Startup accelerators and incubators are words which entrepreneurs might often hear in the startup business.
Most of the time people think that these two terms mean the same exact thing, but they are wrong.
Our firm is specialized in offering business development, strategy and accounting services to companies and startups looking to scale globally.
In the last ten years we have seen the rise of two new types of business development programs: accelerators and incubators.
They offer two different kinds of services and in this article we are going to point out everything you need to know on startup accelerators.
- What is an Accelerator?
- Differences Between Accelerators and Incubators
- Brief History and Examples of Successful Accelerators
What is an Accelerator?
A startup accelerator (or seed accelerator) is a program that offers early stage startups great opportunities of growth.
The accelerator provides seed investments, connections, mentorship and educational components to new startups in exchange for equity.
The program is strictly scheduled and very demanding: one of the main features of accelerators is the presence of a specific time deadline.
The final goal of accelerators is to support early stage startups in order to attract top venture capital firms investments.
Some popular companies that attended accelerator programs said that this service is so challenging and busy that it helps a startup to achieve two years of business building in just a few months.
Differences Between Accelerators and Incubators
As said before, people often mistake accelerators with incubators so let’s point out all the differences between them.
Basically, accelerators help the growth and expansion to a better status of an already existing company or startup.
On the other hand, incubators encourage developing ideas by single entrepreneurs in order to turn them into a real business model and a company, as you may have seen in the popular Tv show Silicon Valley.
Another different aspect is that accelerators have a set deadline.
Companies must develop their business and achieve all goals within that specific time.
This is very important because at the end of their schedule they often plan an event in which startups have the opportunity to present themselves to possible investors.
What’s more is that these programs are open to everyone, but are very selective: only one out of three startups manages to enter the program.
Incubators only provide assistance to selected clients and their programs are only open to startups: already established companies are not allowed.
Brief History and Examples of Successful Accelerators
The first company known as an accelerator was Y Combinator.
Established in 2005 by Paul Graham in Cambridge, Massachussets, later moved to Silicon Valley after the tech boom.
From that moment, different accelerator programs started to appear all over United States.
China and Southeast Asia quickly followed the example and accelerator companies started growing in the Asian continent: the first and most popular program is Chinaaccelerator, based in Shangai.
Nowadays these developing programs are very popular all around the world.
A recent survey said that one third of the A class startups in the United States, went through an accelerator program.
Thanks to these kind of statistics, accelerators have become the main source for investors looking for possible future successful startups.