Once upon a time, the word "incubator" almost exclusively meant "little box with a light bulb in it to nurture young birds." Funny how the more things change, the more they stay the same.

In today's tech sense, incubators amount to holding companies that provide funding and third-party services for start-up companies. The first of these arrangements dates to 1959, with many of the earliest configurations originating at universities. Over time, investors and entrepreneurs have latched on to the idea -- and, if you ask me, many have run it into the ground. As a result, the incubator -- that safe haven where businesses can grow and develop until they've got wings of their own -- is in danger of disappearing, or worse, falling into the hands of the government, which promises to rule and regulate it to death.

Why care about incubators? There are no ifs, ands or buts about it: the Internet economy needs them. Incubators help new people with fresh ideas make their mark. And here's another thing to consider: if venture capitalists and angel investors are the only factors in financing and supporting new economy companies, you better believe that we're going to see start-ups even more consumed with market value and exit strategies than with growing the business at hand. Many investors expect to make money as fast as the technology they back can calculate or communicate. They have forgotten that patience is a must if we are to grow businesses of real substance -- particularly these days, when the tools of the trade are changing so fast.

It's helpful to remember why the incubator became popular outside the realms of academia in the first place. Many venture capital companies with portfolios of 50 dot-com companies or more found that each needed administration, Web development, human resource management and office space. Such functions consumed time and took energy away from the core business, prompting many investors to provide the supplementary services themselves with hopes that they would save each start-up plenty of time and money in the long run.

I have been fortunate enough to work alongside many incubators with vastly different structures and origins, which fall into what I consider three basic categories: organism, acquisition and virtual.

The organism

Few incubators fit the organism model better than Chicago's own Divine Interventures. This model grows all of its services in-house as Divine did. The Greenfield companies -- Dotspot, Talent Divine, Buzz Divine, and Web Divine, to name a few -- are very much like divisions of the holding company. And they started from nothing internally.

The idea, of course, is to have a unified vision and seamless delivery of service. At first glance, the model seems ideal. Recent history shows us otherwise.

The "organism incubator" depends on one central factor -- that it is ready to perform well right out of the starting gate. Few companies can ever satisfy that requirement because let's face it: no technology company hits its stride right away. And with today's shortage of techie talent, that expectation becomes even less realistic.

Another detail organism incubators often ignore is Darwin's concept of survival of the fittest. Companies that have to fight to survive strive to stay lean and efficient and put considerable energy into winning and retaining clients. However, companies coddled by their holding company have no sense of urgency moving them forward.

The acquisition model

So, the acquisition model is the answer, right? To fix the problem created by slow growth in the organism model, simply acquire companies to be part of vendor services. A fully established, already successful company would succeed where the organically grown company failed, right?

Think again. Just as every answer invites new questions, every solution invites new problems.

Ask the former USWeb, now MarchFirst, if acquisition is so smooth a road. and most people there answer in the negative. Employees often leave acquired companies. Maybe their options vest and they decide to take a sabbatical. Some like the "small company feel" and despise corporate structure. Many know that their wonderful start-up culture of yesterday will be replaced by politicking and keeping your nose clean in the new, plodding culture. Some will be laid off and others will leave in a huff, disgusted that their friends were treated so shabbily. The list of reasons goes on.

Sometimes, companies simply don't -- and can't -- integrate well into a new regime. And any company that buys another and then pledges to leave its acquisition alone is either wasting its time or lying. There must be some exchange of knowledge to make the acquisition worthwhile. People in the acquired company also must be ready, willing, and able to work alongside veterans.

Let's just say that sounds a lot easier than it is.

It's the Internet - Keep it Virtual!

Which brings us to the last of these models, the virtual model. One I know is a vendor that partnered with complementary businesses and then eventually with capital sources to provide its start-up clients with a full set of resources. The benefits are clear because the companies are established and competitive. The virtual model offers flexibility the acquisition model does not. I could choose to partner with several firms in the same category but representing different cost structures and competencies.

However, there are obstacles. Problems with the virtual model come primarily from a lack of clout and funding. Investors involved with these leveraged incubators are typically of the private or angel variety, and few come from well known firms. In fact, the money behind the virtual incubator tends to be a network of investors. The incubator does them a service because this level of investor generally has difficulty finding promising deals. The incubator provides a conduit.

I believe the virtual model can reinvigorate the incubator. The advantages of this flexible, relatively inexpensive approach to dot-com support are clear. The missing ingredient is institutional funding. I would guess that this model will thrive only when venture capitalists take the initiative and partner to form a fully integrated network of services around themselves.

Without this level of participation from venture capitalists, incubators will fade away and force early-stage companies to handle all the administration themselves.

And what a disaster that would be.

Alec Ross is president of Web Market Design Inc. of Chicago.