Since we announced the creation of the first Monolab|Incubator, many people have asked us whether we will offer drop-in packages or not. We’ve given very serious considerations to this request, and came up with a virtual incubator concept that got the attention of many people, especially from the VC community.

The problem with a drop-in package (access priced on a daily basis) is that it does not make much economic sense, and would put us in direct competition with Regus, which we have no interest in whatsoever. Another problem is that we want to offer 24/7 access to the incubator, without having to hire full-time security personel. This requires a level of trust between the incubator’s operators and residents that is difficult to achieve without some form of qualification. Here comes the concept of virtual incubator, which we’re quite excited about.

Many venture capital firms like to engage with entrepreneurs as early as possible in order to track their progress and get a chance to invest at the right time. Some establish incubation facilities within their own premises, but it makes little sense when they are paying $15 to $20 per square foot on Sand Hill Road. Others develop Entrepreneur in Residence programs, which are great for entrepreneurs who already have one or two prior successes under their belt, but is not practical for younger talented individuals. While such firms would like to help the entrepreneur out, they have very little to offer beyond their insight and network, which are great in and by themselves, but do little to help pay the bills.

The idea behind the virtual incubator concept is to remove the bills entirely. Here is how it works: venture capital firms sponsor the incubator by subscribing to one or more virtual seats, for a period of at least a year. A virtual seat allows them to invite anyone they want to use the incubator, for any period of time, one at a time. A virtual seat gives a guest access to all the services other tenants get access to, at the exception of having a dedicated desk, while we guarantee availability of a desk at any time, by simply limiting the number of sponsors based on occupancy rate.

The cost for a virtual seat is set at $12K per year for the first three sponsors, $15K thereafter. From the VC firm’s standpoint, it goes directly toward operating expenses (funded by their management fees). While some firms might want to take equity in exchange for access to the incubator, we strongly discourage it. We view the virtual incubator concept as a way for VC firms to help young entrepreneurs out, create some good will and social capital, and develop their networks in new ways.

In order to make it as easy to use as possible, the service will be managed from a self service portal, where general partners or their assistants can register an entrepreneur by filing a very simple form out: first name, last name, company name, email address, start date, end date. Click on the submit button. Done! On our end, we take care of the rest. When the entrepreneur shows up, we give her a tour of the facility, make relevant introductions to other tenants and multiple service providers we work with (law firm, graphics design agency, PR agency), and give her an RFID card for access to the facility and use of the multi-function printer. That’s it!

Once a VC firm sponsors the incubator, any of its partners, analysts, and EIRs also get access to the facility, in order to meet the sponsored entrepreneur over a cup of (free) coffee brewed from a Jura Capresso Impressa Z5 machine, or simply crash in downtown Palo Alto for whatever reason (OSIM uSpace massage chair coming soon). The space is also available for organizing private events, including our upcoming State of The Arts parties, which we’ll tell you more about very soon…

If that sounds interesting, drop us an email, or join us for a Bastille Day celebration.