Incubator vs Accelerator: Which is Better for your Startup Success? 🚀

Everything you need to know about hubs, incubators & accelerators to make your Startup successful.
Incubator vs Accelerator: Which is Better for your Startup Success? 🚀
By
Kyla Göbel

Startups are risky. There are so many factors that make or break a startup, from finding the perfect investors to finding the perfect employees. We all know Silicon Valley to be the perfect hub for startups, but is Silicon Valley status really the only hope for a startup to succeed?

The answer is no. About 87% of successful startup incubator and accelerator programmes are elsewhere in the world!

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Have you ever heard of innovation programs that offer startups the opportunity to grow their businesses, and develop scalable and impactful business models? Hubs that have the perfect environment for your startup to succeed? Well, I’d like to try and help you in finding the right one for your company!

Large unicorn startups, such as Airbnb and Uber, have taken a billion dollars or more in debt in order to become more successful.

Let’s begin at the beginning👇

What is a Startup Hub

There’s a reason why Silicon Valley is famous for countless successful startups, major corporations, investors, and universities as well as startup incubators, and accelerators. This is because it’s considered to be the perfect startup hub.

San Francisco and Silicon Valley are the epicenters of entrepreneurship, home to 13.5% of all global startup deals.

What is this hub word I keep throwing in your face?

Startup hubs create a vibrant ecosystem for startup founders and an environment that encourages collaboration and information sharing among entrepreneurs, corporations and venture capital investors.

How do you identify these hubs though? Well, According to KPMG, the top factors that are important for a tech hub are:

  1. Modern infrastructure,
  2. An urban locale,
  3. At least one research-intensive university,
  4. Investment funding, and
  5. Available talent.

So, start looking at where you’re located 🗺 ️and with whom you’re associated.

What is Startup Accelerator

If you’re a startup fanatic you’ve probably heard of the company Y-combinator. If not - that’s okay. Let me fill you in: Y-combinator is the world’s most well-known startup accelerator program. 😉 What’s an accelerator, though?

Accelerators normally help startups at the beginning of their business.

They provide startups with tools that will help them internally as a team and of course, externally that will help them achieve seed or series funding.

In the end, they try to accelerate what your startup will only achieve or gain over several years into just a few short months.

What is a Startup Incubator

Incubators, on the other hand, invest in startups on a more long term basis, spending much more time and resources to design and build a structured and sustainable business model from the ground up. It’s also the perfect environment to develop and build your Minimum Viable Product (MVP).

Incubators invest in startups on a long term basis, spending much more time and resources compared to accelerators.

A great example of this is Launch Academy, a tech incubator that provides mentorship, resources, and a networking environment for entrepreneurs to launch, fund, and grow their startups.

Incubator vs Accelerator

The age-old question. Which one is better for your startup to become a part of? 🧐

Let’s look at the pros and cons 👇

Image source: Department for Business, Energy & Industrial Strategy

Incubators

An advantage of being a part of an incubator is that your startup business gets access to a wide range of financial capital alternatives. In addition, it also provides mentorship, networking, and expertise in your specific startup industry, as well as helps startups turn ideas into new businesses.

Sometimes these benefits can also be a disadvantage to incubators. Certain types of mentorships and networking with entrepreneurs may hinder the startup owner’s focus during the risky early stages of their startup and your idea might not always lift off.

Accelerators

On the other hand accelerators in general work extremely close with everyone involved in the startup, which is an advantage. Accelerators also match the partners and investors to fit with the chosen startup.

In accelerator programmes they also focus on the development of pilot projects for their startups to ensure growth and success. Accelerators try to provide a platform for the startups to grow fast while enrolled in the programme to increase the probability of receiving startup investment.

Y Combinator accepts about 1.5% to 3% of the applications it receives.

A disadvantage of accelerator programmes is that they are short-lived and won’t provide as much support as an incubator would over an extended period, however the short-term acceleration might produce better results in the long run. Another con is that these programs only accept a few startups every year and require equity in each startup they accept.

In the end, it depends on how developed your startup is and what type of support it will need to grow.

I can already hear your next question in my head… What do I have to do to be a part of an accelerator programme?

Don’t worry I’ve done the research for you👇

Checklist for your startup to be ready for an accelerator program

Are you ready for the next big step in your startup — a journey that will change your life forever?

1. Trillion-dollar startup idea?

The bigger the idea the more likely you will get noticed in your application. You also need to make sure that you are able to explain your idea so that it is easy to understand.

95% of accelerators seek B2B startups, while only 78% of accelerators look for B2C startups.

2. MVP

Your product/service needs to be completed, but that doesn't mean it has to be perfect. Launching a Minimum Viable Product shows how your idea can work in the real world, gives you time to get customer insights, and highlights the areas where you would want to improve your product/service when you apply to enroll for an accelerator programme.

68% of accelerator programmes accepted startups that already have a prototype in place.

3. Evidence

Are you growing as a business? Can you prove it? What is the likelihood of growth in your startup over the next 2 to 5 years? How many customers have you worked with? How many people are visiting your website? What’s your ROI? These are the things that you will need to provide when you’re filling in an accelerator application.

53% of accelerators accepted startups that already have some customers, even if some of those customers aren’t yet paying.

4. Your Team

You need employees. No one can run a startup on its own for long (#burnout!!). Your employees need to work full time or be willing to switch over to full time when being accepted into the accelerator.

18% of startups fail due to team problems such as a lack of domain knowledge, lack of marketing knowledge & plan, lack of technical knowledge, friction within the team, lack of motivation, and a lack of availability.

5. Network + Research

Do you have references from mentors and other founders who have gone through one of these programmes? Have you done your research on which accelerator will be the best fit for your startup?

"It’s OK to ask recruiters and hiring managers questions to see if their vision aligns with yours so you can run a successful business." — Stephanie Wells, Formidable Forms

6. The Pitch

If you get accepted to go through to the interview for one of these programmes, you need to be ready with your pitch. You need to know your business inside out. This means you need to know the metrics, stats, the vision, and how to overcome potential obstacles (check Point 3 again).

"Most tech startup people are so in the trenches of their product that they forget how to talk high level about who the tech is for." —John Murphy, eBike Generation

7. Accepted 🎉

If you get accepted you are one of few. Take this opportunity to expand your network in the startup realm. In addition, make friends — being an entrepreneur isn’t always easy and not everyone understands that part of the startup world.

Angel investors made up 47% of post-accelerator funding, followed by VCs at 32%, and 59% of all investors are located within 100 miles (160km) of the accelerators that graduate their startups.

With all that said, you might be feeling a bit overwhelmed. Where to start? I’ve listed a few of the best known accelerators for you to check out below.

List of Accelerators to Investigate

1. Y Combinator — Probably the most well-known accelerator in the world.

2. Launch— It’s a 14-week program, with 7 startups per cohort.

3. Techstars3-month accelerator programs of (usually) around 10 startups each cohort.

4. PioneerPioneer is a remote-first, global accelerator.

5. Entrepreneurs Roundtable Accelerator (ERA)Focuses on software-related startups to fund.

6. Forum VenturesThe Forum is focused on the future of SaaS.

7. Village Global AcceleratorBacked by some big-name founders, including Magic Johnson, Bill Gates, Jeff Bezos, and Diane Greene.

8. Founders InstituteA pre-seed startup accelerator program

9. MOX— A mobile-only accelerator serving mobile Internet users.

10. Gener8terEach cohort, invests in five startups who receive a concierge experience during a 12-week accelerator program.

Conclusion

If you don’t prepare yourself to succeed, you never will! Go and watch some testimonial videos by the people who have succeeded from these hubs and programmes. Take the time to put everything in place in your startup. To end off this blog I’d thought to leave you with this thought:

“For most startups at this stage, the best predictor of success is the founders. The most important parts of the application are the questions about the founders’ backgrounds and the most impressive things they’ve done. We’re looking for evidence that the founders are smart, effective, and determined.” — Sam Altman (Former President of Y Combinator)

About the Author

Kyla Göbel: A new writer, from Cape Town, who has a passion for music, photography, and people. She is also currently finding her way into the digital marketing sphere at Hi5. In addition, Kyla fundamentally believes there is a creative solution to everything in life, and that with hard work anything is possible.