By Matt Foley, Director of Startup Incubation
Many startups these days know that it is a smart move to join a startup incubator or accelerator to stay motivated and accountable with a community of fellow founders, find mentors and advisors, get connected to funding sources and more. While you can get by without joining one, incubators and accelerators can be a significant catalyst to your growth and eventual startup success.
However, many entrepreneurs are confused as to the difference between a “startup incubator” and a “startup accelerator.” Even NextCorps as an organization can be a bit confusing to the startups we serve, since we operate both a startup incubator as well as multiple co-branded startup accelerator programs!
To help clear things up, we’ve created a handy table (below) that outlines the differences between incubators and accelerators in a single place.
As you review, note that some of the terminology and definitions even among people in the “startup industry” are contested, so this is our interpretation based on commonly accepted terms and how we run our incubator and accelerator programs here at NextCorps…
|Duration||Ongoing, no fixed start or end date, although startups “graduate out” of the incubator eventually upon reaching a significant milestone||Typically finite in duration, lasting anywhere from 3-6 months (occasionally up to 1 year, but rarely past that)|
|Startup Stage Served||Idea stage through to growth stage, with a few more mature startups still involved post-graduation||Seed stage (prototype generally developed with some revenue and traction) through to growth stage|
|Cohorts||Rarely cohort-based due to varying stages and types of startups served||Almost always cohort-based, with startups at a similar stage in the cycle|
|Startup Served||Generally many startups served at once (NextCorps currently has over 60 active in incubation, as one example)||Typically smaller cohorts of around 10 startups, although some programs like Y Combinator have scaled far beyond that|
|Vertical or Horizontal Focus||Both, although commonly horizontal and serving a range of startups types (e.g., hardware, software, life sciences, etc.)||Moving more and more to being vertically focused around an industry or technology trend (e.g., VR, blockchain, etc.)|
|Curriculum||Generally no pre-defined curriculum, although educational sessions will be offered from time-to-time||Often include a structured curriculum that all teams in the cohort go through at the same time|
|Equity Position||Mixed — some incubators take equity in the startups while others do not (NextCorps does not take equity as part of our incubation program)||Almost always take equity unless the accelerator is sponsored by state or federal funding sources|
|Physical Resources||Typically have a physical location with offices, coworking space, conference rooms, etc.||Sometimes have a physical location or occasional in-person gatherings, although moving to mostly virtual as a result of COVID|
|Funding Resources||May have access to non-dilutive grant opportunities, as well as connections to investor networks||Often provide small amounts of funding directly upon entering the accelerator, with investor networks for follow-on|
|Support Resources||Provide coaching, mentorship, office hours with service providers, access to Entrepreneurs-in-Residence, etc.|
|Form of Organization||Many incubators are organized as non-profit initiatives (though not all)||Almost always a for-profit initiative, although some are public/private|
|Funding Sources||Many incubators are funded by a mix of regional/national public funding, as well as private funding and grants||Typically privately funded, although public funding models do exist as well|
|Internal Goal||Due to public funding sources, many incubators are focused on job growth to support regional economic development||Focused on growing the value of the portfolio of companies that have gone through the program|
Hopefully this shed some light on the differences between incubators and accelerators!
If your startup is located in or around the Rochester, NY region, be sure to check out the incubator at NextCorps. If you are outside the region, you may consider exploring the various accelerator programs we offer.