The concept of community-based support systems for helping individuals and companies succeed has existed for a long time. The terms ‘accelerator’ and ‘incubator’ have emerged in recent decades to describe organizations that focus on supporting small businesses that aspire to rapid growth.
What is a startup accelerator?
The difference between an accelerator and incubator is evident in the name: Accelerators ‘accelerate’ the growth of your startup, Incubators help you ‘incubate’ or innovate your startup idea. There is of course overlap and some programs seek to provide both sets of benefits, others focus on a subset.
A common aspect of both models is the employment of a tight-knit founder community with each cohort and across the alumni base that increases with successive cohorts, and which naturally provides networking and mentorship advantages.
Accelerators and incubators can be for-profit or non-profit, be agnostic to or exhibit a very narrow industry focus. Examples of the latter are fintech support programs such as Rise and the FIS Fintech Accelerator.
Various of the programs are managed under the umbrella of a sponsoring educational institution, such as Columbia’s CSL and Harvard’s i-Lab.
Regardless of each program’s specific focus or identity, there is evidence abound of the value such experiences offer to founders and early-stage companies. Investing time in researching which programs would offer you the most benefit is very definitely worthwhile.
How do startup accelerators work?
Accelerators often have a rigid, structured timeline. Companies apply to join, pitching an existing idea with which they may already have some market traction and product presence. Programs often come with some equity investment. One well-known example of such financial support is YCombinator, which pioneered the SAFE financing instrument now used across the startup ecosystem by angel and early-stage investors. Programs typically culminate in a pitch or ‘demo day’ where companies present to potential investors and partners.
Incubators, in contrast, do not usually organize around a firm, rigorous schedule and focus instead on providing a creative and supportive environment for ideation and innovation.
Depending on the actual incubator participating founders may not have incorporated their company at the start or even by the end of the program. Whereas with accelerators the starting companies usually are incorporated with some, small-scale initial funding from external investors.
Is it time for you to consider an accelerator?
All evidence points to the benefits of participating in an accelerator or incubator program.
The question is to what degree the investment of time and attention on the part of the founder is worth the resulting benefit, and whether or not there are cheaper ways (in time, funds, or equity dilution) to achieve the same outcomes.
Therein lies a key consideration for founders: Identifying the right fit based on researching and assessing the benefits of the holistic experience a given program would provide.
Applying alone takes time. Founders should get feedback from their advisors as to the reasonable chances of success with the more popular, highly sought-after programs. At the same time, founders need to review objectively whether the demands and content of a given program will drive their venture in a direction desirable to them.
It isn’t, and shouldn’t be, that one accelerator or incubator is better than all the rest. The same multi-faceted value proposition occurs in these programs as with, for example, any college or higher educational search process.
Reflecting and thinking hard on the intended benefits versus the costs is crucial. It’s also important to recognize that not every successful startup participated in an accelerator or incubator. There can be other means whereby founders access the equivalent value.
A list of accelerator programs you could consider
Y Combinator – Started in March 2005, it has been used to launch more than 2,000 companies
AngelPad – A mentorship program for seed-stage startups
Mass Challenge – A global network for innovators to connecting startups, experts, and communities to solve challenges
Google Accelerator – A portal for growth-stage startups with tailored technical, leadership, and expert support from Google
500 Startups – An early-stage venture fund and seed accelerator with a global network of startup founders, mentors, and investors
LearnLaunch – Serving the education ecosystem in the New England region
Columbia Startup Lab – Space for Columbia alumni to nurture and grow their startup ventures
Harvard i-Lab – A community of resources and programs dedicated to innovators and entrepreneurs from all Harvard schools
Galvanize – Dedicated learning community for tech entrepreneurs and enthusiasts
Rise – A hub to drive innovation, technology and growth in the financial services industry
About The Author
Johnnie Walker is co-Founder of Rooled, which provides outsourced accounting, fractional CFO, and tax services to venture-backed and high-growth companies.
Johnnie was previously VP Sales with inDinero, providing fully outsourced accounting solutions to start-up, emerging high-growth, and established companies where he led sales and BD activities nationwide for the company. Previously, at tempCFO, Johnnie led the East Coast office and provided strategic CFO advisory services to technology ventures and other businesses.
Johnnie is also an Adjunct Associate Professor in impact investing at Columbia Business School also advises several startup businesses, focusing on financial management and investment strategy. Educated in business and engineering, Johnnie has held senior roles in the defense electronics industry, venture capital, and non-profit sectors.
You can connect with him on Linkedin here.