Business Impact

This Incubator Wants to Help Startups Cope with Tough Regulations

Rachel Haot of 1776 says that by spending time with government officials, entrepreneurs can learn to navigate red tape.

If you’re building a new social network, creating a tech-enabled food delivery business, or developing an artificial-intelligence translation tool, there aren’t many demanding rules to adhere to. But if your startup deals with issues such as health care, finance, or education, things can be rather more difficult.

“Because [these industries are] so essential to human needs, government is involved,” explained Rachel Haot, managing director of the startup incubator 1776, speaking at EmTech MIT 2016 on Wednesday. By necessity, that leads to regulation. “Government has to protect the rights and safety of people,” Haot said.

Rachel Haot, right, speaks with MIT Technology Review's editor in chief, Jason Pontin.

Problem is, startups are often naive about this: they may have a good idea, but they can be unaware of onerous rules that sometimes make implementation difficult. Haot says 1776 can help by offering guidance to startups navigating heavily regulated areas.

She points to procurement—the formal process through which large organizations and governments purchase products and services—as a good example of an area where her organization can help. Meant to prevent corruption and reduce risk, the rules around procurement are intended to give the buyer assurance that a given company won’t go out of business before delivering the promised product or service.

“These requirements can be so onerous that startups that could provide a better, cheaper service may not be able to enter the procurement process,” Haot said.

To overcome such problems, 1776 has eschewed the traditional incubator model, Haot said, and instead views itself as sort of a “college campus.” It offers entrepreneurs and innovators from large institutions the chance to network with government officials and learn about the regulations that are most relevant to them.

That way, the company hopes, red tape may no longer seem quite so burdensome.

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