Incubators or Accelerators?

by GDP Venture

The euphoria of building a startup are surrounds the world community, also in Indonesia. When building the digital startup, third party enablers like incubator and accelerator were also in charge to build up an ecosystem. But, what’s the difference between them? Because the lines that divide both are sometimes blur.

Some people say that incubators are for startups, and accelerators are for scale-ups; incubators are long-term programs, while accelerators are for a limited period; others even differentiate between the two by saying incubators are supposed to be non-profit and publicly funded, while accelerators are instruments used to invest in early-stage start-ups. This ambiguity causes issues for many entrepreneurs.

According to Bridge for Billions article from medium.com, Here are the main issues that feed the incubator vs. accelerator debates:

Based on Project Maturity. Incubators are seen as aimed towards startups, while accelerators are seen as aimed at scale-ups. While both options provide guidance and mentorship. Incubators are meant to nurture startups through the beginning phases of their project. On the other hand, accelerators, focus their guidance towards scale-ups, which are ventures that have already developed a prototype, done project development, planned out their business, and completed customer discovery. These ventures have a strong foundation and are looking for greater business traction as well as a seed investment. Accelerators provide tailored mentorship that helps these ventures grow.

Based on Duration of Services. Those who use this differentiation believe that incubators tend to be long-term projects, while accelerators are bounded by time. Incubators work based on the entrepreneurs’ need and have no time limit to the duration of the incubation services provided. Accelerators tend to take entrepreneurs in cohorts and provide intensive training for a limited period of time (3–6 months typically).

Based on the Business Model. Incubators should be nonprofit, and should not take equity. Incubators should be publicly funded with the aim of boosting local businesses. Accelerators, on the other hand, take equity in the companies that they accelerate. They are also instruments for entrepreneurs to find investments for their start-up

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