Startup Accelerators vs Incubators

Incubators and accelerators are two types of programs that can help startups succeed, grow. There are many similarities but these programs are vastly different.

If you're a startup the terminology can get a little confusing and this is made worse by the fact that many of these programs have morphed over time and have at times used these terms interchangeably.

Let's start with accelerators. The core idea of an accelerator is that it's a
fixed program, typically 3-4 months. These programs invest in companies
directly in exchange for equity. The investment can range but some of the more well known programs such as Techstars, YC and 500Startups invest around $120K in your startup for a 6-7% equity stake.

Each program has unique attributes to the program is but the main benefit these programs offer is community, mentorship, networking and access to capital through demo-days and introductions to investors.

As the main implies... Accelerators - accelerate a startup. Typically
companies have elements of the startup in-place and they are looking to speed up the process of startup formation, execution or revenue generation. In some instances companies accepted into an
accelerator may only have a vague idea of what they will do but more typically they have made some initial progress and traction.

Accelerators invest a substantial amount of time and money the process
to apply and get accepted into these programs is highly competitive. But the competitive nature means that more eyes are on companies as they get accepted into these programs and graduate. It's often the startup equivalent of getting a prestigious degree from a university.

Accelerator programs will often pair founders with mentors, provide technical expertise, resources and experts to help companies succeed.

Incubators on the other hand are setup slightly differently. Incubators are less likely to take an equity investment. Incubators as the name implies are
incubating something that has potential but isn't quite ready to be a full
company.

Incubators are often formed by businesses that have extra office space or extra lab space may donate that space for startup incubation. This can bring startups, mentors and companies together without direct financial expectations. Many companies will run incubators for potential early-stage business partners.

Incubators may offer some mentorship, they sometimes they may actually charge a small fee to startups to offset some of the costs associated with running such a program. In many cases this can be a good alternative to a co-working space because it puts you in closer proximity of companies in a related field or a company that's likely to be a business partner.

If you're really early an incubator can help you incubate your idea, meet other people and better formulate a general direction. Incubators can also be great if they offer you access to lab-space or special equipment that would otherwise be expensive or difficult to access.

Similar to accelerators, these programs may also be competitive but they are low
risk to you and don't take equity or have financial expectations.

If you're a little further along, an accelerator program can provide you with
both seed funding and offer introductions and mentorship to get you moving much
faster.

I hope that helps you understand some of the differences. I have some exciting news on the accelerator front, so if you're interested in entrepreneurship, hit subscribe if you want to hear more.

[slainiae]

Excellent video - particularly stating the expected equity stake for getting accepted into an accelerator programme.

[robpengson]

this was good. i subscribed! keep it up

[GregoryCampbell-xd]

I like the idea of contrasting the two, but the thing is, a lot of start-up entrepreneurs are too naive and don't have a business model. A company is first and foremost a business, not just a place to innovate. Too many start-ups rely on fund-raising, without taking into account the negotiating leverage investors will have with them. That's why it's better to generate cash yourself to see if the idea is scalable, and then finance yourself. In my opinion, an idea that's difficult to finance anyway is a bad idea, especially if you're just starting out.

[yousafali]

I've just applied for Incubation and they're charging me 2.5% equity in my start up.

I'm think yo switch to accelorater

[jeffbrunswick]

As someone that has worked in the technology start-up sector in the UK, I've really grown to hate the entire entrepreneurial "support" community. It really is a chaotic mess, full of idiots. I often wonder how many successful businesses come out of these programs, I suspect that it is close to zero.