Incubators vs Accelerators
Imagine you’re an early-stage start-up founder with a brilliant product or service that can help thousands of people solve a really painful problem. You’ve introduced it to the market, have a few customers and a business model and then you realise you have no funds you need to grow your business to the next level. This is where incubators and accelerators come in.
There are about 1000 incubators and accelerator programs in the world providing solutions to start-ups. From the literal meaning, incubators nurture new ideas while accelerators improve the growth of an existing company. In the case of incubators, they work with founders at the idea stage and help you network with other entrepreneurs, build on your idea, determine product-market fit, and get investment-ready. While accelerator programs help founders — who demonstrate potential for rapid growth — with expert advice, training, mentoring, networking, and often financial support too.
However, founders have complained about the low acceptance rate or how difficult it is to get into an accelerator program. For instance, the Y company based in Silicon Valley has a yearly acceptance rate of 3%. Although a lot of people recommend the program as it helps you achieve growth for your business which would normally take years within 3–6 months.
Accelerator programs have an open recruitment process, which is open to specific audiences, but they accept a few applicants. In comparison, incubator programs have an exclusive recruitment process, which is open to specific audiences, but they accept many.
Apart from the networking and structured guidance, accelerator programs provide, they also provide funds to your company which can be used to fund research, marketing, fine-tune a product, or hire new team products. In return for the funds provided, they are entitled to an equity share in your company. This is mostly not the case with incubators. They do not focus on providing funds but rather on the development of your business.
Accelerator programs also have a set graduation date or demo day for their members after finishing the program. This day is set aside to allow you as a participant to display your business and also try to secure investors for your business. However, incubators do not have a set graduation date for their members after finishing the program.
Accelerators typically do not provide office space for participants, although they may have a physical site where conferences or shared resources are held, as well as for advising. Incubators, on the other hand, provide start-ups with specialised office space for a certain length of time.
However, while a few accelerators and incubators have been highly effective in assisting businesses to achieve success, acceptance into a start-up accelerator or incubator programme is not a guarantee of success for a start-up founder.