In the world of Entrepreneurship, new methods have been developed to support SME“Small to Medium Enterprise,” which will be defined in this presentation as startups. On Figure 1 you can see, an egg representing the incubation period, the, i.e., incubating an idea like an egg- we need the right temperature (i.e., sufficient money ), rotating the egg (validation of the project ), environment (i.e., mentor network space and office /resources) and some humidity (i.e., spend cadence )
As the egg hatches out – This is the stage where you have validated your project’s product. It opens doors to angel funding, internal or external accelerators.
As the chick is out of the egg, it needs to grow. So it needs to be fed (funding, investments), the chick will socialize to grow in a healthy environment (networking).this the last phase is called acceleration, which induces the testing of other aspects of business models assumption.
As a whole, incubators and accelerators are relevant partners for developing your startup and your projects. This article will inform you of these services, their offers, and their goals.
How do Startup Incubators work?
Business incubators are mentorship programs that are generally offered by nonprofitable entities, typically managed by both public and private organizations. The main focus and goal are to accelerate the successful growth of startups, debutant, fledgling, and SME. The incubator entity supplies the entire entrepreneurs with an array of target services, resources, and networking. These services are developed by incubators to offer and run both the network through contacts, according to NBIA.
Abstractly incubation is similar to an incubating egg. Incubators ensure value proposition and client segments, i.e., giving the right resources (funds, network) and mentor support to explore the area within a set time frame to find a suitable product-market. Incubators are mainly funds that can be categorized as scholarships; thus, almost or no income has been expected. Incubators mentor entrepreneurs by resolving issues commonly associated with running a start-up by providing networking, mentoring, logistics, seed funding, and offices. A start-up incubator aims to help entrepreneurs develop their program using a series of mechanisms. Incubators mentor entrepreneurs by resolving issues commonly associated with running a start-up by providing networking, mentoring, logistics, seed funding, and offices. The purpose of a start-up incubator is mainly to help entrepreneurs develop their program using a series of mechanisms.
The working infrastructure of incubation involves both internal and external involvement.
Some Major Incubators Involved In The Development And Mentoring Of Start-up
Here are some general characteristics that distinguish both programs. These entities may seem very similar, so the table below shows you some differences :
Top-5 Best Incubator entities According to Forbes Magazine
Founded in 2005, Mountain View, CA-based. It has launched more than2000 tech startups. Y Combinator’ is community of over 4000 founders. The company has a combined value of $100B.Their most famous graduates include Dropbox, and Airbnb.Y-combinator provides seed funding for startups. Seed funding is the initial stage of venture funding collection. Seeding provides funds necessary to launch a startup. Many companies need an initial boost by seeding or by mentorship. Y Combinator is a significant partner to start a business in the most comfortable environment. Specificity – Two batches per year that enjoy their services after a selective processed. Program duration: January – March; June – August. Amount invested: Twice a year, they invest a small amount of money, around 125.000$ in many startups. Famous graduates: Dropbox, Airbnb, Scribd, Weebly, etc
Also, in Mountain View, 500 Startups is both an accelerator and a seed fund. Member startups have access to a worldwide network of 160 expert mentors. 500 is involved in incubating more than 2400 start-ups, present in more than 75 countries with over 5000 founders. The specificity of this entity is that it’s both an incubator or an accelerator. Amount invested: over $600M. Famous graduates: Zendesk, Oracle, Hubspot, etc
With programs in five of the top startup hubs (NYC, Boston, Seattle, Boulder, and San Antonio), TechStars hosts 12-week mentoring programs. They recently launched the Unified Seed Accelerator Application, a startup version of the Common Application used in higher education, enabling entrepreneurs to apply to nineteen accelerators using one form. Techstars is involved in the incubation and acceleration of about 2157 companies, thereby providing mentorship and investing over $120K. Duration: 3 months. Total funding: over $9.3B. Famous graduates: AWS, Pilot, SendGrid, etc.
Based on Chicago, Excelerate Labs is a 13-week summer program culminating in a “Demo Day” where startups pitch to area investors. Excelerate labs, or Excelerator Titan, are among the best tech incubators and startups companies in Chicago, Illinois. The capital of investment is $25,000 in each company in exchange for 6% common stock. They are thereby providing the best type of Mentorship. The main goal is to help startups and grow.
Austin-based Capital Factory gives its members continuous access to 20 mentors. Moreover, Capital Factory shares a working space for young teams to grow their startups in one space. This incubator founder Joshua Baer is one of the professors for the University of Texas at Austin‘s “One Semester Startup” course. The main advantage for all who are willing to apply is a possibility to gather a team within the incubator. For example, when you are the only one representative of your idea, make sure you will find people willing to support the same idea with you.
How do Startup Accelerators work?
Accelerators, as they sound, accelerate start-ups with quicker and effective programs. Accelerators are induced in businesses that already exist and need further partners for the development of their company, according to the NBIA. Startup accelerators are progressively getting mainstream among entrepreneurs. Startup accelerators are a crucial major asset to the rapid growth of startups, thereby providing resources, funds, skills, and connections that lead to a business’s success. Resources these accelerators may provide are lawyers, bookkeepers, marketing advisers, logistics, and even locations.
What is a startup accelerator?
Seed accelerators or Startup accelerators are types of a business uphold program that provides funding, logistics, training, and mentorship, providing necessary tools that can lead to the startup’s booming growth. The startup can join a group of accelerators with similar objectives and targets. A startup accelerator involves a seed investment and access to a credible network of partners to exchange equity or/and convertible shares.
At every stage of business, accelerators keep an eye on the startup’s level of growth, causing a boost in the business of these startups. Here are the main points that are taken into account by an accelerator:
New York’s Best Top 5 Accelerators
Was created in New York, and it is one of the largest accelerators. The program provides grants to early-stage start-ups. Services: Mentorship with over 500 experts, major investors, specialists in products, sales, and marketers. The selected startup is granted $100k with an added benefit of networking; they enjoy sponsoring payment platforms like Stripe and PayPal. They may provide free legal support, i.e., lawyers, one year of free communication service, etc. Grants: $100k as an initial investment
It is a startup accelerator found in NYC. Their start-up-Resident program collects the top early startups in NYC by providing free workspace for one year with no fee involved in the expenditures from these startups. They own a 1.1 Million square feet office space in downtown that rents this space for startups. GCT development encourages talented startups. GCT provides the necessary funds and support for the growth of startups. Program: 1 year
The biggest accelerator network around the world, Techstar, was founded in 2006 in NYC, created more than 2157 companies across the locations.some of their notable graduates are Classpass, Pillpack, and SendGrid. The New York chapter of Techstars was opened in 20 Techstars New York collaborated with Barclays to create an accelerator focused on Fintech.
They were founded in 2010. Based in San Francisco, This is an outstanding NYC accelerator. Every six months, the accelerator selects about 15 startups from an impressively large pool of applications. Lucky companies become eligible for a 12-week accelerator program that involves preparing to fundraise, finding a target market, and participating in investor meetings. Each company that enters AngelPad receives $120,000 for 7% of the entity. How much you get: $120,000 for 7% of the entity
Established in New York and implies companies to join an immersive experience. The immersive program indicates a workshop compared to a speed dating where 50 mentors meet startups for 15 minutes. The mentors try to detect the distinguishing spirits (team, market opportunities, etc.) from the participants. How much you get: 6% for $200,000
How To Prepare Your Startup for Incubation And Accelerator?
Incubators and Accelerators have been significant partners to the increase in the development of startups in the world. Most start-ups lack the necessary techniques and experience to develop a successful company. So being a partner to an incubator or an accelerator for mentorship, seeding, and support during your business’s growth is the most challenging tool to have.
It is a certainty that applications for these programs will not lack. So certain predispositions must be taken before and during the interview to distinguish your startup from the others. There are a lot of preconceptions to be taken into account before the interview, so below are listed the essential points to consider before applying for either an Incubation or an Acceleration.
Every incubator/Accelerator is unique, so you have to conduct thorough research on their programs to analyze if they fit your startup. So an intense amount of research must be done before you apply.
The fuel of a startup lies in the spirit of cohesion in the team. The chemistry should be perfect between members. Roles should be defined in a team, and all members must have the same thought and goals about the startup they run. Many Incubation / Acceleration interviews require face-to-face or video interviews. Depending on the area, some workshops may be organized by specific incubators/accelerators for startups to present their companies. You may experience a breakthrough if these ingredients are assembled in your team.
Knowing the status of your income and growth is a necessity before enrolling, so make sure you get InTouch with your financial and accounting department to know all about your company before the final presentation. This point is essential for companies trying to hook up an accelerator. For companies trying to hook up with an incubator, a thorough business plan must be done.
Before enrolling, what to say is the most important thing to know before engaging yourself. Get acquainted with the jury via the internet to be able to express the requirements. The team members involved in the pitch should be well rehearsed in the primary key points like the presentation, Technical details, Economic situation of the company, business model, projection of the company in the nearest future, etc. Your team must be presented as an executing team, i.e., having very strong records is needed. Incubators and Accelerators don’t invest based on talk, but they want to see actual actions with irrefutable performances.
Check out the interview with Don Hatch the Global Head of Demium incubator about what should startups do before applying to the incubator.
In conclusion, Incubators and Accelerators are partners that have to be involved for a successful growth of a startup. AMCONSOFT is a partner for some incubators who are ready to help young businesses with funds raising. Contact us to learn more about the opportunities we are ready to share with you.