Business Incubator vs. Startup Accelerator: What’s the Difference?

A business incubator is a program that supports early-stage startup companies to expedite profitability and success. Incubators provide startups with valuable resources such as free office space, equipment, mentorship, a collaborative community, and networking opportunities with potential funding sources, like angel investors and venture capitalists. Business incubators focus on brand-new businesses that still need to develop a product idea and business model.

Many types of companies and organizations sponsor startup incubator programs, including universities, non-profit organizations, for-profit development corporations, government-run economic development organizations, and venture capital firms.To submit to a business incubator, you'll need to go through an application process that typically involves meeting the incubator's specific criteria and submitting a viable business plan.

A startup accelerator program expedites the growth of existing companies that have developed business models and validated products in the marketplace. Startup accelerators provide companies with valuable resources such as mentorship, free coworking spaces, legal services to help secure intellectual property, a collaborative work ecosystem, and access to industry influencers and potential investors.

Startup accelerators take on businesses that already have a solid foundation to build upon, so accelerators focus their guidance and resources to help ventures scale up as quickly as possible. In addition, accelerators commonly give their ventures a seed investment and take equity stakes in the companies. While funding for startup accelerators may come from both private and public sources, accelerators are more likely to be private organizations.

Business incubators and startup accelerators both offer early-stage companies support and mentoring throughout the entrepreneurship process, but there are key differences between these business development models:

1. 1. Stage of the venture: The biggest difference between accelerators and incubators is the stage of the venture they focus on. Incubators focus on early-phase startups that are in the product-development phase and do not have a developed business model. Accelerators focus on speeding up the growth of existing companies that already have a minimum viable product (MVP) in the hands of early adopters with an established product-market fit.
2. 2. Seed funding: Incubators do not typically invest capital into ventures, but they may ask for an equity stake in exchange for the valuable resources they're providing. It's standard practice for accelerators to provide ventures with a seed investment in exchange for an equity stake in the company.
3. 3. Program timeline: Business incubators typically develop their ventures on a slower timeline. Their goal is to incubate a business idea as long as needed to build a successful company—and that incubation period may take one to two years. Conversely, accelerators run more like a startup boot camp and tend to have a set time frame of only three to six months.

To help you and your founding team decide which business development program is best for your company, assess your specific needs and identify whether you're an early- or late-phase startup.

1. 1. Assess the state of your business’s product. Incubators tend to be ideal for brand-new businesses that do not have an established viable business model and that are still developing a product idea. Accelerators are ideal for early-stage existing companies that already have a minimum viable product (MVP).
2. 2. Identify your funding needs. Incubators are an ideal choice for businesses that are not yet ready to seek capital investment. Accelerators support businesses that are looking for seed investment to help scale up.
3. 3. Determine the timeline of your business. Incubators help to support businesses over a longer period of time, while accelerators work with businesses to scale up rapidly within a matter of months.

Incubator and accelerator programs are highly selective, and the application pool is competitive. You must meet an incubator's specific criteria and submit a viable business plan as part of the application process. Startup accelerator programs have a similar application process, but they also require evidence that your business has high potential to scale up at an exceptionally fast pace.

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