Unlike the bad old days, where funding happened ones in a blue moon, things have changed today and we often hear startups getting accelerated or incubated, and we tend to assume that both are the same. However the terms sound similar and are interchanged often instead of using the correct one. Although both of them help in the growth of a startup, accelerator and incubator widely vary.
Now it is really important for you to know the differences between the two entities as it provides you with right knowledge about the startup ecosystem. Now, let’s glance through some of the key differences between an accelerator and an incubator and highlight their roles played in a startup, as compiled by Inc.
In simple words, accelerators are nothing but a special program, where startup at their initial stages go and enroll to. The program may last up to 6 months, and during the program, the accelerators nurture startup ideas and help building it to a stage where it can stand on its own. The accelerators may even provide small amount of funds to startups to capitalize on the idea and after the end of program the startup graduates itself to run its own business.
To give more insight on accelerator, Paul Bricault, cofounder of Amplify, a Los Angeles-based accelerator defines it as “An accelerator takes single-digit chunks of equity in externally developed ideas in return for small amounts of capital and mentorship. They’re generally truncated into a three to four month program at the end of which the start-ups ‘graduate,’” he says.
After the startup develops its idea, incubator comes into the picture. Here, an incubator guides the startup to manage the idea which is already been developed. An incubator provides managerial support to a startup, and its program takes much longer than an accelerator. Its external management team helps a startup to kickstart their business and to venture into real market. It provides funds, and even provides space and man power, for startups to run the business. However, it would take a specified percentage from the profits, for rendering its service.
“Those ideas can gestate for much longer periods of time and the incubator takes a much larger amount of equity [compared to accelerators],” says Bricault.
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