Accelerator vs Incubator: 5 major differences startup founders need to know

In most of the cases, apart from lucky minorities, the reality for most entrepreneurs with an idea is that money is often a prerequisite. Regardless of your idea and confidence, you need money to keep the lights on, the team happy, and the momentum going.

Startup founders looking to get into a direction often turn to a startup accelerator or incubator for help. In fact, both accelerators and incubators offer great ways to start and grow businesses. Initially, these programs were popularised by startup hubs in Silicon Valley, but now, it’s present across the globe.

Quite often than not, the terms ‘accelerators’ and ‘incubators’ are assumed to represent the same concept. There are quite a few distinctions that separate both based on though. Check out the 5 differences here, if you don’t have a clear idea.

Difference 1

Accelerators: Accelerators ‘accelerate’ growth of an existing company.

Incubators: Incubators ‘incubate’ disruptive ideas with the hope of building a business out of it.

Difference 2

Accelerators: Accelerators programs generally have a time frame from a few weeks to months in which the companies spend with mentors and other experts to build their business.

Incubators:  In this case, incubators are long term and do not operate on a  schedule. It’s pretty much open-ended in this case.

Difference 3

Accelerators: Accelerators are funded by an existing company.

Incubators:  Often, incubators are independent, they can also be sponsored by Venture Capitalist firms, angel investors, and other major corporation.

Difference 4

Accelerators: Accelerators offers early stage a specific amount of capital in addition to mentorship network. In exchange, the accelerators usually require a predetermined percentage of equity

Incubators:  Incubators do not provide capital usually and are often funded by universities or economic development organizations. Additionally, they don’t take an equity stake as well in the company they support

Difference 5

Accelerators: Accelerators have a much more structured program. On top of that, they do not offer dedicated office space to startups.

Incubators: Incubators are more focused on creating an environment for co-creation. Incubators provide dedicated office and development space to the company  for a specific period of time.

Which one is right for you?

Choosing between accelerators and incubators is indeed a tough decision and solely depends on the entrepreneurs. Both programs offer significant benefits and opportunities for startups to get headed in the right path. In the end, it’s all up to you and your team to know what’s best for the future of your startup.

Stay tuned to Silicon Canals for more updates in the tech startup world.

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