Accelerator or incubator: which is essential for startups?
Often Startups and incubators are lumped together, meaning confusion surrounds what differentiates them. The emergence of co-working spaces-cum-incubators also blurs the lines further. However, some crucial differences are vital to know if you're thinking of taking your startup down this route. In this article, we will explain the differences along with the pros and cons of each. Incubator: The primary purpose of an incubator is to help startups at a very early stage to grow. They are collaborative programmes that help people solve problems associated with launching a startup by providing a space to work, seed funding, mentoring, training and other benefits. Incubators differ from accelerators in many ways. They tend to allow startups to physically base themselves within the incubator for far longer – months or even years. They are also more likely to be run by non-profit organisations like universities, government bodies or civic groups. Pros: Long-term support, including office space A collaborative environment where you can learn from other startups Cons: Investors may take a larger share of the business in return for longer, more in-depth support and investment Programmes can drift without time limits and clearly defined expectations
Accelerator: Startup accelerators are generally fixed-term, group programmes that include mentorship and training and may end in a public pitch event or demo day. One of the main differences between incubators and accelerators is that accelerators are considered to tailor to later-stage startups. In contrast, incubators are more suited to very early-stage business ideas. Therefore, accelerators are more focused on providing help to scale up a fledgeling business. Accelerator programmes all differ, but they tend to work by getting startups to apply for a three- or four-month scheme based within the host company's offices, during which time they receive mentoring and guidance. The company may choose one or two startups to partner with as they can also invest in them in return for a stake or subsume the startup into the host company. Nesta's research also found that accelerators are generally less reliant on public funding than incubators and are more likely to be funded by corporations. The same study also found that although incubators are spread evenly across the UK, half of the accelerators concentrate in the capital. However, Birmingham, Bristol, Manchester and Cambridge are also heating up in terms of the number of accelerators setting up shop.