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May 14, 2020
As an entrepreneur, you must have heard the words “incubators” and “accelerators” while talking to other founders. Both startup incubators and startup accelerators help early-stage businesses grow and scale. It’s no surprise, then, that these terms are often used interchangeably, even though they accept different types of startups, serve different purposes and have different outcomes.
In simple terms, a startup incubator nurtures innovative business ideas and sets up conditions in which a startup can thrive. On the other hand, a startup accelerator helps grow, or accelerate, a business in its early stages over a predefined frame of time.
Here is what you need to know about startup accelerators and incubators if you’re planning on signing up with one.
The idea behind a startup incubator is to create an ideal environment for early-stage startups, where they can develop a minimum viable product (MVP) and a foundational business model. An incubator often provides entrepreneurs with an office space, seed money, training, mentorship and discounted or free professional services (such as accounting and legal help). An incubator is not limited to one industry, market or vertical.
A startup incubator is typically a nonprofit organization run by both public and private entities, and can often be associated with universities. Some business schools also allow their students and alumni to take part in such programs. However, there are many incubators that are formed by other startups, successful entrepreneurs, governments and civic groups.
Here are some common benefits of enrolling in a startup incubator:
Now, some potential drawbacks:
A startup accelerator offers capital, mentorship and connections to investors and business partners. It chooses startups with promising founders and MVPs, in order to scale rapidly.
Most accelerators work on defined timelines. The goal here is to get the startup off the ground as quickly as possible. Startup accelerators have a thorough application process, and one typical prerequisite is that your business must have an MVP.
An accelerator program usually lasts only a few months (usually three), and investors offer investment capital and act as mentors in exchange for a key percentage of equity in the company.
Some advantages of signing up with a startup accelerator are:
The disadvantages are:
Figure out your business’ current stage before choosing a program. If you have a really small team, are more flexible, have a less-defined timeline for your long-term goals and are still working through important details such as product development or market fit, then an incubator may be the better option for you. A startup incubator often works better for those founders who want to build lifelong skills and learn things they wouldn’t otherwise have access to in an independent environment.
But if you already have an MVP, a solid financial plan and are looking for expert mentorship and support on how to get to the next stage of your company’s growth, an accelerator might be the better choice of the two. A startup accelerator can be a great motivator because some of the top programs use incentives and will reward you when you hit certain milestones.
Getting accepted to a top incubator or accelerator such as Y Combinator, Techstars or 500 Startups, can be quite a challenge. These organizations reject hundreds of applications each year. Here are four things you can do to increase your chances of getting selected:
Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.
Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.
Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.
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