If you have only recently gotten interested or involved in the world of entrepreneurship and startups then you may have heard terms like incubator, pre-incubator, accelerator, and hatcher being thrown around and you may not have understood what was being referred to or how they differed from each other. In this “Intro to Entrepreneurship” article, we will focus on explaining what incubators and accelerators are, how they resemble each other, and how they differ.
The reason that the terms “incubator” and “accelerator” are often used interchangeably is that they both guide and help startups grow by helping them improve their business models and strategies in order to become valuable to investors. However, as indicated by its name, incubators “incubate” disruptive ideas and build them into business models. Accelerators, on the other hand, “accelerate” the growth of an existing business. So, while one deals with innovative ideas, the other deals with businesses in need of advancement. Accelerators are also usually funded by an existing company, meanwhile, incubators are often independent but can also sometimes be sponsored or run by venture capital firms, universities, etc...
Accelerator programs often have a set time frame, during which businesses network and work with mentors. Usually, an accelerator will invest capacity in the businesses in its program in exchange for a specific amount of equity. On the other hand, unlike the close-ended or rigid structure of many accelerator programs, incubators are often more open-ended in their time frame or structure, and can sometimes be more long-term than accelerators.
It is quite understandable why one might confuse incubators with accelerators, especially that not every incubator will follow the exact same formula and the same obviously applies to accelerators. However, it is important to be able to distinguish them from each other and, thus, understand why one might work more for you than another.