Three key differences between accelerators and incubators

Last updated: 13 August 2024. 

If you're in the process of making your startup idea a reality, chances are you're looking for a bit of help to get things off the ground.

Accelerator and incubator programs exist to help ambitious founders like you get where you need to be. But what do they do and which one is best for you?

For many early-stage startup founders, ‘accelerators v incubators’ is a decision to sweat over. Your choice will help to shape the future of your business, so choosing wisely is essential.

Let’s explore the differences between the two, to help you come to a decision.

What's an incubator?

More often than not, startup incubators are non-profit organisations with ties to business schools, universities or governmental bodies. They exist to help startups develop their ideas and build solid foundations for their business.

Incubators usually take on startups through a formal application process or through their network of personal advisors. Impress the advisors and you could be in for a win.

As the name suggests, incubators help startup founders to build on their ideas, find the right market fit, and discover valuable networking opportunities.

These programs are also designed to refine business plans and iron out any potential organisational roadblocks like intellectual property disputes.

Typical incubator programs are intensive, lasting between two and four months (some are a little more flexible). The process usually ends with a pitch or demo session where program participants can present their fully-formed business ideas to potential investors.

But, before joining an incubator programme, ask yourself:

1. Does the incubator program have guides or mentors that will offer genuine value?
   
   When choosing an incubator program, do your research and make sure the expertise on offer aligns with your specific goals, values, and ideas or you'll waste your time.
   
   
2. How much funding do you need right now?
   
   Most incubators focus on refining your plan and product(s). Incubator programs exist to make your startup product-ready rather than offering upfront investment.

So, if you’re looking for a financial boost to get things off the ground right now, an accelerator program might be more your speed.

What's an accelerator?

Startup accelerator programs help founders increase the pace of their commercial growth. Yes, as the name suggests, accelerators speed things up in a way that is controlled and focused.

Accelerators usually kick things off with a stringent application process. Many leading accelerator programs accept a mere 2% of applicants into their programs.

If you do make the cut, you will gain access to early-stage financial support in return for between 5% and 10% of your startup’s equity. You will also have the chance to connect with early-stage investors while getting personalised guidance from proven industry experts.

Many accelerator programs also run collaborative workshops so you can bounce your ideas off other talented startup founders. Accelerator workshops are valuable opportunities to gain a greater perspective on your products while expanding your professional network.

Much like incubators, accelerator programs usually conclude with a pitch or demo day where founders can present their refined plans or ideas to potentially captive partners or investors.

Things to consider before taking on an accelerator programme:

1. Are you ready?
   
   If you’re at the stage where you’re still developing your basic idea or hiring employees, an incubator may be a better option.
   
   
2. How quickly are you growing or planning to grow?
   
   If your startup is picking up the pace or you’re looking to scale swiftly, you’re probably ready for an accelerator.
   
   
3. Are you prepared to pack up and relocate?
   
   Many accelerators are fixed-term (two to three months) and require participants to work from their offices or HQ. If relocating is an issue, not all accelerator programs will be a good fit.

Accelerators vs incubators: the key differences

There are crossovers between accelerators and incubators. Both programs will help you develop your startup and get you ready to break into the right markets for your products or ideas.

The differences between the two models boil down to three things: location, funding and readiness.

If you have a minimum viable product (MVP) and you’re looking for immediate funding to continue scaling, an accelerator will likely make a good fit.

If you’re in the throes of forming your startup and fleshing out your big idea, an incubator could prove beneficial as you will gain the mentorship needed to refine your plans and define your commercial direction.

Incubators are typically more flexible when it comes to location where many accelerators will ask you to set up shop at their offices.

Tip: Both accelerators and incubators offer their services and resources in return for an equity stake in the business. So, it’s always working through these terms with a fine tooth comb before making any firm commitment.

Choose wisely

We hope this guide helps you decide which startup program will best suit your needs. For more professional pearls of wisdom, check out our many resources.