Accelerators vs. Incubators: What’s the Difference?
Entrepreneurship is not easy, and it comes as no surprise that founders are often met with business hurdles that run the risk of impeding the growth and survival of their startup.
As a result, programs have been developed to provide guidance and offer support in the early years of a business. The two most common programs are known as accelerators or incubators.
Although these two terms are often used interchangeably and assumed to represent the same concepts, there are in fact significant differences between the two.
Accelerators
The most common characteristics of an accelerator include fixed-term timelines. Accelerators typically operate anywhere between 6 weeks to 6 months, giving start-ups a sufficient amount of time to access investors, mentorship and other support to help them grow. Accelerator programs are also common among startups that are beyond the early stages and have developed their idea significantly to the point where they’re ready for investment.
Accelerators place a strong emphasis on mentorship and this is often highlighted as the foundation of the program. In return, the accelerator will receive a small equity stake in the company. Many accelerators will also want to see your monthly recurring revenue (MRR) above a certain dollar amount. These are a few of the reasons why being accepted into an accelerator program includes a rigid selection process.
Beyond that, accelerators adopt a more interdisciplinary approach. Team members (consisting of an accelerator’s marketing team, program directors, etc.), or community partners, such as service providers and sponsors, often work collaboratively with the startups they assist. This creates an environment where acceleration, networking, and mentorship are all crucially linked.
Incubators
While accelerators are aimed at accelerating companies and building them to scale, incubators focus primarily on stimulating innovation in order to incubate and nurture ideas.
As a result, incubators are largely geared towards early-stage companies who typically need help validating their business plan and developing their ideas.
In terms of timelines, incubator programs are often more long-term given the type of guidance being provided. Turning an idea into a business takes time, and while accelerators are more structured, incubators are often more open-ended.
Which one should I choose?
Deciding whether to take part in an accelerator or incubator program involves determining your objectives and where you’re at in your startup journey. Below are some questions to ask yourself when determining which program is right for you:
- What stage is my business at (e.g. pre or post-revenue)?
- Is my business market-ready?
- What is my monthly recurring revenue?
- How fast do I want to see results?
If your answers lean towards quick, concrete results, consider an accelerator program. Choose an incubator if you’re still in the ideation stage, but need help establishing a more defined, longer-term vision for your startup. If your startup is still in its early stages but you’re ready to scale, an accelerator may be a better choice. If you’re a brand new startup and need help defining product-market fit and building out your business model, then an incubator may be a better fit.
No matter the route you choose, both accelerators and incubators can provide exceptional value. Always do your research, figure out what’s best for you, and embrace the process!
