Accelerators, Incubators & Hubs – What’s the difference and why do we need them?

It’s easy – and sometimes also fun – to throw around business terms like leaves in the wind. However, when you’re trying to finance your new venture, you need to know exactly what it is you’re asking for, where you can get it from, and what the conditions are.

Incubators, accelerators and hubs share similarities in how they assist startups. Yet, they also have substantial differences. That's why in this article we provide a clear and concise picture of respective services they offer and how these services differ. This way, you can decide which would give you the best beginning in this competitive and ever-growing startup market.

Accelerators

These are entities that focus primarily on the scaling-up of startups, not on helping them start out. The typical accelerator helps a company to get investment faster by offering mentoring, access to business networks, and providing resources. An accelerator program usually lasts between 3-12 months and usually works with tech-based and digital companies.

The mentoring that you can expect from accelerators typically comes from experienced entrepreneurs. Although they will be much more experienced, the accelerator culture is one of peer-to-peer mentoring. This means that learning doesn't go via a top-down structure, but rather via a flat distribution. As a result, the teaching process works reciprocally, because by working as colleague entrepreneurs alongside one another, everyone can easily share their experiences worth learning from.

In order to get accepted into an accelerator program, there is usually a highly selective admissions process. This means that the competition is fierce. Yet, if this sounds like the type of support that you need, it's definitely worth putting in the effort and taking a shot!

Incubators

The lines are sometimes a bit blurry when separating incubators from accelerators. However, in contrast to accelerators, incubators are focused on the embryonic stages of company development. They help startups to establish themselves instead of scaling-up.

Yet, incubator programs are equally selective, so the requirements can be just as demanding as getting into an accelerator program. The typical length for a startup working with an incubator is around two years. During this time, the startup usually shares resources like office space and production equipment with other startups. This effectively reduces the initial costs that come with running a business. Similar to accelerators, incubators offer resources such as a trained staff, office space, networking opportunities, and marketing strategies.

Things to keep in mind with Incubators and Accelerators:

  • According to the research organisation Nesta, incubators and accelerators are rarely known to actually measure their efficacy and impact on start-ups.

  • Therefore, it is hard to quantitatively measure the effect that they have on the companies that they help.

  • Most measurements regarding their impact on start-ups are qualitative in their nature, such as surveys within the business organizations that they are helping.

  • When quantitative measures are used, such as increased/decreased investment and company growth, there is usually no reference to a control group for comparison.

The issue: How do you know if the incubator or accelerator you are reaching out to is worth your time?

  • The best method, the Financial Times explains, is to simply talk to graduates of the accelerator/incubator program that you are interested in.

  • This way, you can get feedback from a person or group who has real and personal experience with the organisation. This offers valuable insight as to whether the organisation can be a good match for your company.

Hubs

These are effectively the ‘go-to’ business locations for companies that have shared interests and goals. These locations vary widely in size. Sometimes a hub is as small as one coworking office space, other times it may span across a vast area, such as the well-known Silicon Valley region in California.

Yet, regardless of the sizes and resources available in a hub, the hub area is characterized by a united common interest. For Silicon Valley, the shared interest is tech-based innovation, for a coworking office space, it might be something as simple as having lots of start-ups similarly themed startups in one place, for example an office with mainly impact start-ups.

The benefit of finding a business hub for your company is that resources are often shared, and thus much cheaper. Moreover, because you are surrounded by people in a similar field, the networking opportunities in hubs are abundant. Hubs alone, however, are rarely enough to get your business ready for investment, but they are certainly a helpful stepping stone to get you there!