The words "incubator" and "accelerator" have somehow become interchangeable. They're not. They're two different things.
Business incubators have been around for decades—they're the original. Accelerators, the new kids on the block, started popping around the turn of the millenium.
Your Capital Edge decided to break down the fundamental differences between incubators and accelerators. While nothing is black and white, these guidelines are evidence that the two terms are far from interchangeable.
• Incubators branch outside of technology, including science and medical firms.
• Incubator sponsors are typically universities, economic development corporations, community-based groups, and government.
• Incubator clients are often operate nonprofit business models.
• Clients are incubated for anywhere from one to five years. The average is 33 months, or nearly three years.
• Accelerator clients are generally emerging-trend, software technology startups: web, mobile social, gaming, or cloud-based firms.
• The clients are usually younger and their business models are typically for-profit.
• Accelerators are commonly funded by serial entrepreneurs, angels, and venture capitalists.
• Acceleration programs only last one to three months in most cases.
What's also interesting to note is that, while these two models appear to serve different purposes, Capital Edge has discovered that accelerators are increasing in popularity while incubators are fading out of the picture. Is a replacement occurring? And does that represent a shift in how entrepreneurs are expected to grow their startups—quickly and powerfully rather than slowly and carefully?
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