Business Incubator vs. Accelerator--What's the Diff?
I am often asked what the difference is between a business incubator and a business accelerator. Until recently, the term "accelerator" has been used interchangeably with "incubator," especially as incubators developed a slight negative connotation after the Tech Bubble burst in the early 2000s. Recently, however, the term has developed a specific meaning, notable among the investment community. I have been narrowing the concept of "Accelerator" to mean those programs that:
1. typically focus in IT, and more spedifically web 2.0 and mobile apps 2. offer a short-term program, usually 3-6 months 3. bring companies in as a cadre and move them through as a group 4. invest seed cash into the business (anywhere from $10K to $50K) in return for equity 5. culminate the program with a demo day
I see these programs as pre-incubation kinds of activities because they have a hard start and end timeframe and there is a focus on product development because the goal is often to get to proof of concept or functional prototype. There is often business training and entrepreneurial education but the main purpose is to get the proposed product to a point where further investment is possible (think entrepreneur boot camp meets FastTrac with a dash of Shark Tank). I believe that once a company has gone through a program such as this and successfully secured some additional funding, it may be a perfect candidate for an incubation program where it can continue to grow and develop and the entrepreneur can refine the business.
I'm sure there are other subtleties that need to be taken into account when looking at the concept, but this helps me explain it to people in a way that is easily distinguishable from traditional incubation. I hope you find my views helpful, too.