Incubator Firm

See: Incubation.

A firm that incubates lots of little baby companies is an incubator.

Y-Combinator was the scale pioneer in doing this handholding/wet-nursing for young Silicon Valley companies. The notion was that many of the early companies building cool things on the web needed the same resources: help from expert, seasoned coders, big fat servers, big fat coffees late at night.

So they set up little cubby-hole-offices all over San Francisco, and many small firms then incubated there, under the auspices of adult supervision. The big carrot for the incubator firm then remains that, should a tiny company suddenly gain traction and look for at least a moment like it's the next GOOG/FB/AMZN/NFLX, then the incubating firm can invest early and often, with hopefully ginormous investment returns to the partners of that firm.

That's the theory anyway. The financial results to date have been meh.