Accelerators vs Incubators: Your complete guide
By Bruntwood SciTech
The entrepreneurial journey is hard, lined with learning curves, pitfalls and many a sleepless night. Having a support network to cover the basics of starting or growing a business can make a significant difference to that entrepreneurial experience.
Here is where incubators and accelerators come in; the support programmes designed to assist your business growth faster than you would by going it alone. In this article, our Head of Innovation Deb Hetherington shares how accelerators and incubators differentiate, what they offer and what you should consider when deciding which programme is right for you.
What is the difference between an accelerator and an incubator?
One of the hardest things a new founder will have to grapple with is the terminology within the tech ecosystem. From incubators to accelerators, through to MVPs (Minimal Viable Products), VCs (Venture Capitals), Angel Investors and PoC (Proof of Concept). This is often where a mentor, usually provided by both incubators and accelerators, can guide you through the complexities of this space.
The two terms - incubation and acceleration - are often used interchangeably. However, there are some significant differences between the two that first time founders should understand which I’ve summarised below:
Incubator: The goal of early stage support in the form of incubation is to hatch an idea and ensure market fit. As an incubator programme isn’t time framed, this allows entrepreneurs to take their time in developing their idea, whether that takes months or years. Incubators are open ended and aim to help entrepreneurs refine their business idea and model from the ground up. They do what they say on the tin: incubate an idea into a product or service that has a much better chance of growth.
Accelerator: The goal of an accelerator is to skyrocket the growth of a proven business concept, ensuring pitch readiness and generally concludes in a presentation which can result in significant funding. They tend to be time-framed and usually run over 3-12 months, providing early-stage businesses that already have MVPs with advanced growth strategy support, mentoring, market access and often funding (though not always). An accelerator is the rocket fuel for high growth businesses to accelerate them to the next level.
Below I've shared more information on the support each offer early-stage business owners and advice on how to choose which is right for you.
What support do incubators offer early-stage business owners?
The offer of support varies between programmes. For example, incubators are aimed at ideation stage concepts that are yet to prove market fit, whereas accelerators are there to support the fast growth of entities with a successful business model and market traction. These two entities need very different support.
Activity associated with an incubator generally occurs within a given physical space. A small company/individual will take a desk and pay a rent and in return they will receive some basic support. The opportunity to access funding isn’t as common in an incubator and the provider of this support won’t generally take equity (unlike an accelerator).
The type of support varies, but common themes include: physical space, mentoring, training and access to like-minded individuals. Entrepreneurs spend time networking, using peers as a sounding board, fleshing out ideas and testing their product or service for market fit. For those with intellectual property attached to their offer, support in this area also tends to be on hand. This is the model we follow in our Tech Incubator at Circle Square in Manchester, which is home to a thriving community of forward-thinking founders and entrepreneurs, such as one the world's first, and largest, NFT Marketplaces Known Origin and software development training company Northcoders.
What support do accelerators offer early-stage business owners?
Accelerators on the other hand, start with a much stricter eligibility criteria and application process. The global leaders in acceleration are the likes of Techstars and Y Combinator, who accept on average 2% of applicants per cohort. All of these accelerators share common themes, including a duration of between three and six months, the utilisation of high quality mentors, and access to seed funding.
We offer a number of Accelerator programmes across tech and life sciences within our own network at Bruntwood SciTech, facilitating access to finance, talent and new markets through our unrivalled partner network. At Innovation Birmingham for example, we’ve partnered with HS2, PNB Baribas Personal Finance and West Midlands Academic Health Science Network for a number of our Serendip Accelerator programmes.
Participating businesses should already have a product market fit and a proven track record at this stage, so the acceleration phase is set up to help founders to avoid the common pitfalls of the growth journey.
Which programme should I choose?
The type of programme you should consider will depend on what stage your idea or business is at.
Taking into account the pros and cons of these programme options, according to Nesta, most startups consider the contribution of an incubator or accelerator as having a significant impact on their success. Involvement is correlated with higher survival rates, increased growth in employee numbers and higher raises during funding rounds.
Whether you choose an incubator, accelerator, or to go it alone, it’s worth noting billionaire entrepreneur Mark Cuban’s words when he says: ‘don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.’
For more information on the specialist support available for early stage science and tech businesses that we offer or to find your nearest Bruntwood SciTech location, click here.