Business incubators are obviously a staple in the technology industry today. Y Combinator & Tech Stars have paved the path, followed by many others that have popped up & started to micro-fund new companies in the web & technology sector. In my mind, only Y Combinator, Tech Stars & less than a handful of others appear to be doing the incubation thing right. But why? Surely i/o Ventures, Capital Factory & their ilk are mentoring some great companies, but what I think the greatest way for an incubator to contribute, is to provide services that are adjacent to the core business.
What I mean is, that today, most startups need technical, sales, legal & accounting expertise. If you're running an incubator, you're probably recruiting the technical talent, off the bat. On top of that, the physical world appears to be converging with the internet on it's own, so while sales isn't a walk in the park - a geek can learn to sell in relatively short order. What that leaves us with - is a gaping hole in accounting & legal.
What I am getting at is this: I think an incubator where legal & accounting services are built in - would do really well. I say this because it's still not common knowledge that you should be creating a Delaware C-Corp if you intend to raise venture capital. It's not apparent how you should account for revenue & taxes when you're collecting payments on behalf of other companies or individuals. Creating sales agreements, terms of service or privacy policies that are rock-solid are all perfect examples of tasks not well-suited for a founder.
Essentially, if you're starting an incubator in your community - I believe that you should focus on having an amazing supporting cast of lawyers & accountants. Rather than creating an uber-cool space or throwing a party. Focus on properly identifying talent / opportunity combinations & provide the essential supporting services to those early stage companies along with the standard gamut of startup knowledge to founders in order for them to focus on what will allow them to build sustainable, large businesses for the long term.