I have noticed that after the turn of the century the most successful startups decided to enter an incubator and/or follow an acceleration business program. I talked to many participants and all of them seem to be very enthusiastic about their individual choices.

Statistics based on hard quantifiable data may indicate that acceleration programs multiplied after 2006 and they are now the most popular startup means. They also indicate that they give better chances of success to new entrepreneurs.

Despite the undoubted validity of hard evidence, we should take into equal consideration individual circumstances and choices. After all, success for some of you may not be the accumulation of profit and exponential growth but happiness and peace of mind. So, the right program should serve as a tool that will bring you exactly what you need and wish for.

Incubation

  1. The environment surrounding the startup is a creative one. It provides the necessary stimulation to explore new ideas and implement them.
  2. There is mentoring support at hand that will keep the startup on the right track. Especially if the mentor is an experienced entrepreneur in his/ her field, the chances of success are increasing exponentially.
  3. The regular workshops the startups attend and other means of teaching are crucial for their development. Of course, much of the necessary knowledge becomes available through informal means.
  4. The program is loose and the startup does not have the obligation to complete it within a specific period of time; thus, avoiding unnecessary stress.
  5. In many cases, startups in incubators have better access to funding than startups who reside in their bedroom or an isolated office. After all, they get the chance to meet the right people during networking meetings and/ or they are introduced to them by their mentor. Make sure that the incubator has a large network to support its function.
  6. They provide some professional support on legal and accountancy issues.
  7. Incubators usually do not ask for equity. This is a double edged sword: on one hand, the startup does not lose precious percentages, while on the other hand the incubator does not have a skin in the game.
  8. Incubators are not overly specialised. Although some of the reviewers may think this is a negative thing, I believe that this is only positive. After all, an interdisciplinary environment is always fertile ground for innovative ideas and disruptive ventures.
  9. You may chose between public incubators that focus on the creation of local communities or private ones that focus on the creation of monetary value. If you have a social enterprise and you do not want to accumulate profits, the former may be more suitable. If you want to have a scalable business, then you should choose the latter.

Acceleration

  1. These are time-limited business programs for startups. They range from 3 to 4 months and they take a fast paced approach. This has its advantages and its disadvantages. On one hand, the startup rates of survival increase. On the other hand, I know of several teams that burned out or were dismantled in the process.
  2. The accelerator and its investors take around 7-10% equity from the beginning. in exchange of a few thousand pounds. Again there are pros and cons in the process. It is positive that the accelerator as well as the investors have skin in the game. It is not nice for a startup, though, to lose 10% at hello!
  3. The teaching program is comprehensive and aspires to cover most aspects of the challenges a startup will face. This can only be a positive.
  4. There are not many accelerators around to cover existing demand. So, the startup may have to travel to another city or country at a specific point in time to attend the program of his/ her choice. Most of the startups, though, feel that the inconvenience was well worth it!
  5. The mentorship is usually exceptional and it provides support for the duration of the program. In most accelerators, though, support finishes (cold turkey) after the startup graduates successfully.
  6. You get access to professional help, regarding legal and accountancy issues.
  7. The chances of getting further funding for your startup after graduation increase massively. The participation in such a program is almost a confirmation of the high value of the startup, as it increases its chances for success. Investors take seriously into account the completion of these programs and are more willing to listen to the founders’ ideas.
  8. The founder cannot bootstrap its startup. The main point of the acceleration process is to raise funding and attract investors.
  9. Accelerators emphasize on creating large networking groups, while they are part of the entrepreneurial ecosystem. The startup can take full advantage of this, not only when s/he is part of the program but also afterwards.

There are a lot more characteristics of incubators and accelerators that I have not included in this short blog post. I am sure you will be correcting some of them and you will be adding more information in the process. This is not supposed to be a comprehensive article that covers all possibilities.

The reason for writing this piece is to clarify my own thoughts. I am setting up an incubator AND accelerator in Leicester and I feel the need to be clear about advantages and disadvantages of existing programs. As I am trying to position myself in this new world, I am determined to erase some of the negatives and focus on the positives.

If you want to know a bit more about my new venture, you can visit the website http://incubate-leicester.co.uk In following posts I will explain why I have made the specific choices in my business model and what problems I am trying to solve. Until then, you may want to come and see us or join the formal opening reception we organise on 21st May at 18:00, in 119 Granby St., Leicester LE16FD.

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