Differences Between Startup Accelerators and Business Incubators

Start-ups should focus on how to grow their business in markets from various sources. The accelerator and incubator programs are suitable for them and will help ensure high growth rates. At the same time, they should evaluate the differences between them from different sources that help make the right decision. The startup accelerators and incubators are ideal for new entrepreneurs to focus more on their goals. However, they need proper research that gives ways to operate a business in markets without any difficulties.

Knowing The Major Differences Between Accelerators And Incubators

1. Purpose

Although startup accelerator and incubator programs come with a purpose, one should know them in detail. The objective of an accelerator program is to guide an entrepreneur to advance to the next stage. It offers guidance, training, funding, and other things which give ways to accomplish goals with high efficiency. Moreover, it has a short duration of 3-6 months with intensive ideas that will benefit a business in various ways. Most accelerator programs are cohort-based and include educational components.

On the other hand, business incubators aim at guiding start-ups in the early stage which has a long duration. They provide methods to build their finance from the ground up when the venture is still in the idea stage. Apart from that, they involve comprehensive training programs that will benefit a startup. The program has a duration of 1 year or more until a business achieves its full capacity.

2. Program design

An accelerator program follows a structured format that works on a schedule. It involves planned activities to execute them in an organized manner. The program is a traditional rigid model that promotes the growth of a business. It has a demo day allowing a business to present a demo to potential investors at the end of the program.

However, an incubator program is an open-ended format that doesn’t come with a no fixed time. Most start-ups will have fewer commitments at this stage associated with the business. There is no fixed demo day available in this program.

3. Sponsorship

A startup accelerator program is a privately run program that accepts equity as a form of payment. Most corporates involve in the funding process to earn more profits.

At the same, business incubators often rely on angel investors and government entities for funding purposes. So, they don’t take any commission because they are mainly supported by external parties.

4. Range of resources

Startup accelerator programs won’t provide office spaces for entrepreneurs. Instead, they will recommend co-working spaces and help find spaces that exactly suit the operations.

An incubator program shares office spaces with start-ups and stays within the program for longer periods. Additionally, it focuses mainly on how to develop and grow in markets with innovative approaches.

5. Seed funding

Many start-ups face difficulties in getting funds due to the lack of ideas and other factors which result in various problems. An accelerator program offers seed funding depending on the business type and other things. Corporates may offer a large sum for startup companies when they want to boost their business.

Seed investments are not available in business incubators and they mainly aim at pitching to investors They don’t provide upfront funding and don’t require equities in return that will help grow business.

6. Selection process

The startup accelerators are more traditional when it comes to the selection process. They are highly competitive which involves stringent selection. Hence, it is wise to know whether they suit startup businesses or not. An incubator program doesn’t follow a set application process and approves startup firms that have disruptive ideas for the development.