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Launching a business requires significant time and resources to get off the ground. To aid the development of burgeoning businesses and start-ups, you can employ the services of an incubator or accelerator; both with their own advantages to bring to the table depending on a business’ needs. These can include space to work from and support via resources and networking.
If you’re a start-up looking to grow, it’s important to understand the differences between business incubators and accelerators when searching for the right opportunity. Our workplace experts are here to break down what each service provides, so you can choose the ideal path forward to develop your business.
We can also help you find a flexible office space best suited for your team, including in some of the UK’s start-up hotspots such as London, Manchester and Oxford.
A business incubator is a flexible initiative designed to work with start-ups at the earliest stages of development, typically during the ideas phase. An incubator will help the business network with other leaders in its space, workshop with it to see if its product matches the demands of the market, and provide general guidance and mentorship.
Other benefits of a business incubator can include:
A business accelerator prioritises growth in a short period of time, often over a few months. Typically an accelerator provides a more structured growth plan than an incubator, the aim being to inject as much guidance and resources as possible in a smaller timeframe, enabling the business it works with to scale up quickly.
Other benefits of a business accelerator can include:
The key difference between the two is the length of time they work with a business to grow, and the stage of development they come in at.
Incubators will usually collaborate with a start-up much earlier in its growth, focusing on long-term support over shorter bursts of investment. They also provide more flexibility in how long the initiative lasts.
Accelerators work with start-ups for less time, but their resources, network opportunities and mentoring are often given at a more rapid pace. As a result, accelerators typically help scale up businesses that are further along in their journey, and have more immediate potential.
Starting out with the support of an incubator or accelerator gives you a wealth of knowledge to pull from. This could be insights into your particular industry, such as the likelihood of products succeeding, or wider expertise gained by solving common teething issues with other businesses.
Many start-ups and rising businesses gravitate toward accelerator initiatives because of the financial stability it gives them, even if only short term.
Both incubators and accelerators open up opportunities for networking with other businesses, whether it’s to learn from start-ups at the same point in development, or from those that have gone on to succeed.
Because they typically support start-ups that are beginning their journey, incubators often provide a workspace. A dedicated place to operate from not only creates chances to network, it also frees up some of the burden that can come from dealing with those initial overheads. Flexible offices can be beneficial for similar reasons.
Every start-up is different and your incubator can help you find an environment suited to your needs. This might be a coworking space where networking with other businesses is more prevalent, a private or self-contained office where you can showcase your brand for potential investors, a workplace with creative facilities, or one featuring labs for research.
Every start-up is different and your incubator can help you find an environment suited to your needs. This might be a coworking space where networking with other businesses is more prevalent, a private or self-contained office where you can showcase your brand for potential investors, a workplace with creative facilities, or one featuring labs for research.
There are numerous positives that come with incubator or accelerator support, but it’s important to also consider the below when researching this path.
The potential yields of working with an incubator or accelerator mean there’s also significant competition. Ensuring you have a business plan that is detailed and forward-thinking is crucial when applying.
Whether you’re taking on short-term investment from an accelerator or growing over a longer period of time with an incubator, they will expect appropriate commitment from you to maximise the results of their contributions. You should come prepared to invest plenty of time and effort, in order to reap the rewards.
An accelerator will usually gain a stake in a business in return for supporting its growth. It’s vital to think about how this might impact your future plans as a company e.g., would you prefer to maintain full independence?
Accelerators and incubators work with businesses for different reasons, but crucially it’s often down to investment. The short-term rapid injection of financial support from an accelerator usually results in a stake in the business for them, the idea being to ‘accelerate’ products or services to market and quickly benefit from a return on investment, off the back of a proven business model. This ROI can then be invested in other growing businesses, further increasing the accelerator’s profits.
Incubators prioritise the inverse of that and focus on nurturing ideas with fledgling start-ups. Instead of financial return, the aim is to help young businesses refine their business model and target resources in the right areas. This is why incubation is often managed by academic institutions and regional organisations to stimulate job, technology and community growth.
Business incubation traces its roots back to the United States in the 1950s, with links to key figures such as the economist Joseph Schumpeter and businessman Joseph L. Mancuso.
Research by Schumpeter suggested that larger corporations could help smaller businesses or ‘start-ups’ to grow by leveraging their expertise and knowledge. This laid the groundwork for businesspeople like Mancuso to open institutions such as the Batavia Industrial Centre.
Business acceleration became prevalent much later during the 2000s, particularly as technology companies and Silicon Valley rose to prominence. The ‘dotcom crash’, a result of rapid growth and rising interest rates in the early 2000s, also contributed to the need for accelerator companies to support start-ups as wider industry investment sunk.
Because of their different focuses, incubator and accelerator sponsors can come in various forms.
Because of their different focuses, incubator and accelerator sponsors can come in various forms.
Not all incubators cater to a wide range of start-ups; some might specialise in a particular industry such as creatives. The same applies to accelerators, with some investing across industries whilst others focus on specific sectors. Some flexible office spaces also partner with accelerator programmes or offer their own.
Examples of incubator programmes
When thinking of applying for an incubator or accelerator programme, consider how it might impact your business in terms of both advantages and drawbacks. This can help you make an informed decision and potentially yield the best possible results:
If an incubator or accelerator sounds like it suits your business, make sure you’re seen as an attractive business proposition:
Moving past the incubator and accelerator phase, you might want to continue growing within an office space where you can benefit from flexible contracts. If so, consider the future costs of renting an office space, or how much space your team might need as you.
Looking for a new office or want to list your office space for rent? Our team of experts are on hand to help.
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