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Small Business Accelerator or Business Incubator? Featured

Small Business Accelerator or Business Incubator? vehicle side mirror

To clarify, I’m referring to a “business incubator” not a “small business accelerator.” To be sure, there is a ton of overlap between the two. But, in reality, the differences are more than just semantics. The first topic is one of the most misunderstood topics in this space. Many entrepreneurs—both big and small—have been quoted claiming that they want to join a startup accelerator or incubator because it will help them get their businesses started faster and get some traction before they need to raise equity funding or do any serious marketing. Here’s the problem: these programs are NOT accelerators!

They are business incubators! While many people assume these programs function similarly to accelerators, they do not. Accelerators are mostly about helping early stage companies find investors but often do not have any specific role in helping founders build their companies (i.e., their roles are strictly advisory). Business Incubator programs tend to have much more impact on how quickly startups can grow from seed to exit, as well as how quickly founders can build their businesses from seed to revenue and/or exit (i.e., their roles are strictly advisory). The second topic is also misunderstood by many entrepreneurs and investors who think that being part of a startup accelerator or business incubator means that an entrepreneur will get access to an established VC firm or angel group as well as additional resources such as team building retreats, mentorship opportunities, etc… The reality is that being part of such groups could create an unfair advantage over other entrepreneurs who may not have joined these groups yet but who may have more experience with certain aspects of startups (i.e., VC firms usually have team building retreats and mentorship opportunities for founders who come from non-acceleration backgrounds).

1. A Business Incubator is a Non-profit business center that provides everything you need to get your startup off the ground

Many people believe that a startup accelerator is what you need to get your company off the ground. However, the reality is that a business incubator, also known as an accelerator or program, is a non-profit business center that provides everything you need to get your startup off the ground. In other words, it’s a place where you can do any of the following: 1) You receive free office space, 2) You get partial funding from angel investors and venture capital firms, 3) You have access to networking and mentoring opportunities with other startups and investors, 4) You have access to information about relevant industry events and initiatives.

2. What is a Small Business Accelerator?

A small business accelerator (SBA) is a program that provides funding and customized mentoring to small businesses. Accelerators are funded by various philanthropic organizations, including The Bill & Melinda Gates Foundation, The Foundation for the Advancement of Medical Research, and The Rockefeller Foundation. The term “small business accelerator” can refer to both SBA programs and those that provide access to larger firms. In either case, the business is typically a “startup”, not a “laboratory” or research firm. There are many kinds of accelerators: 1. Business incubator 2. Startup incubator 3. Venture capital firm-backed incubator 4. Small business loan facility 5. Self-employment program (for college students)

3. Difference between an Accelerator and Incubator

The less-than-symbolic title of this article leads us to believe that there is a discernible difference between an accelerator program and an incubator. But the fact is that there isn’t. A business incubator just does not exist in a vacuum. It exists in the world because entrepreneurs need to be nurtured, supported, and fostered by people who are familiar with their businesses but not necessarily their financing mechanisms or prospects. Accelerators do not incubate your company, they accelerate it. Their job is to provide you with the tools you need to start and grow your business, while also preparing you for the eventual launch of your product or service.

4. Advantages of Accelerators

This is a question I often get asked: what are the differences between a business accelerator, and a startup incubator? Some people think the two terms are interchangeable. But this isn't true. First off, starting up a company is not an accelerator. Starting up a company in the US requires an SBA loan (which you get after you raise money). If you're looking to expand your business and need to raise money to do that, you'll need to apply for bank loans or equity financing – which are not accelerators. A business accelerator is smaller than a startup incubator and offers support to companies in their early stages of development. It's designed for businesses with less than $50 million of revenue and no employees (in contrast to startups with less than $1 million of revenue). These companies usually have at least one employee as part of their team, so there's no on-site work involved. There may be other work involved as well; one example is an entrepreneur mentor who works with the company throughout their growth phase. If you're thinking about expanding your business, finding the right type of accelerator may be the most important decision you'll make before you even launch. Startups typically have more in common with accelerators than they do with incubators – they're both places where small businesses can learn how to grow and scale without having to invest hundreds or thousands of dollars upfront in equipment or hiring staff on-site at their current location. The main difference between startups and accelerators is that accelerators are smaller than startups, while accelerators offer mentorship from experienced industry leaders who can help start-up teams develop and execute on their product vision. They also often provide free access to investor resources such as connections and introductions whenever possible so that entrepreneurs can build strong networks within their communities. Accelerators tend to focus on specific verticals such as transportation, healthcare services, technology/startups, creative industries like music/film/arts/fashion/tech, etc., rather than big general industries like manufacturing or construction (although many accelerators do offer both types of programs). Accelerators also typically offer mentorship from experienced industry leaders rather than working directly with entrepreneurs in those industries – though some accelerate programs do include both types of mentorship models so that entrepreneurs can learn how new products develop — but it's very unlikely that you'll find several different types of acceleration programs under one roof (unless they're all focused on specifically verticals). Again – this isn

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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