Business incubators and accelerators advise and support various forms of start-ups. The difference between incubators and accelerators is that the latter reduces the start-up time by operating as a kind of fast-track training. Incubators, on the other hand, accompany the company throughout its start-up phase, allowing it to develop at its own pace.
Incubators offer start-ups office space and shared services, such as telecommunications systems and Internet connections in a facility. Entrepreneurs can also access advice and guidance from professionals such as accountants, marketing consultants and business advisors; who are associated with the incubation centre and act as mentors. In general, entrepreneurs stay in an incubation centre until they have a stable financial base and a real presence in the market.
Many business incubators are run by non-profit organisations such as government groups and economic development agencies. Some universities offer specialised incubation centres where entrepreneurs can tap into research activities on campus or take existing research and turn it into a commercial venture. Some incubation centres in different regions offer facilities based on industrial sites.
In incubation centres rents are generally 25-50% lower than commercial rents. They benefit from the networking opportunities, the mentoring and professional advice available and the contacts with other entrepreneurs that provide a stimulating environment for growth. The aim of incubation centres is to develop successful businesses that will create new jobs in a region and contribute to local economic growth.
Business accelerators have some features in common with incubators offering professional advice to startups. However, in accelerators, the incubation period is short and intense. Accelerators aim to turn business ideas into prototypes or market-ready products within a few months. Accelerators provide seed funding and expertise to small groups who can bring a product idea to market. In return, accelerators take a small stake in the new company.
In business accelerators, the focus is on rapid growth and successful product market entry. At the end of the incubation period, entrepreneurs have the opportunity to approach venture capitalists for additional funding. A business accelerator is, therefore, more suitable for startups that want to reduce their time to market; rather than adopting a gradual development.