Accelerator vs. Incubator: Which One is Right for You?

Each year thousands of entrepreneurs aspire to transform their startup into a profitable business. Unfortunately, the majority of startups do not see the light of day, in fact as many as 9 out of 10 fail, according to Fortune. Although this may sound discouraging there are programs dedicated to assisting startups to boost their chances of success.

Accelerator and incubator programs are designed to provide guidance to startups, as well as advance business models and strategies. The main objective is to help evolve the idea of a startup and groom the company to become valuable in the eyes of investors.

However, incubator and accelerator programs are not the same. The following comparisons between the two will help you figure out which program is best for the advancement of your startup.

Incubators:

• Support startups entering the beginning stages of building the company: These startups have an established idea to bring to the marketplace. However, they lack a business model as well as a sense of direction on how to transform an innovative idea into a company.
• Do not operate on a set time frame: Incubators focus on guaranteeing the longevity of a startup. Therefore, this program is less concerned with how quickly the company grows, but instead ensures it advances at the right pace. It is not uncommon for incubators to mentor startups for more than a year and a half.
• Can be difficult to get accepted into: Since incubators invest the time and resources into advancing a startup, many incubators only accept pitches from entrepreneurs with whom they have an established relationship with. Networking skills play a big role when trying to get into an incubator.
• Provide mentorship and a coworking environment: Incubators support startups with mentorship, as well as a coworking environment. This allows for companies in the incubator to share an office space, which is rented out on a month-to-month lease program, and connects the startup to the local community.
• Ask for little to no equity: Incubators do not provide capital to startups and are often funded by university grants. This allows the program to support startups without asking for a stake in the company.

Accelerators:

• Support startups who need help advancing the growth of an existing company: These startups already have an idea and business model in place, but are ready to advance the growth and value of the company.
• Operate on a set time frame: Accelerators usually work with startups from 90 days to four months. During this time period, startups build out their business with the support of mentors and capital provided by the accelerator, and are able to pitch their business to investors at the end of the program.
• Have an application process: Participants must apply to accelerators in order to be selected for a program. Each program decides how many startups they want to accept and top programs are incredibly selective.
• Provide capital, mentorship and office space: Accelerators offer a specific amount of capital to startups at the beginning of the program, provide mentorship from seasoned entrepreneurs for the duration of the program, as well as office space with access to a multitude of resources.
• Ask for equity: Since accelerators are investing their time, money and resources into furthering the success of startups they select for their program, they ask for equity in return. Usually they require anywhere from three to eight percent of equity in a company.
• Prepare startups for investors: Typically, at the end of an accelerator program, startups that participated in the program are given the opportunity to pitch to an audience of investors familiar with the accelerator.

If an accelerator program seems like the right fit for your healthcare startup, we offer a 12-week program where entrepreneurs have access to an extensive arsenal of seasoned industry experts, investors and mentors who can provide guidance and advice. We also provide a $30,000 seed investment, in return for eight percent of common stock in your startup. If you want to join our program as a member of the Class of 2017, applications are currently open and will close on May 31, 2017.