Incubator Vs. Accelerator Vs. Co-Working Space

Y combinator

Many entrepreneurs are on the lookout for a suitable place to start and operate their business. The options include Incubators, Accelerators, and Co-Working Space. Entrepreneurs looking to venture into a startup need to be familiar with these options as there are a lot of differences and the final choice can have either positive or negative impact on the business.

Why do you need to choose one?

Starting a new business is not an easy task and requires some form of external help. It can be either in the form of funding or expertise. It is always a good choice to be working with experienced people in the industry and choosing the best option among the three can provide you with that opportunity. On the other hand, some entrepreneurs are also on the lookout for financial help and few others may be searching for some guidance to take their business in the right direction. You will find one of these setups useful for your business.

Incubators Accelerators Co-Working Space
Provides you with office space. You may or may not be charged for this facility. Provides you with office space and, usually, do not charge for this facility for certain time period. You get access to a ready-to-use office space. You will have to pay for this facility.
Can provide you with funding and guidance. Will provide you with guidance in the initial stages and help you secure funding. You will not get any help with regards to funding.
Get access to mentors who have relevant industry experience. Experienced mentors will help you to fine tune your business. You will not have any guidance and have to work on your own.
Duration falls in the 1 to 5 year range. Time period ranges from 3 to 6 months. Duration depends on the company’s growth.
You may have to share a percentage of your equity. You will have to share a percentage of your equity once you accept funding. No need to share equity.
Examples: Betaworks, 500 Startups, AngelPad, etc. Examples: Y-Combinator, TechStars, DreamIt Ventures, etc. Examples: Betahaus, NGIN Workplace, Cross Campus, etc.

Plug: TeamWave – CRM, Project Management & HR Software for Small Business

Incubator

  • You need to have a company to be able to choose an Incubator.
  • Once you have a registered company, choosing an Incubator will give you access to a working space along with other facilities.
  • Many entrepreneurs will need assistance in setting up the company in the initial stages and it is possible when you choose this option.
  • Incubators will usually have a strong network of investors and this can be very helpful for your startup.
  • You can even get access to potential clients and mentors to guide you in the right direction including business growth and PR activities
  • When it comes to the charges, there is no standard practice in the industry. Majority of the organisations ask for some equity in your company and provide you with all the help.
  • Even the time frame of staying in an Incubator depends on your business and your contract with the service provider. It can range from a few months to over a few years.

Accelerator

  • This is similar to the Incubator in many aspects, but comes with some differences.
  • When you choose an Accelerator, you get access to support in setting up your business in the initial stages.
  • However, you will have to qualify for the program and they will also provide you with the initial seed funding required to boost your business and make it ready for the market.
  • The time frame is usually short and restricted to a few months of help with regards to fine tune your business idea.
  • You will also get access to mentors who have good industry experience and they will guide you in the right direction.
  • Once your business is ready to face the market, you will be given a platform to present your business in front of investors.
  • This is the final stage of the program and if you qualify to get any funding, you will continue with the program.
  • In return, you will have to offer a percentage of your equity to the Accelerator.

Co-Working Space

  • This is significantly different from the other options and it basically provides you with an office space with all the facilities to run your business.
  • In this regard, you need not worry about investing a huge amount of money in buying all the required office equipment.
  • You can just walk into the Co-Working Space and start your business anytime. You can even try it without having a running business or company.
  • This is quite popular among freelance workers as it provides instant access to such facilities.
  • The biggest advantage comes with having ready-to-use office space that is fully equipped with computers, printers, Internet connections, meeting rooms and security along with other facilities.
  • You will be charged a monthly fee to use the space and you can choose it for any duration.
  • It is also possible to hire the space depending on the number of seats you will be using for your business.
  • As other similar startups and entrepreneurs will be sharing the space, you get a chance to develop a good network in the industry while using this space.

Which one to choose?

business-growth-curve

It all depends on your business and experience. If you are still in the phase where you do not have a proper business idea, it is better to choose a Co-Working Space and give a complete look to your idea so that you can develop a business out of it. Remember that you do not need to have a running business or company to be able to get into a Co-Working Space. On the other hand, if you already have a running company that is still in the initial stages, you can look forward to choosing an Incubator or an Accelerator. While Incubators give you a long duration to settle down and take forward your business for further funding, Accelerators do not offer such luxury. However, Accelerators are keener to push your business to the market and present it in front of investors so that you get a boost and grow your business. Remember that you will have to share a percentage of your equity when you choose these two options. In this regard, depending on the stage of your business, you can take an appropriate decision.

Are you in the wrong place?

Choosing the wrong option can be detrimental to your business in the long run. If you are not in need of some funding in the initial stages and can manage the business on your own, it is a good choice to go for a Co-Working Space. On the other hand, when you need some guidance from experts in the industry and cannot afford to hire them, choosing an Accelerator is a good choice. Make sure that you are ready to part with a percentage of your equity with the Accelerator. If you need further guidance and capital to fuel business growth, go for incubators. You should be careful when choosing any option as choosing the wrong team means taking your business in the wrong direction. You need to carefully study the background of the team offering you mentor-ship and funding. If you choose to take help from an inexperienced team, they will not understand the complete potential of your business and force you to take hasty decisions to earn some quick money.

As the key here is to choose the right team, always conduct research and do not hesitate to ask for their track record; see how they have developed other companies in the past. Always go with an experienced team that understands your business potential. It is paramount that your vision matches with that of the mentor and investor.


TeamWave - CRM Projects HR

2 Comments

  1. Thanks for sharing the comparison between incubator, accelerator and coworking spaces. The post will surely help new entrepreneurs to choose the correct options and start their business. Great post.

    Like

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