Especially for those new to the entrepreneur world, there can be a lot of confusion around the difference between startup accelerators and incubators, and which one is right for your business – if at all. This article will try to help clear that up.
What are Accelerator and Incubator Programs?
Although they both provide support to help businesses grow, they are distinctly different types of organizations – and the names actually give you a pretty good idea of what that difference is. Accelerators are designed to accelerate growth for start-up companies, while incubators are focused on idea generation and development, helping at the incubation stage of technology or business concepts.
One of the big differences aside from the type of growth they support is money: accelerators typically provide seed money or introductions to angel investors or venture capitalists, whereas most incubators do not. Other differences include the types of companies they accept, the services they provide, and the length of support offered.
Accelerator programs are generally for early-stage start-ups looking to scale. Programs are relatively short, lasting weeks to several months. They are structured programs that provide training and mentorship to accelerate the growth of the start-up, which usually conclude with a pitch event to investors – known in the startup world as “demo day”.
Incubators are usually less structured, with the timeline and services tailored to the needs of the individual entrepreneurs. Work space is normally provided, and the incubator will work with the startup in many capacities to fully develop its idea and business model. Rather than just a few months, incubator programs tend to last much longer – up to a year or more.
Additionally, almost all accelerators are for-profit companies, while many incubators are non-profit organizations. You do need to do your research however, as this is not always the case – which is yet another reason why there is so much confusion around the interchangeably used terms of accelerator and incubator.
Carefully Consider Options, Opportunities, and Outcomes
Regardless of the type of program you sign up for, any seed money you are offered will probably be tied to an equity stake in your company, so be sure to carefully consider your investment before you proceed. While accelerators and incubators can help you achieve in just weeks or months what might take many years without the access to expert help, valuable networking, working space and funding (or worse, may not happen at all without one or more of these things), you do need to understand that there may be strings attached. It is important to evaluate all of your options, and that you not only consider the opportunities associated with each program, but that you also think through all of the possible outcomes as well.
Which One is Right for Your Business, Accelerator or Incubator?
So which one is right for your business? If you already have a developed product or business offering, a business model and are looking for help scaling, an accelerator is the place for you. If you have an innovative new idea but no idea how to bring it to market, an incubator is where you want to be. You can also choose to go it alone, but unless you have strong partners, a network and adequate funding, chances are you could benefit from some expert help.
Next Steps: Research, Analyze, and Apply
However, deciding what type of program is right for your business is just the first step. Next you need to research the available programs and figure out which are the right fit for your business. You also need to consider whether you’re willing to relocate if that is a requirement. Then, there’s the application process. Many programs – especially the elite – only accept a tiny percentage of program applicants, so competition for a place in many institutions is extremely high.
But don’t let that put you off. There are hundreds of accelerator and incubators across the country. While you might not find yourself at one of the top accelerator or incubator programs, you will find many other opportunities available to you.