Incubator, accelerator, and co-working space are three common terms in the startup world. However, if like me you have ever felt you don’t really understand the difference between them, then we are not alone. The difference is not always as clear.
Because of this confusion around definitions, it can be challenging to know which option offers your company the best chance for success.
A simple observation reveals that many “experts” feel incubators are nothing more than office space in exchange for equity. Some Silicon Valley companies brand themselves as offering incubator, accelerator, and coworking space at the same time. No wonder we get confused.
RocketSpace for example is often seen as “incubator office space”, but a closer look reveals that it is a specialized coworking space, or a tech campus for high-growth startups, that offers an ecosystem both speed and direction that helps them scale.
While the terms may be used incorrectly, understanding the correct definitions of startup spaces can enable entrepreneurs to understand what they may need. If it’s time to scale beyond your kitchen counter, you’re in the right place to keep reading.
Where is the best space for my startup ?
Accelerators specialize in growing new and early-stage businesses. In 2012, Forbes defined them as “startup hubs which offer expert membership, resources like office space, legal counsel, and even seed money – typically in exchange for a small amount of equity.”
Startup accelerators can be referred to occasionally as “business school,” as the business plans coming out of incubators tend to be vetted and more thoroughly validated. Leading incubators take entrepreneurs with promising ideas, and teach them how to run a successful startup.
Why is there so much confusion about the definition of an incubator? The reason could be explosive growth the number has grown from 12 to 7,000 in the past 40 years. The massive expansion of the incubator model has also created an environment where there’s variation in what entrepreneurs can expect. Typical benefits might include guidance and resources, funding opportunities, and a credibility boost from membership.
Co-working space is just what it says. It’s a location where startup coexist and with some potential harmony – ideas and support might be shared between the tenants. Often, they can create a sense of community that accelerators fail to emulate as with little pressure from funders, startups can come together to organise grassroots events and share knowledge and contacts.
Is an accelerator right for my startup?
Simply joining an accelerator isn’t a guarantee your startup will succeed. Why? Well, we see it largely depends on the “depth” of the mentor network offered. Anyone can knock up to be a startup mentor, as there is simply no barrier to declaring yourself to be one. However, commercial experience and success, must combine with the ability to have empathy, direct and live the moment with the startup team. Entrepreneurs also need to make sure the mentoring community at a prospective incubator can offer specific domain expertise, not just general skills.
The top accelerators are very selective, and only accept startups who are in the earliest stages of their startup. You are required to disclose your plans during the application and interview process. Finally, you must be ready to operate while being closely monitored and directed by experienced mentors and founders.
Accelerators also tend to result in a Demo Day, where startups pitch their business, with the ultimate aim of gaining funding.