Compared: incubators, accelerators or other help to start-up

Inventors and entrepreneurs who have taken the decision to commercialise their idea will come at a certain point to the question, where to find help in starting up, finding the right advise, mentors, resources and funding so they can properly start building or, at a later stage, scaling their startup business.

For entrepreneurs, the range of possibilities is broad, and whatever option they choose, there will be PROs and CONs to consider. Do they just want to start on their own, participate in an entrepreneur's curriculum, self-study, join an incubator, accelerator or find other ways to reach their objective of building a successful business or commercialise their solution? Although finding funding is mentioned by first-time entrepreneurs as one of the top challenges in order to succeed in early stages, this is just one checkbox on the list of support entrepreneurs need. Beside funding, they will need human and physical resources to build a prototype, knowledge and help to create a solid business plan, mentors who provide advice concerning intellectual property protection, regulatory compliance and potential partners who are willing to share risks by supporting the endeavor with know-how, network, funds, market access or more.

Due to the fact, that first-time entrepreneurs have limited resources, funds and energy, with many of them having their full-time job or other constraints when they start up, it is crucial for them to find the right help fitting to their needs. As very often in life, it is a hard call, of which consequences many entrepreneurs can only judge once they have made their good or bad experiences.

Many startups hope to get accepted by a world-class incubator or accelerator providing them the chance to pitch prominent investors, but often they don’t really know which fit to their needs best and which added value these provide.

In this blog we would like to help entrepreneurs to answer questions which are often being raised when starting up:

1. What fits better to my needs, joining a business incubator or a startup accelerator?
2. Which any other options might exist which help me to take the my business forward?

1 What fits better to my needs, a business incubator or a startup accelerator?

In short, incubators focus on early-stage entrepreneurs who are in the ideation or early development phase and do not have necessarily yet a developed product, a registered business or a solid business model. Accelerators' focus on the other hand is speeding up the growth of established businesses that already have at least a minimum viable product (MVP), first customers and a confirmed product-market fit.

A business incubator aims at assisting startups to build and mature their proposition or business turning an idea into a viable business plan and get ready for investment, launch and beyond. It provides services entrepreneurs and new businesses usually need in the starting phase, such as management, training, mentoring, access to investors, working capital or office space. Typically an incubator provides their incumbents a shared office space in a co-working environment, tutoring by business mentors and experts, with association with the nearby region. Incubators offer entrepreneurs development programs that help them getting their business to the next level, according to the business' or idea's maturity.

Startup accelerators provide early-stage startups that already have a Minimum Viable Product (MVP) and reached a certain level of product-market fit with education, resources and mentorship needed to speed up in a few months what otherwise might take several years of slow growth. In a business accelerator, a startup will work in a short 3-6 month timeframe intensely on getting their business to the next level, by refining its business model, work on its market strategy, marketing, further improve the product-market fit, address intellectual property issues and network with mentors, other startups, experts and investors. 

In the following we have condensed what are the main differences between incubators and accelerators and how they address the needs of entrepreneurs in different startup phases.

Joining a startup incubator

Usually incubators select their incumbents by an application or selection process or through informal channels of their ecosystems. As incubators often focus on specific market or industry verticals (e.g. an incubator that is supported by the energy industry may only be looking for energy-focused startups), startup maturities, geographic areas, certain technologies or business types, their application process is tailored to their scope and applicants need to meet these criteria in order to get accepted. Some incubators run their specific tests which are evaluating the candidates' motivation, skills, experience and attitude instead of focusing on specific verticals.

When is a startup incubator meaningful for you?

An inventor can have a brilliant idea that solves a real problem or has excellent utility, but turning it into a profitable business is a different story. Often, young entrepreneurs struggle to execute their business plans and commercialise the idea, as most do not have a business background or previous experience. This is where incubators can help, nurturing an early stage idea and helping the inventor to turn it into a viable business model.

For early-stage startups being still in their ideation and bootstrapping phase, incubators can make sense. Through the incubation program they can mature to a stage when they can attract clients for their products, start earning money and so getting to a stage where they can attract investment for further growth. More established startups who have already a business angel involved or have raised Series A or higher rounds might be already beyond the stage where they can benefit most from incubators. For the last, joining a startup accelerator would be the more appropriate way forward.

Joining a startup accelerator

Most accelerators select their incumbents by an application or selection process or just like some incubators through informal channels of their ecosystems. Their application process is tailored to their scope and applicants need to meet these criteria in order to get accepted. Some accelerators admit candidates who pass their tests evaluating the candidates' behaviors which they consider to show potential for talent and success.

Accelerator programs are open for startups typically in spring or fall cohorts and have limited number of seats per program. Most accelerators run a multi-stage application process starting with an initial application by filling and submitting a form providing information about the startup’s idea, team, market, some KPIs, and other criteria followed by a pre-screening assessing maturity for investment. Some accelerators conduct with pre-selected founder teams interviews so they learn to know them and can assess their potential and "fundability". The last stage of the selection includes some due diligence checks evaluating company and revenue statements, legal and IP issues plus their previously made claims.

When is a startup accelerator meaningful for you?

For early-stage startups being still in their ideation and bootstrapping phase most accelerators won't be the right place (they are better supported by incubators, see above). Some are offering curriculums for early-stage entrepreneurs but this is more the exception. Accelerators require their applicants to have a validated product fitting to the market need, initial traction and an established team, in some cases also a certain number of employees and proven previous investment rounds. They won't admit startups in very early stages and often focus also on specific geographic areas, certain technologies or business types. Joining an accelerator may not be ideal for solo entrepreneurs working on their idea part-time beside another full-time job or not being able to spare 20 to 40 (or more) hours per week over several months for delivering the accelerator's curriculum requirements. During the curriculum program the candidates will go through regular checks and will be rated on an ongoing basis until the completion of the program, when the accelerator's investment committee members will decide on in which startups they will invest.

Roughly 25-70% (depending on the accelerator) of the startups that make it to the final phase receive funding. More established startups who have already a business angel involved or have raised Series A or higher rounds might also be already beyond the stage where they can benefit most from accelerators. For these joining an accelerator post-grad or later stage program would be the more appropriate way forward.

Pros and Cons of startup incubators and accelerators

You may have already sensed from the above some of the relevant criteria helping you to decide on joining a startup incubator or accelerator. In the following we have condensed some of the PROs and CONs that can help you preparing your decision:

PROS

• Incubators often offer workspace that saves entrepreneurs some money in the early stage while they grow.
• Incubators provide access to administrative support, labs, development or prototyping tools and sometimes industry-specific expertise assisting inventors with advice needed during starting up. This support includes often also access to mentorship, resources of partners and companies sponsoring the incubator, and sometimes capital.
• Incubators and accelerators provide specific development programs, workshops, exercise for pitching to investors and exchange with peers and mentors.
• Incubators and accelerators often have a network of investors who trust the incubator and offer the right startups funding, once they successfully finish the curriculum program.
• The professional structures and curriculum programs can assist entrepreneurs to keep focused and develop in the right direction.
• Post-grad programs can further help the startups who successfully finish the curriculums to leverage on the incubator's or accelerator's network.

CONS

Although not all incubators and accelerators operate based on the same model and with the same scope, there are differences which are worth evaluating before you decide to apply for an incubator or accelerator program. Some provide more or better-fitting services to your needs than others or have a higher specialisation in your industry. Some potential downsides worth evaluating:

• The application process can be quite stringent, sometimes very competitive.
• Most accelerators require a very intense, often full-time engagement of the founders from a few month up to one or two years, plus adherence to the often quite strict schedule of meetings and deliverables set by the accelerator, including many pieces of work applicants must comply with. A part-time involvement of the entrepreneurs often will not be sufficient to successfully close the curriculums.
• During the curriculums entrepreneurs will be regularly assessed and must be open to criticism and yes, also ready to be grilled on front of their co-applicants, which prepares entrepreneur for the tough business world, but, which sometimes can be perceived as high pressure especially on young founders.
• Although some incubators and accelerators offer their programs for low cost or even free of charge, often they take a share of 2-10% in your company whether you finish the curriculum or not, which might hurt at a later stage your cap table.
• Many incubators are focussing on a specific region and operate based on a face-to-face model requiring physical presence. The Covid-19 pandemic forced many of them to run their programs virtually, with only a few of them having efficient digital environments allowing effective remote collaboration and interaction with their ecosystem.

Selecting a startup incubator or accelerator is an important decision for an entrepreneur, as by joining their program they invest substantial time and equity for its resources and expertise. Our recommendations for selecting a business incubator or accelerator before you decide a program to join:

• Your business' maturity - startups with proven product who want to accelerate their growth and need funding, an accelerator is the best option. Earlier-stage entrepreneurs, or solo first-time founders, are better supported by an incubator.
• Your needs - check what your expectations and needs are and whether joining an incubator or accelerator is the right next step for you in your entrepreneurial journey. If you are unsure, get advice from an experienced mentor or advisor.
• Your constraints - check whether you are able to invest the required time and equity.
• Offerings - Check the offerings to see whether they match with your needs. Compare the incubator's or accelerator's application requirements, scope, ecosystem and their mentor/expert network to decide, whether their services and value added match your business requirements and whether they offer a good return on your investment.
• Their curriculum program – assess the program's schedule and objectives, the time required to be invested for preparation and participation including learning time, coping with tasks and deliverables they demand, and whether you can invest the required time on the long run through the program, even beside running your daily job or startup operations. 
• Track record – Evaluate references and how other businesses performed with the support of the incubator/accelerator and which benefits they confirm to have reached by going through their program.
• Return on investment - Check the cost related with the incubator's/accelerator's program. Which equity does the incubator take, what are their terms, what cost do you save compared with other resources (workspace, equipment, expertise, network etc.).
• Location – whether they require physical attendance and which remote collaboration means do they offer. If physical attendance is required, evaluate the time and financial constraints a relocation or temporary commuting would pose on you.

2 Which any other options might exist which help entrepreneurs take their business forward?

As highlighted above, joining an incubator for early-stage entrepreneurs, and a startup accelerator for startups with an MVP, has many advantages and can help the business to establish and scale. As the PROs and CONS from above show, there is a group on entrepreneurs for whom they would not be ideal. These are entrepreneurs or inventors who:

• are solo entrepreneurs in an early stage,
• start their new business part-time, beside a full-time job,
• are not admitted by the incubator's or accelerator's selection process,
• do not want to invest the money, time and shares in an incubator or accelerator,
• cannot adhere with face-to-face attendance in a local cohort or strict curriculum schedule requirements
• want to build their business in their own pace and not dictated by a time schedule which is preset by the accelerator
• want rather to focus on development as on running their own business and prefer licensing their intellectual property rights instead of maintaining control of the commercialisation.

The above group of entrepreneurs might prefer some new alternate possibilities, like e.g. online idea commercialisation platforms, which can be used instead of, or complementing incubators and accelerators without the constraints the lasts set on their incumbents.

An online idea commercialisation platform can outcompete traditional startup incubators and accelerators in several ways:

1. Accessibility: As with innovation summits, an online platform can be accessed from anywhere, making it more accessible to entrepreneurs who might not have the resources to travel to a physical incubator or accelerator.
2. Cost-effectiveness: Incubators and accelerators often require startups to pay fees or give up equity in exchange for their services. In contrast, an online platform can be more cost-effective, allowing entrepreneurs to retain ownership of their ideas while still accessing valuable resources and support.
3. Broader range of resources: While traditional incubators and accelerators may offer access to physical resources like office space and equipment, an online platform can offer a broader range of resources, including mentorship, coaching, and access to a global network of experts and potential customers.
4. Flexibility: An online platform can be more flexible than a traditional incubator or accelerator, allowing entrepreneurs to work at their own pace and on their own schedule. This can be especially valuable for entrepreneurs who are juggling multiple commitments or working on ideas outside of traditional business hours.
5. Further services: An online platform can offer valuable services like offering their intellectual Property for sale, licensing or partnering with corporates that can help entrepreneurs commercialise their ideas without necessarily building an own business.

Overall, an online idea commercialisation platform can offer entrepreneurs a more accessible, cost-effective, and flexible way to develop and commercialise their ideas. By leveraging the power of technology and providing a broader range of resources and support, online platforms can help entrepreneurs to bring their ideas to market more quickly and effectively than traditional incubators and accelerators.

One of these online idea commercialisation platforms is Sciony, providing entrepreneurs guidance, resources and network, similar to those of incubators and accelerators but without the above mentioned constraints. Sciony is ideal for all first time founders who want to keep full flexibility and still have access to mentorship, expertise and funding but also for all others who want to combine an incubator's or accelerator's services with the benefits which a global, online platform provides for many objectives incubators and accelerators do not provide. See below a comparison of Sciony's offerings versus those of Incubators and Accelerators.

There are pros and cons to each of these options. Depending on the level of control you want to keep over your idea and its commercialisation and the investment you are ready to make, you will need to evaluate these more in detail. If you do not want to maintain control of the commercialisation and rather focus on development as on running your own business, licensing your Intellectual Property (IP) on Sciony might be the right option for you.

About Sciony

Sciony Ltd. is a London-based company that runs a global online innovation ecosystem open for entrepreneurs, startups, corporations, universities, incubators and accelerators as well as investors and experts supporting the innovation lifecycle. Sciony provides its members easy-to-use tools and expertise such as the "Sciony Logbook“ which guide entrepreneurs and innovators to effectively prepare, document and commercialise ideas, market innovations or offer Intellectual Property for sale without any geographical, maturity, or time restrictions. Moreover, leveraging Sciony's functionalities, entrepreneurs can create a comprehensive business plan and investor pitch for their idea in a safe and secure place. Corporations and investors can source locally and internationally well documented propositions and support startup growth. Sciony is the commercialisation tool for everyone with great business ideas and smart solutions! 

Sign up for free and start commercialising your ideas today, just click here https://sciony.com/register/member/free.