Are you ready to take make your side hustle 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 which one is right for you?
Before you find your nearest Erlich Bachman, get the quick guide to incubators and accelerators below, and learn about alternatives to both.
Incubator vs. Accelerator
An incubator helps entrepreneurs flesh out business ideas while accelerators expedite growth of existing companies with a minimum viable product (MVP). Incubators operate on a flexible time frame ending when a business has an idea or product to pitch to investors or consumers. The timeline for accelerators is a set few months during which the entrepreneur receives mentorship, funding, and networking help.
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.
Originally published Jul 5, 2019 7:30:00 AM, updated July 05 2019