Financing a Startup Company Series: Incubators
This post continues our Financing a Startup Company Series and focuses on startup incubators.
Somewhat similar to accelerators, incubators provide office space, mentoring, networking opportunities and access to investors for startup companies. The ability to share office space and business services (financial, accounting, legal, etc) with other startups can lower costs and lead to useful exchanges of ideas and advice.
There are major difference, however. First is the time that the startups spends with each option, and the intensity of the experience during that time. An accelerator program is designed to get business on the fast track and have them in and out within just a few months. An incubator, on the other hand, will often allow startups to stay for multiple years as they develop and grow. There is thus less time pressure to prove your business idea in an incubator.
A further difference is that incubators don’t usually offer seed financing like accelerators do.
Third, while most accelerators take equity in the startups in their program, many incubators simply charge a monthly rate for the use of their space and services.
Not all incubators are the same. There are huge differences among incubators in their mission, services offered, industries served and other aspects of the incubator experience. It is vital to check out the available options and ask a lot of questions before choosing the right one for a particular startup and its team.