Subtitle: How Startups Attain Success with Accelerator or Incubator
Are you ready to make your side hustle becomes your main hustle? Or maybe you’ve got an idea you just don’t quite have the details fleshed out. You may be considering an incubator or accelerator to help you get started. But what’s the difference? And What is a Startup Accelerator or Incubator do to help startups attain success?
Accelerators usually begin with a rigorous application process. Top accelerators like Techstars and Y Combinator are highly selective, accepting less than 2% of applicants into their programs.
Typically, the accepted companies have already demonstrated fast growth and a minimum viable product (MVP). They’re often given a small seed investment and paired with mentors from the accelerator’s vast network.
The goal of the accelerator is primarily networking, mentorship, and resource allocation to skyrocket the success of proven business ideas. A business’ time at an accelerator typically ends with a presentation sharing the growth and development they’ve achieved during their weeks or months in the program.
Things to Consider When Joining an Accelerator:
Is it the right time? Make sure you’re joining an accelerator at the right time. If you’re still searching for a co-founder or your first few employees, you may be a better fit for an incubator.
How fast or slow are you growing? If you’re a fast-growing company, an accelerator might be the right fit. If your growth plan is still developing, an incubator might be a better choice.
Will you relocate? Many accelerators require you to relocate for the few months you’re participating in their program.
Some incubators select candidates through an application process while others only work with companies or entrepreneurs passed along from within their network of advisors. Some incubators are focused on specific verticals. For example, Monarq Incubator supports female-led startups through their programs.
Incubators also tend to focus on businesses or entrepreneurs from a certain geographic location — or require participants to relocate to their coworking space or local community for indefinite periods of time.
Participants spend their time at the incubator networking with other entrepreneurs, fleshing out their ideas, determining product-market fit, and creating a business plan. Intellectual property issues are also vetted and dealt with at this stage as well.
The incubator process usually lasts a few months — but is often open-ended — and ends with a pitch or demo day where the entrepreneur presents their business idea to the incubator community and/or investors.
Things to Consider When Joining an Incubator:
Do they have the right mentors? Make sure your incubator can offer specific and experienced guidance for your business or idea. The last thing you need is someone advising you on your shipping business idea who’s spent the last 30 years mentoring young restaurateurs.
Do you need funding now? If you’re looking for capital to grow your business, an accelerator might be a better fit. Incubators focus on preparing the entrepreneur or founder with the business model, plan, and mentorship necessary to confidently pitch their finished business plan to investors.
Can You Get By with a Coworking Space?
If funding, business savvy, and a proven business idea aren’t an issue for you, you might consider simply joining a coworking space. You’ll get the office space you need with built in networking opportunities and events. Some coworking spaces even help you outsource administrative tasks so you have more time to spend on the bigger tasks at hand.
Another benefit of joining a coworking space is that you don’t have to give away equity in your company. Incubator and accelerator mentors generally receive equity in exchange for their expertise. That’s not an issue with coworking spaces.
If you’re joining an incubator or accelerator, make sure you have clearly defined, actionable goals. And be honest about whether or not you can achieve those goals without joining an incubator or accelerator. The process for applying to and joining these programs is lengthy and arduous — and it’s time you could be spending getting your business off the ground without parting with equity.
An advantage of being a part of an incubator is that your startup business gets access to a wide range of financial capital alternatives. In addition, it also provides mentorship, networking, and expertise in your specific startup industry, as well as helps startups turn ideas into new businesses.
Sometimes these benefits can also be a disadvantage to incubators. Certain types of mentorships and networking with entrepreneurs may hinder the startup owner’s focus during the risky early stages of their startup and your idea might not always lift off.
On the other hand accelerators in general work extremely close with everyone involved in the startup, which is an advantage. Accelerators also match the partners and investors to fit with the chosen startup.
In accelerator programmes they also focus on the development of pilot projects for their startups to ensure growth and success. Accelerators try to provide a platform for the startups to grow fast while enrolled in the programme to increase the probability of receiving startup investment.
Y Combinator accepts about 1.5% to 3% of the applications it receives.
A disadvantage of accelerator programmes is that they are short-lived and won’t provide as much support as an incubator would over an extended period, however the short-term acceleration might produce better results in the long run. Another con is that these programs only accept a few startups every year and require equity in each startup they accept.
In the end, it depends on how developed your startup is and what type of support it will need to grow.
At a high level, startup accelerators and incubators are organizations that seek to help startups attain success. Startup accelerators tend to focus on providing startups with mentorship, advice, and resources to help the startups succeed, including a Demo Day, a day to focus the attention of the startup investor community on the startups through hosting a series of investments pitches from the startups to startup investors.
Accelerators tend to not offer dedicated office space to startups (and may encourage startups to find their own dedicated space), but may have a physical location for shared resources and accelerator events such as invited guest speaker talks and advising office hours. Incubators tend to offer dedicated office and development space to the startups for a set period of time.
Startup accelerators and incubators can get involved at all stages of a startup’s development, from idea stage to revenue-generating, late stage. However, most tend to focus on relatively early stage startups, as this is when companies can typically most benefit from outside help.
Startups are usually admitted in batches, with many incubators and accelerators offering 1-3 batches per year. Some focus on a specific industry, market, technology, stage, or other thesis, whereas others are more generalists. Most seek to run an application and screening process.
However, while a handful of accelerators and incubators have been very successful in helping startups attain success, being admitted to a startup accelerator or incubator is not a guarantee for success to a startup founder, and not a guarantee of a sound investment for a startup investment.