-take relationship in which: 

  • The corporation provides its early-stage business unit or startup with the support and guidance it needs to develop into an independent business. 
  • The incubator acts as a catalyst tool for the corporation to stimulate innovation and develop a pipeline of successful new ventures.

This type of support can be crucial to the success of a new business, not to mention the corporation that’s investing in it.

3. Why corporate incubation is a successful innovation strategy.

When executed skillfully, incubators are a great way to innovate and develop disruptive new ideas that might otherwise get scrapped in favour of everyday corporate demands.

They’re especially useful for companies that are having trouble competing due to rapidly changing technologies, an outdated business model or the arrival of newer players in the market.  Find out more about how to identify the 5 key signs showing it’s time to step up your innovation game now.

If you recognise any of these traits in your company, it might be a good idea to take a closer look at investing in your own corporate incubator.

Ready to get started? Try out our corporate incubator canvas, designed to help you:

  • Find the strategic value of your incubator and set the right scope for it going forward. 
  • Help you make crucial decisions for development and success. 
  • Develop a clear framework for stakeholder discussions regarding the key functions of your incubator.

4. The benefits of having a corporate incubator.

We’ve already touched on some of the key benefits of starting your own corporate incubator, but here are a few, more specific examples:

Benefit 1: They’re a great way to actively involve your employees in the innovation process and build a culture of innovation.

Benefit 2: They help companies tap into new markets and stimulate the development of new value propositions.

Benefit 3: They encourage the exploration of new research directions and help companies commercialise their expertise and know-how.

Benefit 4: The newly acquired insights can help companies solve problems faster, more cost-effectively, and at a lower risk.

Benefit 5: They foster a supportive environment that facilitates innovation by creating, experimenting, and learning by failing.

Benefit 6: They provide access to new ideas, skill sets, and technologies.

Benefit 7: They can expand a company’s strategic vision.

5. How do incubators fit into the greater corporate venturing landscape?

The greater corporate venturing landscape features a variety of different tools designed to help corporations fuel innovation and accelerate new growth. Some of these tools include (but are not limited to) corporate venture capital (CVC), mergers and acquisitions (M&A), strategic partnerships, scouting missions, hackathons and accelerators. If you’d like more information about these tools and how to use them, check out our article about the 16 Tools for Disruptive Innovation.   

To give you a better idea about how corporate incubators fit into this greater landscape, we’ve created an overview detailing their position:

corporate incubator

6. How is an incubator different from an accelerator?

Although some people use these terms interchangeably, incubators operate quite differently than accelerators

  • Incubators “nurture” disruptive ideas to help them transform into an independent company with a solid business model. 
  • Accelerators are the next step in the process, helping young companies expedite their growth and scale their existing business models. 

Here are a few other key differences:

programming

  • Incubator programmes tend to be flexible and on-demand.
  • Accelerator programmes are fixed and highly structured.

duration

  • The “incubation” process lasts 1 to 3 years.
  • The “acceleration” process lasts only 3 to 6 months.

return

  • Incubators usually have full ownership of the venture.
  • Accelerators tend to establish partnerships or arrange some sort of equity.

7. Corporate incubator examples.

Find out how some of the world’s leading corporations have used their corporate incubators to accelerate growth, tap into new markets, experiment with new technologies and create a culture of innovation.

Employees of Daimler's Lab1866

1. Daimler’s Lab1886

About Daimler and Lab1886

One of the ways Daimler has remained an industry leader is by creating its own independent innovation lab, Lab1886. Their goal is to identify new business opportunities, including those outside its core business, and incubate them until they’ve reached market maturity.

Lab1886 is an independent innovation lab within Daimler AG. Their mission is to identify innovative ideas and leverage Daimler’s corporate know-how and assets to nurture them. The incubator’s impressive portfolio includes startups like Car2Go, Moovel and Mercedes Me.

For more great examples of successful corporate incubators, check out our report: 25 Corporate Incubators, examined.

What Lab1886 brings to Daimler.

  • Actively build a culture of innovation.
  • Tap into new markets and accelerate the development of innovative value propositions.
  • Leverage its expertise, resources, and partnerships to evolve beyond its core business.
  • Acquire insights to future-proof the company, solve existing problems faster, more cost-effectively, and with lower risk.
  • Facilitate innovation through creation, experimentation, and learning by failing.
  • Access new ideas, skill sets, and technologies through experimentation.
Employees working at Samsung's C-Lab

2. Samsung’s C-Lab

About Samsung and C-Lab

With a revenue of $ 221.58 B and 309,630 employees, Samsung was the second-largest technology company in the world in 2019. 

Fully aware of the importance of innovation within its industry, Samsung made a pivotal decision in 2012 to start its very own corporate incubator programme, Creative-lab or C-Lab for short. Today, C-Lab is divided into two parts:

C-Lab Inside

C-Lab Inside refers to Samsung’s original incubator programme, built to uncover new ideas and foster a culture of innovation throughout the company. The word “Inside” in the title refers to the fact that this programme is made up solely of Samsung employees. 

To date, they’ve incubated over 259 projects with the help of over 1060 Samsung employees.

Some of this year’s most promising projects include SelfieType, Hyler, Becon, and SunnyFive (formerly known as Sunny Side).

C-Lab Outside

C-Lab Outside refers to C-Lab’s 2018 acceleration programme built to support entrepreneurs from outside Samsung to develop their ideas. Some of the resources provided include funds, infrastructure, mentoring, consultation services, and partnerships.   

Some of this year’s most promising C-Lab Outside projects include VTouch, Smoothie, and Circulus.

What C-Lab brings to Samsung.

The results of C-Lab’s incubator programme pretty much speak for themselves:

  • Every year, the submission of new and promising projects increases.
  • The sharing of knowledge and ideas has become a natural part of Samsung’s company culture. 
  • Over 46% of C-lab’s projects become part of various Samsung business divisions.
  • 20% have become independent spin-offs. 
  • Many of C-Lab’s startups are outside Samsung’s core business, providing various expansion opportunities.  


According to an article by Silicon Republic, so far, C-Lab has helped 163 Samsung employees build 45 start-ups. Collectively, these startups have raised over $ 45 M – and they’re just getting started.

8. 10 Key steps to making your corporate incubator a success.

Find out how some of the world’s leading corporations have used their corporate incubators to accelerate growth, tap into new markets, experiment with new technologies and create a culture of innovation.

Step 1: Establish a clear purpose.

Start by envisioning what your end goal is, and why your company needs an incubator. Once that’s done, figure out what the scope of your incubator will be (e.g. What expertise will your incubator have?). 

Based on that, you’ll have a pretty good idea of what your incubator’s direction will be and the resources you’ll need to get started.

Step 2: Define the range of your corporate incubator.

It’s important to have a clear idea of how far you want to branch out from your core business. A good way to start is by figuring out the type of innovation you want to achieve (e.g. radical innovation? adjacent innovation? core Innovation?).

Step 3: Decide how to build your team.

Once you have a good idea of what your new incubator’s product or service will be, the next step is to figure out the type of expertise you’ll need to make it a reality.

Depending on what your new offering is, you might need to bring in experts from outside your company. If that’s the case, you’ll have to choose between building a new team with only external experts or a mix that includes people from within your corporation as well.

Step 4: Define the potential additional activities of your incubator.

Find new ways to expand your portfolio, e.g.: 

  • Startup investment: Investing in startups within the focus of the incubator.
  • Mergers & acquisitions: Take over existing startups within the focus of the incubator.
  • Startup acceleration: Inviting startups to join an added acceleration programme.

Step 5: Focus on the right criteria to select your venture ideas.

Focusing on the right criteria will help you make well-founded decisions when refining your venture ideas later on. Consider different types of criteria like your solution fit, company strategy fit, market validation and your business case. 

Covering your bases early on will significantly increase your chances of success as you move through your incubator programme.

Step 6: Set up a timeline and milestones for your incubator programme.

Make sure you have detailed outlines illustrating the duration, process flows, milestones and deliverables of your incubator programme. Taking this step will help keep you focused on your goals and avoid unnecessary delays. 

Step 7: Allocate your resources wisely.

New ventures need resources to get up and running, and it takes a lot more than just money to make it all happen. Make careful decisions about which resources you can use strengthen your new venture.

Having a clear idea of what resources your incubator programme needs will help you reach your scale phase quicker and more efficiently.

Step 8: Motivate your team with the right incentives.

Setting up an effective incentives programme is a crucial factor in the success of any new venture; so put careful thought into the type of incentive programmes you’ll use.  

Taking this measure early on will ensure that your team is adequately motivated to build your next breakthrough product or service.

Step 9: Position your incubator strategically within the corporate structure.

Positioning your incubator close to the executive level of your company will help you bypass long chains of command and expedite your approvals. 

Remember, no matter how brilliant your business ideas are, your venture runs the risk of being delayed or even phased out if you don’t have the right positioning, connections and internal support.

Step 10: Plan past the incubation phase.

Decide on what happens when your venture is incubated, and ready to scale. 

Having a long term plan will keep you focused and working towards your pre-established goals, increasing the chance that your business unit will become a prosperous company when the time comes to scale. 

Find out more about the ten key steps in this handy report.

9. Insights from Richard Faas, who runs a corporate incubator for ARAG.

We recently spoke with Richard Faas, CIO at ARAG’s Legal Tech Studio, to get his feedback on the benefits of corporate incubation. Here’s what he had to say:

“Corporate startup collaborations bring us a lot of learning. Investing in early-stage makes growing together possible, with the added perk that we do not take high financial risks at this stage. Even when startups fail, we hope to still acquire some valuable talent.” 

Q: What is your approach to innovation?

Richard: We focus on both horizon 1 and horizon 2 innovation. In horizon 1, we solve real, everyday problems.

For horizon 2, we look for new business models and invest in legal tech companies. We say, okay, we are a big company, and we have a lot of skills, funds, data, and resources. What we don’t always have is the agility and creativity and entrepreneurial mindset that some of our startups bring to the table. Our aim is to combine our assets to build new successful ventures.

Q: Why should one be bothered if fewer than 50% of startups fail?

Richard: As a big corporate, we don’t only make early-stage investments. We acquire companies, but also build our own corporate ventures. I believe that horizons 1,2 and 3 can strengthen each other. For example, one of our portfolio startups builds decision trees, and we use this solution within our corporate ventures and corporate organisation to improve customer journeys.

Q: How does ARAG measure the “success” of Legal Tech Studio? What kind of KPI’s do you look at?

Richard: Our success is being measured in different ways. When we introduce new technology within our organisation, it is about efficiency, employee satisfaction, and customer satisfaction.  

Our investment portfolio, on the other hand, is driven by strategic and financial indicators. Is this company still growing and developing as promised? Is their financial value still increasing? But, we also learn new ways of working, new customer journey, new customer demand, new technologies, and new ways of providing access to justice.

That’s why we have a diverse portfolio. Every year we want to make six investments. So in five years, we’ll have a portfolio of 30 validated new business models.

Q: What advice would you give intrapreneurs looking to take on similar projects?

Richard: Try to find out what kind of innovation (horizons 1, 2, or 3) will best fit your organisation, then build your team around it to get started.

What’s next for the Legal Tech Studio?

The Legal Tech Studio is still going strong in its mission to create innovative solutions that help people assert their rights. Some of their current areas of interest include:

  • Online legal services
  • Privacy and GDPR
  • Online Dispute Resolution
  • Online claims
  • Document Assembly
  • Litigation funding

    If you have a promising startup idea in any of these areas, check out ARAG’s Legal Tech Studio, and apply! With such exciting projects on the horizon, we can’t wait to see what they’ll come up with next.

10. Final thoughts.

When executed skillfully, incubators are a great way to innovate and develop disruptive new ideas. They’re especially useful for companies that are having trouble competing due to rapidly changing technologies, outdated business models or the arrival of new players in the market.  

If you recognise any of these traits in your company, it might be a good idea to take a closer look at investing in your own corporate incubator.

Want to know more about how to set up your own corporate incubator? Need help taking your corporate incubator to the next level? Let’s talk!

Get the Corporate Incubator Toolkit.

3 Resources with inspiring examples, venturing models, and insights in one downloadable pack.

Leyash Pillay

Leyash Pillay

Content Lead