Incubators Vs. Accelerators: What Is The Difference?
The terms “Incubator” and “accelerator” form a basic part of the vocabulary of the entrepreneur, but sometimes their differences are unclear and seem fuzzy borders. Some people use both concepts without distinction, but if you are an entrepreneur, you must know where to find the difference.
If you have an idea you want to turn into a business or if you have a business with great potential that you want to develop and accelerate, you may need to turn to external agents to help you with your purpose. This is where the Incubators and Accelerators come into play.
Worldwide are increasingly born Startups that succeed under the supervision of incubators and accelerators. This is the case, with a number of businesses such as AirBnb, Dropbox, etc.
What are their roles?
The main objective of incubators and accelerators is to support entrepreneurs and startups to help them achieve business success. The provided help can be summarized in the following sections:
- Assignment of physical spaces for entrepreneurs to develop their business.
- Technical assistance and mentoring.
- Transversal services (accounting, computer science, agency …)
- Exchange of information relevant to the business.
What are the key differences?
To have a quick overview of the differences, have a look at this table!
The main difference between accelerators and incubators is in the stage of life of the Startups they work.
On the one hand incubators, they act in the early stages of the venture , maturing the idea, helping to validate the hypothesis business and helping build the company. On the other hand, the accelerator operating in more advanced stages , with already established companies that show growth potential and that help achieve the next level of objectives.
The incubator has the role to monitor, evaluate and support the company throughout the incubation period, to create favorable conditions for its development and strengthening as a business. Typically, incubators seek to support small businesses in accordance with any governmental or regional policy, such as energy projects or social inclusion in a region that needs the expansion in this area. For normally the nonprofit organizations, incubators seek to collect amounts subsidized by the infrastructure offered.
In the case of the accelerator, the focus is not necessarily on a local need, but in companies with a fast and scalable growth potential. And because they are for-profit entities, they offer, in addition to the resources of an incubator, a small investment to allow startups run their initial plans, and in return, receive a stake in your business.
Another difference is that usually, the incubators will ask its business plan, while the accelerator will ask for their business model. This happens because, the incubators, who are usually supported by public funding, need a more formal evaluation of the projects, while what the accelerator wants more is a good idea that makes sense.
The accelerator, are led by entrepreneurs or experienced investors and use private capital for their own funding. While incubators, in turn, are led by managers with experience in government mediation, universities and businesses since they use public funds notices for themselves and for the incubated companies, their main source of funding.
While the accelerator seeks to support entrepreneurs with mentoring sessions, both in lectures as mainly with personal conversations between entrepreneur and mentor, incubators are based on the traditional model of consultants who are hired to support incubation at a reduced value, since they will meet a greater volume of business.
Finally, another difference is that the startup time receiving support, in the case of incubators normally ranges from 12 to 24 months, and the accelerating period is less, on average between 3 and 8 months.
These are some of the differences that separate Incubators from Accelerators. If you still have any confusion, let us know in the comment section below and we’ll try to help you at our best!