The difference between business incubators and accelerators
Starting and running a business is challenging especially in today's economic climate. More than ever, the right support network for a small or medium-sized business can significantly improve the odds of success. This is where accelerator or incubator programmes can be incredibly useful and it's the reason that more and more SMEs rely on these programmes to assist with their growth.
But what is the difference between the two? What benefits do these programmes provide and which one is right for your SME?
According to Megan Wuite, an executive at B&M Analysts, though the terms accelerator and incubator are often used interchangeably, there are distinctions between them.
Accelerator programmes help SMEs that demonstrate potential for rapid growth with expert advice, training, mentoring, networking, and often financial support too.
“Accelerators work with business owners for a set timeframe to ‘accelerate’ their growth, and help build a business to the point where it is investment-ready and scalable,” Wuite says.
Incubators on the other hand are programmes that work with budding entrepreneurs at the conceptual stage of the business. Wuite explains: “Incubators nurture startups through the beginning phases of the business. They provide a conducive environment in which entrepreneurs can build on their ideas, determine the product-market fit and get investment-ready. They are the perfect platform for companies to set the foundations for their business growth.”
Here are three key differences between accelerators and incubators that SMEs should consider when choosing which programme is right for their business:
1. Stage of development
One of the key differences between accelerators and incubators relates to the company’s stage of development. Incubators are primarily focused on startups, while accelerators target scale-ups. While both options provide guidance and mentorship, the business stage alters the focus of that guidance.
2. Duration of the programme
Another differentiator between incubators and accelerators is the duration of the programme.
3. Investor Funding
Wuite says that while accelerators and incubators provide significant benefits to SMEs, from the differentiators provided, it is clear they should not be considered one and the same. Through careful self-reflection, entrepreneurs will be able to determine which is the right fit for their business.
She adds that if your SME is at the stage where you are ready to catapult your growth to the next level through market access to large corporate and investment opportunities, there are a number of cluster-based business accelerator programmes available.