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Anupam Mitra

Incubator vs. Accelerator? What do you need?

For startups, their foundation stage can make or break their business. The initial stages of business form key deciding factors on how successful the startup would be.


Entrepreneurs from all walks of life and industries need mentorship, guidance, and support through their journey to have their ideas turn into successful and scalable ventures.


This mentorship and support can come in the form of finances, legal, strategy, and investment.


Too many founders give up on their ideas in the early stages because they have no idea where to start and how to have their business take off.


It is rightly said, “entrepreneurship is like jumping off a cliff and building a parachute on the way down”. Many entrepreneurs shy away from the leap because they don’t have the tools to build their parachutes.


For founders, incubators and accelerators provide excellent guidance and support to supplement their entrepreneurial journey without it feeling overwhelming. They offer experienced ways to grow businesses and help in the development of ideas into concrete plans.


They provide excellent opportunities for growth to ideas that have potential and businesses that are scalable. Both incubation and acceleration models provide support to startups, but as the names suggest- Incubators help startups in their early states (usually idea stage) and groom them to become a more appealing option to investors once the ideas are concrete and actionable.


Accelerators, on the other hand, help take forward existing startups that are already beyond the idea stage and assist them in taking their business forward in terms of scaling, expansion, and customer growth. In this case, a startup usually has initial traction, an MVP, a small team, and a few figures to show for their previous work.


Their ultimate goal is to provide an environment of growth and mentorship where startups flourish. Startups supported by incubators and accelerators thrive on support and collaboration provided by these programs’ ecosystem that helps in understanding business and how to operate in an industry dominated by risk.


Although in the real world, incubation and acceleration are interrelated and function very closely, there are a few differences worth noting.


Incubators focus on long term development of a startup from the ground up and their programs can last up to a year. Their primary goal is to get the founder accustomed to the world of business and get the ball rolling on building the idea into something concrete.


They do this by providing support in terms of mentorship, financial and technical assistance, spaces to work out of, and even access to investor and entrepreneurial networks.


Incubators usually take very little to no share in equity, but they also do not provide direct capital like accelerators. Their programs are funded by collaborations with private institutions and universities. They typically operate as coworking spaces and assist with their network of startups, mentors, designers, and developers.


Incubators provide the following benefits:

  • Office/manufacturing spaces at below-market rates

  • Advice and guidance throughout groundwork

  • Shares expenses, reducing operational costs

  • Connection to peers and access to networks

  • PR and Marketing help

They are a great choice for founders who don’t specialise in technology themselves as in some cases they provide in-house support for their incubees in terms of tech development and initiation.


Incubation programs are the ideal choice for startups that are in their initial and idea stage. They specialise in providing you tools for building the parachute.


Accelerators, on the other hand, is a process where developing startups can get help and support from specialised private companies to become a stable, self-sufficient and scalable.


They are programs that help build startups that are already beyond their foundation stage and have their groundwork in place. Here, startups should have ideally built a product or technology, incorporated business, finalised on a team of founders, and gained introductory traction.


They provide tailor-made mentorship programs that specialise in specific industries and assist in scaling. These acceleration programs focus on building businesses to a stage where they are ready to raise funding.


The acceleration model is usually equity-based where the accelerator provides a pre-seed or a seed investment in the startup. The percentage usually varies between 7%-10% depending on the accelerator and the industry.


Accelerators provide the following benefits:


Mentorship

  • Office Space

  • Supply Chain Resources

  • Capital and Investment

  • Networking

An accelerator program works best for a startup that is already in the growth stage and has identified its niche and industry. It is helpful for them as it focuses on growth beyond foundation building.


The core differences between an incubator and an accelerator program are very simple to understand once a startup identifies what stage it is in.



To find out what suits your business best, it is important to think about what stage is your startup in. If you believe you are still an idea with just a few things laid out on paper, it would be best to consider incubation.


If your startup has already started seeing some results and you can confidently say it has “taken off”, acceleration might work better for you.


It is subjective and might depend on industry variation, but incubation and acceleration programs have proven to take startups to new heights where they’ve become globally known and changed the way we do things.


Disruptive startups like Airbnb, Stripe, and DropBox have gone through incubation and acceleration and it has worked wonders for them.


Sometimes, you need someone outside your network to believe in your idea- and incubators and accelerators help you build your empire through their expertise, innovation, mentorship, and money.


So, who’s going to be your partner on this rollercoaster of a journey?

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