In the startup environment you can often hear about business incubators and accelerators whose main goal is to help young entrepreneurs just starting out in the market. Such entities provide support, access to valuable knowledge and necessary infrastructure. However, despite similar objectives and a similar profile, they are not the same, and delving into their specifics, it becomes possible to distinguish clear differences between business incubators and accelerators. Read on to find out more.
Business incubators and accelerators – table of contents:
- Business incubators
- How do business accelerators work?
- Business incubators or accelerators – what to choose?
The basis of business incubators is the desire to provide support to new, often highly innovative companies. The entity is thus established to help startups at the earliest stages of their development – pre-seed and seed. Such assistance refers both to providing access to extensive knowledge and valuable guidance from more experienced business activists, as well as to guaranteeing free access to basic and sometimes even specialized infrastructure to start a viable operation in the target market.
Business incubators provide startups with the right environment that will positively influence their development. Such measures may include guaranteeing access to office space, legal services, accounting, laboratories or technical infrastructure. In addition, such units strive to foster creativity and strengthen skills among young entrepreneurs, develop their talents, interests and exploit the potential hidden in the innovative ideas they present.
An important aspect is also offering assistance at the various stages of a startup’s development and designing the best solutions reflected in the provision of both substantive and practical assistance. To this end, business incubators, in addition to organizing office space or accounting support, also provide their legal entity, at the same time often helping young businesses get the necessary funding.
Business incubators in most cases function as private enterprises, foundations or institutions belonging to academic centers that constitute universities. At the same time, they charge fees for their services in the form of a monthly subscription, which allows them to cover the costs they incur to operate.
Some of the most popular forms of support are pre-incubation and incubation. The former refers to the stage when a company has not yet been formed and the entrepreneur benefits from the legal entity of the incubator. Incubation, on the other hand, refers to the assistance that is offered once the business is officially registered.
Nowadays, there are many models of business incubators, but enabling access to more specialized services and training is gaining more popularity. Many of the incubators, therefore, additionally decide to set up websites. Budding entrepreneurs can easily find information about available training, networking meetings, conferences or even funding opportunities there.
The services provided by the incubators are mainly aimed at two groups – budding entrepreneurs and young people and students, who, thanks to the provided support, get a chance to start working on innovative ideas.
It is also worth emphasizing the social dimension of business incubators. The knowledge and commitment of people associated with them improves the multidimensional development of social economy entities, contributing to the innovation of the entire market. In addition, in numerous cases, business incubators themselves decide to subsidize the acquisition of some shares of the most prominent startups.
One of the biggest advantages associated with starting cooperation with a business incubator is a fairly high degree of freedom and flexibility. The prepared support programs are not limited with time, although most often the period of using the incubator’s services covers the first three years of a given company’s activity. At the same time, throughout this time, participants can voluntarily decide to leave the incubator.
The fact that potential risks are minimized is also a great plus. Considering the nature of business incubators, they provide their clients with a kind of protective umbrella, which further motivates them to implement innovative solutions.
How do business accelerators work?
As with business incubators, the main task of business accelerators is to support young entrepreneurs in developing their businesses. At the same time, however, their assistance is aimed at those who already have a concrete idea and a vision for its implementation. Before applying to business accelerators, therefore, it is worth having a structured concept, a product prototype or a prepared business plan.
Then, when the presented idea has potential, the budding entrepreneur can expect to receive funding, most often in exchange for a certain percentage of shares in the company. Thus, the assistance of business accelerators is based on the development of a specific idea, which is still at an early stage.
Taking advantage of the assistance offered by business accelerators, still inexperienced entrepreneurs can count on receiving not only financial support, but also professional support. Such entities often develop their own programs to support startups, which also involve business partners representing various industries who provide valuable advice and guidance. During acceleration, new businesses are thus taken care of by industry mentors. As a result, by identifying the individual needs of each startup, it is easier to provide them with tailored training for further development and the eventual launch of the innovative product.
The primary goal of all accelerator programs is to provide startups with assistance in discovering the best strategy for their ventures. During the course of such a program, various types of workshops or training are offered, which, in a broader perspective, allow to analyze the strengths and weaknesses of an idea. Additionally, the knowledge of how to run a business or its accounting is provided.
Business incubators or accelerators – what to choose?
Business incubators and accelerators are established to help startups grow in their early stages. However, despite their common mission to give startups the support they need, both material and non-material, a closer look at the specifics of these entities reveals that they differ in such aspects as the phase of business development, goals and the period of support.
The main difference between an incubator and a business accelerator is the stage of development in which the particular company receiving support is in. A business incubator helps young entrepreneurs during the earliest stages of their idea’s development, when the details of how to turn it into a viable business model have not yet been determined. The primary goal of incubators is therefore to actively assist with the creation of a suitable business model and MVP, a basic product whose launch offers the chance to gather valuable feedback.
At the same time, business accelerators are created for startups that already have a prepared business plan combined with a business model. For these entities, the most important goal becomes to properly prepare the startup for dynamic growth. The cooperation with incubators always takes place before using the help of accelerators. However, using the support offered by incubators is not a prerequisite for working with accelerators.
Incubators, just like accelerators, provide access to various types of training, mentors, industry specialists, legal and accounting services and the necessary infrastructure. However, incubators provide less assistance in obtaining financing for the development of individual businesses. It is the business accelerator that, as the startup grows, often in exchange for shares in the company, provides it with the necessary funding.
The very duration of cooperation with individual entities is also different. The specific nature of the assistance provided by incubators requires a long-term relationship. The complex process of transforming an innovative idea into a viable business model means that the period of using the incubator’s services can last up to several years. The situation is different in the case of accelerator programs, which are usually implemented within a few months.
At the same time, joining a business accelerator requires startups to meet certain requirements. Unlike incubators, which are provided with a relatively small fee for the support they receive, the cooperation of more developed companies with business accelerators is based on fulfilling a number of criteria set by the entity.
The beginnings of any startup involve great challenges for its founders. In order to facilitate their entry into the competitive market, an increasing number of incubators and business accelerators are being established, which offer young companies the most needed assistance at a given moment. At the same time, despite all the previously presented differences between these entities, both the support provided by incubators and that offered by accelerator programs streamline the entire process of transforming an innovative idea into a viable market product.
Read also:How to foster a startup culture?
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The most important questions
What are the most popular forms of support?
Some of the most popular forms of support are pre-incubation and incubation.
Who are the services provided by business incubators aimed at?
The support offered by incubators is mainly aimed at budding entrepreneurs and young people and students who are just beginning to work on innovative ideas.
What is the support offered by business accelerators?
The assistance of business accelerators is based on the development of a specific idea that is still in its early stages.
What are the main aspects that distinguish incubators from business accelerators?
Analyzing the specifics of these entities, they differ in such aspects as the phase of business development, the primary goals or the period of support.