Incubators and Accelerators nurture start-ups at a crucial stage in their lifecycle by providing them with an environment conducive to growing their business. Though both accelerators and incubators often focus on technology start-ups, there are some differences between the two.
Generally, incubators are focused on providing a physical coworking space and access to their networks for very early stage start-ups, which are idea-based and possibly pre-revenue at the time of application. Some incubators provide funding for start-ups in the incubation programme which is usually in the range of 9 – 29 million ($10,000 – $30,000) either in the form of a grant or equity, in which case the incubator will own shares in your company.
Accelerators are also aimed at early stage companies, but ideally at those who have got some traction and are ready to grow and scale their business. Typically, that means the businesses are already making revenue. Accelerators generally take equity in the business in exchange for access to their programme, their facilities, and their mentor network, which often includes investors and experienced business managers. Both incubators and accelerators usually have a set timeframe, from a few weeks to a few months. Accelerators and incubators typically have a selective application process and start-ups need to prove themselves in order to be granted access. The application process examines the start-up’s business model, its financial performance to date, projections for the future, and the quality of the team. While they are typically well run and help entrepreneurs to refine their business, one downside of accelerators and incubators is that they often require entrepreneurs to spend valuable time away from their businesses.
An alternative option for an entrepreneur that is not successful at gaining access to an incubation or acceleration programme is joining an entrepreneurial community through one of the various hubs and co-working spaces across the country. Entrepreneurship can be a lonely journey and there are many benefits to be gained from interacting with other entrepreneurs.