'Virtual' Incubators Hatch

In theory, it all made perfect sense. Start-up entrepreneurs would set up shop in a single location -- the incubator. They'd get cheap rent and enjoy access to legal pros, business consultants, and investors who would help them overcome the obstacles that all new ventures face. Then, properly nurtured, they would be "hatched" into the real world as fully formed companies.

Incubators exploded into the mainstream in the late 1990s, as thousands of entrepreneurs flooded into high-tech hatcheries such as Idealab in Pasadena, Calif., and the Austin Technology Institute. Then the tech economy crashed. More than a quarter of the nation's business incubators closed their doors, according to the National Business Incubation Association.

You don't hear much about incubators these days, and it's tempting to dismiss the concept as a relic of the boom. In fact, some 1,100 business incubators remain open for business in the U.S. Many of them have been quietly reinventing the way they nurture start-ups and are now much more accessible to entrepreneurs looking for expert advice at bargain prices.

That's because incubators increasingly are going "virtual," no longer requiring companies to set up shop on-site. Instead they are focusing on connecting a wide swath of local entrepreneurs with top-notch experts and mentors. Virtual incubators have lower overhead, which often translates into cost savings for entrepreneurs. And since they offer exposure to a wider network of companies, they tend to attract more skilled experts. ...