Accelerators and incubators are great resources for early-stage startups.

FREMONT, CA: Startups often seek assistance from startup accelerators or incubators. It is a common misconception that accelerators and incubators represent the same thing. Founders signing up for the first time should know a few key differences.

Entrepreneurs can benefit from accelerators and incubators in the early stages of their businesses. It helps founders grow their businesses quickly, so they can attract top venture capital (VC) firms to invest in their startups later on. The programs, however, provide different frameworks for startup success.

Incubators aim to build out a business model and company from disruptive ideas, while accelerators "accelerate" the growth of existing companies. Accelerators focus on scaling a business, whereas incubators focus on innovation.

Originally popular in startup hubs like Silicon Valley, these programs are found worldwide. Most of these programs accept companies from various industries, including tech startups.

Accelerators

Accelerators and incubators differ significantly in how their programs are structured. An accelerator program usually has a set timeframe, during which the company will work with a team of mentors to build out their business and avoid problems. Accelerators such as Y Combinator, Techstars, and Brandery are well-known.

Accelerators require applicants to apply, but top programs are usually very selective. Around 2 percent of the applications Y Combinator receives are accepted, and Techstars usually has to choose from about 1,000 applicants to fill its ten spots.

Seed investments and mentorship networks are typically provided to early-stage companies in exchange for equity. Mentoring networks of startup executives, venture capitalists, industry experts, and other investors are often the most valuable resource for prospective companies.

Mentor networks are also not small. For example, TechStars has hundreds of mentors.

Incentives play a significant role in that success. All the partners who advise the companies have a stake in the company's success.

Investors and media typically attend demo days at the end of accelerator programs, where all startups from a cohort pitch. The business has hopefully been further developed and vetted by this point.

The accelerator aims to help startups build their businesses in just a few months. An effective one will reveal the status of the startup founding team and company.

Incubators

Startup incubators may begin with younger companies (or even individuals), and they don't operate on a fixed schedule. Incubators match quality seeds with the best soil for sprouting and growth, much like accelerators are greenhouses for young plants.

Some independent incubators can also be sponsored or run by venture capital firms, angel investors, governments, and major corporations. Many incubators accept applications, while others only work with companies and ideas they come into contact with through trusted partners, and Idealab is an excellent example of an incubator.

An incubator can focus on a particular market or vertical, depending on who sponsors it. A hospital incubator, for instance, may only accept startups in the health technology sector.

Most startups accepted into incubator programs relocate to a specific geographical area to collaborate with other companies. The incubator will help a company refine its idea, create a business plan, explore product-market fit, identify intellectual property issues, and network with other startups.

Most incubators provide shared workspace in a co-working environment, have a month-to-month lease program, and offer mentoring and connections to the local community.

Co-working has split off as its business offering around the country, with co-working spaces charging rent for utility access. Most accelerators provide companies with private office space or help them find it independently.

Incubators are usually open seating, so large teams may find this distracting if they need private space. The economics are usually per seat, which is excellent for the first few people, but renting space may be cheaper after a while.

Neither incubators nor accelerators offer the same assistance to help young companies and startups get started, so choosing the right one is crucial.