Getting a startup off the ground is no simple feat. Luckily, there are programs and organizations in the startup scene that can assist you at every stage of launching your business. Depending on how much you know – or how much you don’t know – a startup incubator or an accelerator program for startups might be the right fit for you.
Despite their marked differences, both incubators and accelerators offer new companies critical networking opportunities and chances to connect with mentors in the early stages of launching a business. Some organizations, like Capital Factory in Austin, operate as both incubator and accelerator, while most programs are standalone.
The most pressing question in analyzing the benefits of accelerators vs. incubators to determinewhich is better suited for you, is: what kind of support are you looking for? While the two options are easily confused, each provides unique help at critical junctures in your startup journey.
What is a startup accelerator program?
A startup accelerator program helps young businesses grow quickly by offering mentorship, capital, and networking opportunities. An accelerator for startups is a short, intense opportunity that infuses some capital into your startup while preparing you to raise funds elsewhere. These kinds of programs are best suited for companies ready to scale.
While the cash provided by an accelerator often doesn’t amount to that much (often $20,000 to $80,000), startup accelerators benefit young businesses by helping ensure future funding. In fact, accelerated companies are 50 percent more likely to raise seed funding than their non-accelerated counterparts. VC accelerators boast robust networks of angel investors, venture capitalists and successful founders who could invest in your company.
Founders Network counts among its members hundreds of accelerator alumni. That means you can use your membership to connect with founders and extend the acceleration energy through peer networks.
Some examples of startup accelerator programs are MassChallenge, Techstars and Y Combinator.
What is a startup incubator?
A startup incubator is a more open-ended program that provides entrepreneurs support at the ground level of launching a business. Incubators often gather multiple startups in a single, collaborative workspace and provide basic necessities like a physical office. They help fledgling startups acquire early funding, mentoring, and training. Incubators are better suited for startups looking for assistance building their products and running a team.
Incubators are typically nonprofits, but there are also for-profit incubators, which often look to monetize their equity in your business, and public incubators operated by counties, states or universities. Most incubators don’t require equity in your company; they also don’t offer capital.
Dollar Shave Club is a great example of a business that successfully launched after experience with a for-profit startup incubator – Science Inc.
Some other examples of startup incubators include 500 Startups and Amplify.LA.
Startup incubators vs. startup accelerators
While both programs help startups get off the ground, there are some critical differences between incubators and startup accelerator programs:
- Duration: Incubators can last between one and five years, while accelerators are much shorter in duration – and thus more intense and fast-paced. They last about three to six months.
- Application process: Admission into an incubator is less competitive and these programs are less rigid with applications. Meanwhile, accelerators operate on a competitive basis. In fact, some accelerators receive thousands of applications for less than 100 slots.
- What you pay: Some incubators require a fee or a stake in the company, depending on the ownership of the incubator. Or, you might be paying rent. On the other hand, most accelerators provide financial assistance in exchange for company equity.
- Prototype status: While incubators are more geared toward helping entrepreneurs get past the idea stage of launching a business, accelerators are typically looking for companies with a validated prototype or service.
- Mentorship model: Incubators provide mentorship on a more as needed basis, offering advice for specific issues. Conversely, accelerators feature very hands-on mentorship relationships designed to get founders ready to raise capital.
We recognize the critical role of mentorship in launching a businesses. Your membership to Founders Network provides access to our various mentoring programs, from diversity and inclusion initiatives to sector-based mentoring programs.