A breakdown of the terminology and what the models entail
When you invest your time and energy in an idea, you want to do your best to make it succeed. The first few decisions you make as an entrepreneur can often cement your success in the business world.
Whether to enroll your startup in an accelerator or incubator program can be one of them. Here’s a quick explainer on both programs to make the decision-making process easier.
What is an accelerator?
A startup accelerator is an organization that offers mentorship, capital and connections to the companies under its program. They help entrepreneurs make connections with possible investors and business partners. An accelerator aids promising founders in fast tracking their startup’s growth.
As an example, two well-known accelerators are the US-based Techstars and Y Combinator.
Timeline
The startup accelerator business model has a clearly defined timeline in place. An accelerator takes about 3-6 months to get a startup market-ready. To succeed in such a fast-paced program, the startup should have already established the validity of its product.
Process
Accelerators have a formal entry procedure. To enroll, the startup founder must fill out an application form and specify details of the company’s idea and the problem that the idea solves. The application should also contain the startup’s target market demographics, the team and previous funding efforts.
Accelerator programs accept startups in slots, with a group of startups coming together to receive guidance. Besides mentoring, startups also receive financial aid from joining these programs. Most accelerator programs also give their graduates anywhere between US$20,000 and US$80,000.
What is an incubator?
The incubator programs support startups at their nascent stages. In an incubator program, startup founders often build their ideas, figure out the right market for their products and get investment-ready.
Incubator programs fall under two main categories, one where the idea is developed during the program and another where early-stage founders are aided in expanding on an existing idea with mentoring and support.
Two popular incubators include India’s Venture Catalysts and the US-based 500 startups.
Timeline
Unlike startup accelerators, incubators do not have a defined timeline. Their programs can be tailored to the unique needs of a specific startup. Often businesses stay in an incubator for as long as necessary for them to grow at a sustainable rate.
Process
Instead of focusing on fast-paced growth, incubators cater to fostering local startups and creating more job opportunities for working professionals.
The application process for incubators is less competitive than accelerator programs. They typically require the startup to fill out an application form with details about the founder and the business, followed by a brief interview.
Many incubators offer the selected candidates a dedicated space to work and develop their ideas for a specific period of time. They do not provide capital investments like accelerators. Incubator programs are instead funded by universities or economic development organizations.
Which one should you go for?
Whether you enroll your startup in an accelerator or incubator program should be based on the startup’s needs. If your startup has proven that its product is commercially viable and only needs a cash injection to fuel growth, an accelerator program is the way to go. However, if you need help in laying the groundwork for a successful startup and a free working space, then an incubator program would be the right choice.
While both programs have their benefits, as an entrepreneur, you must carefully self-reflect on what fits your startup better at its current stage.
Header image courtesy of Unsplash
