Startup 101: Accelerators vs Incubators: What’s the difference?

Maxine Buchert
February 17, 2022

Accelerators and incubators are these innovative concepts that have become super popular in recent years, helping properly kickstart ideas into actual business plans and concrete objectives. These two programs can easily be confused with each other, but can actually help you in successfully securing investments from investors and grants.

So, what’s the difference between these? The best place to start is by understanding business incubators.

You might know incubators as these machines that help babies in maintaining their body temperature and assisting them in the very first days of their life. Business incubators are about the same concept: they help startups at the very beginning of their life, essentially before they actually become proper self-sustaining companies.

Some of the main issues that come with creating a startup is that founders usually have few resources, funding, and a whole lot of issues to overcome and paperwork to understand before launching. Incubators help decipher and support startups through this process, preparing them to be scalable and well-connected before leaving the nest.

Business incubators are programs that might provide actual office space, management training, and even VC financing. Because incubators are so all-inclusive, getting the possibility to be in one can be challenging.

Some examples of top startup incubators around the world include

  • Y Combinator (USA)
  • Techstars (USA)
  • 1Kubator (France)
  • AUC Venture Lab (Egypt)
  • Venture Catalysts (India)

How do you get selected into an incubator?

Getting selected into an incubator can be a challenge, just like with an accelerator. You can find applications to join them online and they usually ask a variety of questions about your business, what makes it unique, and your business plan. If you don’t have a business plan set out, no stress! We’ve got you covered in this article.

Businesses that get selected into incubators usually

  1. have a great idea
  2. a realistic market to sell to
  3. and some kind of plan to implement their ideas.

Luckily, incubators are meant mostly for businesses that are super early in their development process, so having really concrete plans is not crucial. Incubators are designed to help you figure out those concrete plans.

What happens in an incubator?

Incubators are a fantastic way to develop your business plans, brainstorm ways to improve your business idea, and meet plenty of new, like-minded people. Incubators are a concentrated program that usually takes a few weeks to months to finish.

Why do incubators exist?

Although it’s easy to see why businesses love to join incubators, it might be a bit harder to see why incubators even do these activities since it doesn’t seem like they get something from it. The answer is quite altruistic actually: by incubators supporting businesses, they’re supporting their community, which in turn will probably create more businesses. Incubators thus can be funded by the government and universities to start off with, but may also take an equity stake in the startups they’re supporting.

To summarise, incubators are helping to bring ideas to life. They’re there to support businesses in the very early days and help them develop a foundation.

Incubators are essentially boosting startups by providing all the initial necessities they need. Accelerators serve a similar purpose of boosting startups but in a different way.

What are accelerators?

Accelerators provide some kind of support to businesses, such as through a mentorship program. These offerings happen at the very beginning of the startup journey. Accelerators usually offer their services to promising startups after they’ve demonstrated that their MVP (Minimum Viable Product) has potential.

Startup accelerators are usually privately funded and that’s one of the biggest separations from business incubators, which are government funded most of the time. Another big difference between accelerators and incubators is that accelerators are open to all to apply to, but can be really hard to get into.

Here are some of the top startup accelerators in the world:

  • Vendep Capital (Finland)
  • Station F (France)
  • Kickstart (Switzerland)
  • Akro Accelerate (South Africa)
  • Entrepreneur First (Singapore)

How do you get selected into an accelerator?

Accelerators work in a similar way to incubators in terms of who gets accepted. Overall, it seems that great business ideas paired with great business plans are really the key to getting selected. On the side of those seeing who gets accepted and who doesn’t, they’re really investing into a team of people who know what they’re aiming towards and have a good idea of how to get there.

What happens in an accelerator?

Even if the selection process for accelerators and incubators is similar, the actual function and goals of each differs. Accelerators are focused on boosting already established companies still in their early stages, giving them some oomf for the next stage of their growth journey. The companies that join accelerators are usually scalable. This means that they have the potential to grow exponentially and quickly, much in the same way big tech giants like Google and Meta have.

In simple terms: accelerators accelerate growth. Startups using accelerators already have the foundations, but the focus is to speed up their growth.

What are the disadvantages of incubators and accelerators?

While incubators and accelerators seem to be these fantastic and quick ways to grow quickly and gain connections, there is a major drawback that stops some from wanting to participate in the first place.

For starters, these programs usually ask for equity from startups as a form of payment. This is one of the reasons they’re only selecting the best of the best: they want to ensure they’ll end up getting their money’s worth. Do your research in advance because some incubators and accelerators don’t take equity, so if that’s something you’re worried about it’s worth looking into. No two accelerators or incubators are the same!

Another issue with accelerators and incubators is that they’re usually heavily focused on technology, like fintech and healthtech. The reason for this is because these areas have a lot of money and that’s what attracts the most ideas and the interest of those running the incubators and accelerators. This can cause problems with networking and resources: your business might not have to do with these areas and you might not gain much from joining these programs as a result.

Finally, incubators and accelerators are highly focused on achieving large growth in a short amount of time. This plan might not be suitable (or even wanted) by everyone: some startups benefit from having a slowly built foundation for more sustainable growth. Going off like a firework might work for some, but not all.

PSA about diversity and inclusion with business incubators: traditionally startups have been more difficult for people of colour and women, so incubators and accelerators have been made with these challenges in mind.

Some black business accelerators and incubators include:

  • Somerset House
  • Hutch, specifically focused on supporting women and minorities
  • Minority Venture Partners Accelerator
  • Manos Accelerator