More and more entrepreneurs are leveraging accelerators and incubators. They enroll in one of these two programs to turn their vision of a profitable business into a reality. There are hundreds of accelerator and incubator programs throughout the world. While their features vary, they all focus on assisting and nurturing entrepreneurs. What are accelerators and incubators exactly, and how do they work?
The Growing Trend of Accelerators and Incubators: What You Should Know
What Are Accelerators and Incubators?
Accelerators and incubators are entrepreneurial programs that are designed to provide guidance, resources and even capital to early stage businesses. They “accelerate” and “incubate” early stage businesses so that they can grow and become profitable.
The terms “accelerators” and “incubators” are used interchangeably, but they aren’t necessarily the same. Accelerators consist of programs that focus on rapidly growing early stage businesses. Incubators, on the other hand, are programs that focus on nurturing early stage businesses. Incubators are typically more relaxed and have fewer, less stringent requirements than their accelerator counterparts.
How Accelerators and Incubators Work
When you enroll in an accelerator or incubator program — there’s typically a fee — you’ll be given access to resources. Many of these programs provide entrepreneurs with office space. You can visit this shared office space to work on your business idea.
Mentorship is a key element of accelerators and incubators. These programs have mentors who help entrepreneurs with their respective businesses. Some of these mentors may specialize in your particular business idea. By seeking their advice, you’ll have an easier time building and growing your business.
Financing is another key element of accelerators and incubators. All businesses require financing. Early stage businesses, of course, often struggle to secure financing. They don’t have an established business model, so they can’t easily obtain loans or other forms of debt financing. Accelerators and incubators, though, assist early stage businesses by providing them with financing. They offer equity financing by purchasing an equity stake — typically around 10% to 20% — in early stage businesses.
Is an Accelerator or Incubator Right for Your Business?
There are pros and cons to enrolling in an accelerator or incubator program. It will provide you with mentorship, equity financing and potentially even an office space. On the other hand, accelerator and incubator programs aren’t free. Rather, you’ll have to pay to enroll in them.
This article was brought to you by Intrepid Private Capital Group, a Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.
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