Startup accelerators and incubators help businesses during their infancy to reach their initial goals. This is done in a number of ways including by offering finances, advice, and even facilitating networking with potential investors.
In this article, we are going to delve deep into what startup accelerators and incubators actually are. By the end of this article, you’ll understand what they are and whether you should be involved in them as either an investor or a startup founder.
Startup Accelerator or Incubator: Are they the Same?
The Ultimate Guide To Pitch Decks
Top startup accelerators and incubators offer the same basic goals of pushing a new business forward so that it can stand on its own two feet. However, they achieve this by subtly different means.
To understand which is best for your situation, let’s clearly define both.
What is a Startup Accelerator?
A startup accelerator helps a startup founder grow their business to the point where they have a better chance of attracting substantial investment, usually in the form of venture capital.
Startup accelerators accelerate a business from standing still at the beginning, to covering distance at breakneck speed.
Startup accelerators are often founded by successful business people and sometimes entrepreneurial academics. Usually, they come together with a shared interest in a niche or in supporting rookie entrepreneurs in their local area.
By pooling their experience and, in some cases, finances, startup accelerators are able to quickly help startup founders develop their ideas from the conceptual stage into something tangible and potentially profitable.
Startup accelerators are structured differently from incubators. Accelerators stipulate the duration for when they will offer their help to a startup founder. This can last from a few weeks to several months. In rare cases, it can last more than a year.
Within this period, startup accelerators offer mentoring to entrepreneurs, providing them with the advice needed to attract the necessary investment in the short term.
To gain access to a startup accelerator, a business must show that it has a valuable concept at its heart and that it is being operated by someone with good business acumen.
Most startup accelerator applications fail. This doesn’t mean you should stop applying to such organizations, but don’t be too downhearted if a startup accelerator declines your idea. This is more common than not.
Startup accelerators often offer a small seed investment as a catalyst for initial business growth. This is often to perform market research or develop a product; however, it is usually not enough to bring a product completely to market. The idea of seed investment is merely to get a business to the next funding round.
Remember, the goal of a startup accelerator is to accelerate the initial spark of a business so that it can attract long term investment. In many ways, an accelerator is simply there to help a startup prove its worth to others.
Startup accelerators open up their networks to the startups they are supporting. This involves industry experts, financial advisers, venture capitalists, angel investors, and in some rare instances, private equity investors.
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