Incubator vs. accelerator: Which is better for startups?
Incubator vs. accelerator: which is better for startups?
An incubator suits early-stage startups that need time, space, and guidance, while an accelerator suits startups with a product that are ready to grow fast for equity.
- Incubators nurture ideas over one to two years, often without taking equity.
- Accelerators run short, intense programs and invest for a share of the company.
- The right choice depends on your stage, timeline, and funding needs.
Getting your startup up and running is no easy task. It can feel overwhelming fast, since you must weigh many factors. For example, you pick a product to sell, a business model, and a source of funding.
Luckily, startup owners have many places to turn for advice and funding. So it is just a matter of choosing the right program for you.
However, deciding which program to join can be tricky. For instance, weighing angel investors versus venture capitalists, or incubators versus accelerators, can get confusing.
In this article, you will learn which one, incubator vs. accelerator, fits your startup best.
Incubator vs. accelerator: Incubator definition
Business incubators are special programs built to help startups succeed. So they support a startup’s growth with key resources, such as work space, equipment, and advice.
Non-profits often run incubators, like local colleges and universities. Still, some for-profit groups like venture capital firms run them too.
For-profit incubators give winners seed capital in exchange for a share of company equity.
Business incubators have existed as early as around the 1950s. Since then, the model has changed many times to become what it is today.
Each incubator may serve just one industry, such as fashion, food, fintech, or education. However, some are generalists and take startups from any field. To see the full picture, browse the main startup types.
Incubator vs. accelerator: Accelerator definition
Like incubators, accelerators also aim to help startups win.
However, accelerator programs are more intense than incubators. So they are also stricter about who they accept.
This boot-camp-style program gives winners coworking spaces, seed funding, and other resources. Plus, it opens a network of proven pros and fellow founders.
In addition, accelerators offer seminars and workshops led by successful owners.
Unlike incubators, which rarely invest, accelerators give winners seed capital for a share of the company.
Compared to incubators, accelerators are fairly new. In fact, the world’s first accelerator, Y Combinator, was founded in 2005.
Accelerators are often run by existing firms. So they sometimes serve as the next step for startups that graduate from incubators. If you want to compare options, our list of the best startup accelerators is a good start.
Incubator vs. accelerator: Which program is fit for you?
Both incubators and accelerators serve startups and give them resources. However, the similarities end there.
Key differences set the two apart. As a result, one may suit certain startups better than the other.
So to find your best fit between an incubator vs. accelerator program, weigh the factors below.
Timeframe
Incubators and accelerators run on different timeframes.
As noted, accelerators are intense and work like boot camps for startups.
Because they speed up a startup’s growth, these programs usually last just three to six months. During this time, progress that would take years can happen in months.
In contrast, incubators stay with winners longer, often one to two years.
Your startup’s development stage
Both programs help startups. However, they enter at different stages of a startup’s growth.
Incubators usually focus on early-stage startups. So they suit firms that have yet to set a clear business model.
On the other hand, accelerators only take startups with at least a minimum viable product or MVP.
Capital needs
As noted, most incubators are non-profits. So they rarely ask for equity in return for their help.
However, they also will not give startups capital.
In contrast, accelerators usually invest in winners and take a share of equity.
Incubator and accelerator programs worldwide
Since the first programs launched, many more have sprung up across the globe.
Today, there are thousands of incubator programs and hundreds of accelerators worldwide. As a result, founders have plenty of options to weigh. The latest startup statistics show just how fast this space grows.
There are also outsourcing providers like Clark Staff that now offer startup incubation services.
Below are just a few of the world’s top incubator and accelerator programs.
500 Startups (Accelerator, US)
This flagship program comes from a San Francisco-based global venture capital firm. It runs for four months. So startups get access to the firm’s vast resources.
Advanced Technology Development Center (ATDC) (Incubator, US)
Founded in 1980, ATDC has helped more than 130 companies and created millions in revenue. Plus, the tech hub has raised over a billion dollars in outside funding.
Blenheim Chalcot/BrightBridge Ventures (Incubator, UK)
BrightBridge Ventures is Blenheim Chalcot’s fintech incubation arm. Blenheim Chalcot has years of experience helping over 40 startups win.
Copenhagen Fintech (Accelerator, Denmark)
Though an accelerator, Copenhagen Fintech began as a non-profit. It was set up by Finansforbundet (the Financial Services Union of Denmark), the City of Denmark, and Finansradet (the Danish Bankers Association).
Betaworks (Incubator, US)
This New York-based studio and incubator backs startups in software, AI, and other tech fields. So it builds and invests in early firms that tackle problems in a connected global economy.
F10 Incubator and Accelerator (Accelerator/Incubator, Switzerland)
This accelerator and incubator is an innovation of Switzerland’s SIX. Notably, SIX is among the most advanced stock exchanges in the world.
Plug and Play Tech Center (Accelerator, worldwide)
This global program serves many major industries. For example, it covers agtech, energy, fintech, food and beverage, and health. So it also helps startups prep their pitch to Silicon Valley investors.
TheFactory (Accelerator/Incubator, Norway)
Founded in 2016, this top Norwegian program serves startups in finance and real estate. Since then, TheFactory has fast-tracked over 200 companies and nurtured more than 45.
Venture Catalysts (Incubator, India)
Venture Catalysts is the largest incubator in India and across Asia. It is also India’s first integrated incubator. So it serves startups in fintech, SaaS, food and beverage, health tech, and insurtech.
Y Combinator (Accelerator, US)
Widely seen as the top accelerator in the world, Y Combinator has fueled household names. For example, it backed Airbnb, Dropbox, Reddit, Twitch, and Instacart.
Frequently asked questions
What is the main difference between an incubator and an accelerator?
An incubator nurtures early ideas over a long time and rarely takes equity. An accelerator runs a short, intense program and invests for a share. So the stage and the deal differ most.
Which is better for an early-stage startup?
An incubator usually fits early-stage startups best. So it suits founders who still need to shape a business model. An accelerator is better once you have a working product.
Do incubators take equity?
Most non-profit incubators do not take equity. However, some for-profit incubators do give seed capital for a share. So always check the terms first.
How long do accelerator programs last?
Most accelerators run three to six months. So they pack a lot of growth into a short window.
Can a startup join both?
Yes. Many startups start in an incubator, then move to an accelerator. As a result, they build a base first, then scale fast.
Key takeaways
- Incubators nurture early startups over one to two years, often without equity.
- Accelerators run short, intense programs and invest for a share.
- Your stage, timeline, and funding needs guide the right pick.
- Accelerators want a working product or MVP; incubators do not.
- Some startups use an incubator first, then an accelerator to scale.
Independent
