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Rajnish SharmaTop Contributor
Content Creator || Android App Developer
Asked a question 4 years ago

What is the difference between startup incubators and accelerators?

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Rajnish SharmaTop Contributor
Content Creator || Android App Developer

The terms “incubator” and “accelerator” should not be used interchangeably. I see a clear distinction between these two concepts, primarily based on the development stage of the new venture they are serving. Steve Blank argues that the development of a new venture can be divided into a search (for a business model) and an execution (of the business model) phase.
Referring to these two phases, incubators mainly support new ventures during an earlier search/discovery/exploration stage with the aim to find a repeatable and scale-able business model. Incubators encourage their tenants to engage in quick iterations through trial-and-error and frequent feedback loops from early adopters. Hence, incubators are as test bed for experimentation, assessment and refinement. At the end of the incubation phase the tenant’s prototypes (service or product) have been tested/validated in the market (cp. product-market-fit) and, ideally, the new venture reaches some traction (cp. first users or customers, revenue, etc.).

Accelerators, on the other hand, are institutions that “accelerate” the growth of new ventures. The prerequisite to enter an (usually time-limited) acceleration program is a working prototype and initial traction on the market. By providing specific services, resources and contacts and accelerator enables the new venture to grow its business (i.e. increase its users/customer base, generate more profits) and to professionalize its organization in order to lay the foundation for scaling of the business.

Incubators say, "We'll give you space for free or cheap. That will give you a great start."

Accelerators say, "We'll give you mentors and a little bit of seed capital. That will give you a great start. Oh, and we've got some co-working space, but that's minor."

Incubators say, "We'll make intros to great PR folks and lawyers if you want -- it's optional."

Accelerators say, "We'll bring lawyers and marketing folks into give you disgustingly actionable talks and allow you to ask them whatever you'd like. But you don't have to hire them. It's just part of your experience, because we know you don't know what you don't know."

Incubators say, "Stay as long as you want. We want to see you succeed."

Accelerators say, "You've got 8 or 12 or 15 weeks to gain some serious traction. But we expect massive iteration out of your team. Because we want to see you succeed."

Incubators say, "We foster small business creation with a joint partnership between the county, the state, and a consortium of regional nonprofits dedicated to sparking job and economic growth" or some stupid fucking hogwash like that.

Accelerators say, "We fund you, connect you, and drown you with mentoring and knowledge. We help you kick ass. It's our money, so you'd better kick ass."

Incubators say, "Sign on this dotted line which keeps you here in Kansas City or Atlanta or Calgary for 5 years."

Accelerators say, "Go wherever you think you can kick ass. We've always got your back."

Incubators say, "Clean tech? It's popular. We'll help incubate them!"

Accelerators say "Clean tech? Astoundingly tough to launch. No ROI. We can't go near 'em."

It's a philosophical difference, and it's not a small one. The concept of an incubator has already died, the term has just never had a proper burial. I wish it would.