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difference between startup incubator and accelerator

Difference between startup incubators and accelerators?

Difference between startup incubators and accelerators?

Many people use the terms interchangeably, but there are a number of elements that distinguish one from the other. At the same time, there are indeed overlaps across incubator and accelerator services, which might explain much of the confusion. The aim of this article is to help clarify the difference between the two.

difference between startup incubator and accelerator

difference between startup incubator and accelerator

What is an incubator?

An incubator helps early stage startups develop their idea, figuring out their market, build the team and getting early customers and feedback. Essentially an incubator helps early stage startups build a solid foundation for which they can build and grow upon.

What Business Incubators Can Do for Startups

In order to get this straight, let’s draw an analogy and say that the life of a business is like the life of a human being. There are roughly three major stages of life:

Childhood –> Adolescence –> Adulthood

Unlike many business assistance programs, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation program must apply for admission. Acceptance criteria vary from program to program, but in general only those with feasible business ideas and a workable business plan are admitted. It is this factor that makes it difficult to compare the success rates of incubated companies against general business survival statistics.

While learning to stand on its own is a great entrepreneurial achievement, the walk through adolescence is often wobbly and filled with challenges, and the need for guidance is far from over. As any parent knows, guiding a teenager through adolescence is perhaps the most trying period in that person’s life, as the adolescent gains a sense of self and identity. One major challenge facing most companies that operate on the verge between childhood and adolescence is that sooner or later, they get stuck in the trenches of day-to-day operations, and more often than not fail to incorporate long-term strategic planning in the development of the business. The company may lose track of its unique value proposition – its identity – during this phase.

What is a Startup accelerator?

Accelerators are typically business entities which are investing very early in a prototype or idea. They provide a structured program for product development and marketing. The program includes mentoring and cash investment. The accerelation period is in months. An accelerator counts next round of funding as success.

The primary value to the entrepreneur is derived from the mentoring, connections, and the recognition of being chosen to be a part of the accelerator. The business model is based on generating venture style returns, not rent, or fees for services.

Seed accelerators do not necessarily need to include a physical space, but many do. The process that startups go through in the accelerator can be separated into five distinct phases: awareness, application, program, demo day, post demo day.

Bottomline:

  • Incubators and Accelerators are not terminologies to be used Inter-changeably. They both mean very different things.
  • The process and learnings from the faster iterations of Accelerators would fuel the larger incubator ecosystem as well in the longer run.

Conclusion:

In starting any business, it is very important as to have a solid idea of what you’re going to do, an explanation of how you’re going to do it better than competitors or other prospective entrants and a clear vision of how you’re going to grow, but all this combined is not enough without a very clear and written plan for yourself and for others detailing how your vision is going to become a reality. So, in all they are very different entities in terms of day to day pace (slow vs fast), expectations (market acceptance vs rapid growth) and people (academicians/administrators vs business people).

As Investors go through hundreds of business plans, your idea must stand out, it must be innovative and creative, it must be solidly backed by good research, it must conform to reality and not include impractical expectations and it must outline a clear path of how you intend to accomplish your targets and give your investors a good return on their capital. If these are present and in order, many investors today would be ready, willing and able to provide you with all the funds, cooperation, consulting advice and all other required services and support that you require.

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