Anyone working in the start-up field has probably heard of the terms incubators and accelerators. With these programs hosting names such as IdeaLabs, TechStars and Y Combinator, it’s sometimes hard not to. Every once in a while, you’ll see a business come out of nowhere and find out that their road to success began in one of these very programs or similar programs.
First of all, let’s talk about what these places are before we get into their differences. A start-up incubator is a program in which you’ll find multiple start-ups taking part in a collaborative environment designed to help start-ups move past their infancy stages by providing work spaces, some amount of funding, as well as mentorship and training programs. Start-up accelerators are somewhat similar programs that work with educating start-ups and providing mentorships in order to boost (i.e. accelerate) their growth which ultimately lead to a pitching session where investors will weigh in on the value of the start ups that manage to make it to the end of the program.
The first difference you’ll see between an incubator and an accelerator is the timeline they have planned. Incubators tend to be long term-oriented models where education and mentorship is focused on long term goals of the start up surviving the economic ecosystem and managing their goals well. With an accelerator the timeline is much shorter. Ranging from a few weeks to a few months, accelerators offer limited time in which they want to work on start-up growth and scale.
The second difference is the focus of the program. Incubators work on product development, business planning and customer discovery, while accelerators work on traction and seed investments. Both models help start-ups by providing legal advice, spaces where electricity, WIFI, and rent are not an issue, helping find investors, and by providing access to mentors.
The third difference is the business model. Incubators tend to be non-profits aimed at helping local start ups thrive and give back to the community. They are sometimes publicly funded programs or programs with partnerships with large companies such as Google and Samsung. Accelerators usually take shares in the companies they are helping accelerate. However, incubators do not traditionally provide investment capital whereas accelerators do in exchange for equity.
Before joining either program there are a few questions you need to answer. For incubators you need to find out whether they have the right mentors relevant to your business. And if they do, is funding something you need right now? Yes, having a space to work is great and all, but are you looking to help improve your start-up or are you still in the planning phase? When joining an accelerator, you want to think whether this is the right time. Have you found your first few employees who are going to help your business grow? Is your business growing at a slow pace or a fast pace? Will you be able to relocate? Some accelerator programs to require you to relocate to another location. That’s why incubators are considered to be more community oriented in comparison to an accelerator.