The accelerator process starts with an application. Externally developed startups join a short term program (normally 3 months) in which they are given access to a large network of mentors and investors. They also offer opportunities to access PR, design and consulting teams as well as many other professions to help develop the startup. Often, a small seed investment and a small amount of equity is exchanged for an offered amount of capital when starting the program – about £20,000 to £30,000 for a small percentage of the company (5% to 10%). The full cycle of the program ends with a form of ‘startup graduation’.
Incubators are physical coworking spaces with several startups situated in the same building. They are aimed at early stage companies that are normally introduced into incubators through contacts or trusted partners. It is rare to find an incubator with an application process. Moreover, some incubators are sponsored by VC firms, government bodies or corporations which might influence the type of startups they bring in (e.g. a hospital funded incubator would most likely take in health-related companies).
Ideas are developed internally with an external management team. There is no set time frame meaning that many companies stay for over a year or until they are ready to expand and space is provided on a month-to-month lease program. They have access to basic services such as IT, janitorial services and conference rooms as well as local community connections, mentorship and networking opportunities both from investors and fellow startup CEOs. The majority of learning is joint with other startups.
Do I need one?
Both accelerators and incubators have their pros and cons, but it is not always necessary to jump onto one of them. You need to carefully analyse what it is your new business needs in terms of support, facilities and finance before looking into either programs.
Overall advantages include mentorship and shared learning, PR and networking opportunities and access to capital. Disadvantages to both include too many, and often conflicting, opinions on your project (you’ll need to be very good at filtering information), sharing workspace can be distracting and there might be a lack of focus on your project due to too many general meetings.
You know what they can offer, you know what they can take and you know their pitfalls. It’s time for you to weigh up if they are useful for your startup. If you are confident in your business plan, have a strategy for fundraising and have crisp execution skills, then there is no need to seek out one of these programs. I suggest, instead, finding a mentor.