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What is the Difference Between Startup Incubators and Business Accelerators?

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For entrepreneurs, growing a startup is a multifaceted process. The development of an early stage company often includes engaging with the startup community, finding experienced mentors and advisors, and getting connected to funding sources. Joining a startup incubator or business accelerator program provides an ideal environment to make these strategic connections possible, increasing the odds of long-term success.

While ‘incubator’ and ‘accelerator’ are often used interchangeably, there are ways to distinguish the two.

What is an Incubator? 

Incubator programs are designed for startups refining their business plan as they navigate challenges from the idea stage through the growth stage. They typically serve multiple early stage startups with companies representing a wide range of disciplines. Incubators are heavily focused on regional economic development and funded through a combination of public sources and private grants. Strong relationships with regional players at universities and venture capital firms can help to further nurture a talent pipeline that supports innovation and regional prosperity. Though companies can mature out of an incubator after achieving significant milestones, there is no set start or end date in duration for companies to participate. Many incubators also function as not-for-profit entities. 

Benefits:

  • Use of a physical business address versus your residential address or a PO box.
  • Access to desk space, coworking space, or startup studios.
  • Reserve conference rooms for meetings.
  • Collaboration and co-creation among participating startups.
  • Structured support from mentors and industry experts. 

What is an Accelerator? 

Accelerators are purposefully designed for startup companies whose development falls anywhere between the idea and growth stages. Startups selected to participate will have a minimum viable product (MVP), may have formed a prototype, and may have already received pre-seed funding. Accelerators function as a catalyst for high growth among startups by providing professional levels of promotion, education, and capital that might otherwise take years to achieve independently.  

Accelerators frequently have clearly defined start and end dates, lasting no longer than one year and typically anywhere between three and six months. Companies may be accepted into the accelerator through an application process, during which the cohort progresses through the program at the same time. The economic focus is placed on building the portfolios of companies in each cohort and helping these companies scale at a more rapid pace. Most accelerators work with angel investors, venture capitalists (VCs), seasoned founders, and industry experts to advise and form collaborative partnerships with other entrepreneurs. Through one-on-one mentorship, startups are able to overcome common challenges in a shorter timeframe.

Benefits:

  • Participate in a focused, disciplined program designed specifically for your industry or sector.
  • Achieve key milestones while being mentored by experts.
  • Build camaraderie with other founders who are at the same business journey phase.

How to Choose Between an Incubator and an Accelerator

The primary way of identifying if you should join an incubator or an accelerator is the stage of your startup. Incubators provide space and resources for the full spectrum of startups, from early stage to growth stage. Accelerators are ideal for businesses in the startup stage with a minimum viable product (MVP). Additionally, many accelerators have competitive application processes. If you have yet to meet the accelerator’s requirements, an incubator may help you achieve those goals.

Another method is assessing how long you anticipate using the facility. If you’re looking for something long-term that can serve as a collaborative work environment for your entire team, then an incubator is an ideal fit. Many incubators have varying space options — from desks to suites — that can fit your company’s needs as it grows.

Finally, it is common for a business to simultaneously be part of an incubator and an accelerator. There are even some incubators with built-in accelerator programs, such as Ann Arbor SPARK.

Ann Arbor SPARK Entrepreneurial Services

Ann Arbor SPARK provides both types of programs to entrepreneurs with businesses headquartered in the region. Our clients represent Michigan’s driving industries, ranging from high tech and mobility to manufacturing and life sciences.

While there are differences among SPARK’s incubator and accelerator programs, both nurture the Ann Arbor region’s vibrant tech ecosystem. Access to quality mentorship, workshops, educational resources, and office hours are fundamental aspects of SPARK’s entrepreneurial services. This wealth of knowledge and insight provides transparency to the startup journey, ultimately increasing the odds of success for entrepreneurs.

SPARK operates its incubator and accelerator programs from its two Centers of Innovation located in the heart of downtown Ann Arbor and downtown Ypsilanti.

  • From coworking spaces to startup studios, SPARK has the space to accommodate your growing company.
  • Co-founders can learn Lean Startup methodologies and firm up their business ideas as part of our Entrepreneur Boot Camp.
  • At community networking events, entrepreneurs can meet peers, mentors, investors, and other stakeholders from around the ecosystem.
  • Clients have access to professional services designed to help Michigan-based technology companies accelerate growth.

Ann Arbor SPARK’s startup incubator and business accelerator programs are made possible through funds earmarked by the Michigan Economic Development Corporation and budget oversight provided by the Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority (LDFA).