Incubators, Accelerators and Startups - A Guide

You’ve got a great business idea, with an incredible USP - but, unfortunately, you’re lacking the capital and resources to get it off the ground. So what do you do? The good news is that there are programmes out there designed for entrepreneurs just like you.

Startup incubators and accelerators can make all the difference to a business’s prospects in the early stages of its existence. They provide vital resources, such as mentorship, capital, connections, physical office space and startup funding, to promising businesses that need a helping hand.

Here, you’ll learn what startup incubators and accelerators are, how they work, the benefits and drawbacks for your business and how you can join one.

What Do Startup Incubators Do?

Very simply, startup incubators are programmes that are designed to help new businesses succeed. To do that, incubators help entrepreneurs solve some of the common issues associated with running a business in its fledgling days. That assistance typically comes in the form of:

• Mentoring
• Seed funding
• Training
• Equipment
• Workspace
• High-speed internet access
• Marketing and finance assistance
• Networking opportunities
• Access to services and events

However, the specific assistance you receive can differ depending on the particular incubator programme you sign up for and the specific challenges your business faces.

An incubator will usually start to work with businesses at a very early stage, typically when the entrepreneur is still developing their business model and their product is just starting to take shape. Some incubators are also connected to accelerators, which can help startups in the next stage of their journey, with funding and other resources to improve the rate of growth.

The incubator itself can be a non-profit organisation run by a university or government agency, or a profit-making institution that receives equity in return for funding. Some incubators can be industry-specific while others take on more general startups that show promise.

To get on a startup incubator programme, you will usually have to go through an application process to prove that your idea has the potential to become a viable and profitable business. When the programme starts, your startup will receive assistance for anything between six weeks and two years, with the duration usually set beforehand.

How Do Startup Accelerators Work?

The terms incubator and accelerator are sometimes used interchangeably, but there is a big difference between the two. While incubators are designed to nurture an idea and help it become a business, startup accelerators take that business and give it the tools it needs to grow.

Businesses on accelerator programmes typically already have a product that has been validated in some way. That could be through paying customers or a group of free users. Accelerators are intense, fast-paced environments that pack in everything an entrepreneur needs to scale up their early-stage startup in a short space of time.

As well as funding, startup accelerators also give businesses access to other services and support in order to help them grow. These can include:

• Mentorship
• Access to investors
• Skills development
• Educational opportunities including workshops, webinars and demo days
• Pitching practice
• Networking opportunities
• Legal assistance with intellectual property
• Financial and accounting support
• Workspace and utilities

Startup Incubator vs. Accelerator

As we’ve said, it’s not a case of one or the other when it comes to startup incubators vs. accelerators. They provide vital assistance at different stages of your business’s lifecycle. However, it is worth looking at the potential benefits and drawbacks of each so you can give your business the best chance of success.

Benefits of startup incubators

• Spend more time developing your product

One of the main benefits of startup incubators is being able to spend more of your time developing your product and bringing your business to life. The support services can take care of some of the many day-to-day administrative responsibilities on your behalf.

• Access to influential networks

How many prospective business partners are going to agree to work with a one-month-old startup? Realistically, probably none. However, as a part of an incubator, you can tap into a strong network without presenting such a high level of risk.

• Exposure to leaders and mentors

As well as budding entrepreneurs, startup incubators are also home to angel investors, venture capitalists and other experienced business people who can provide mentorship. The opportunity to learn from experts in their field who have been there and done it before is invaluable, and often worth more than any financial investment.

• Help to find funding

Funding is not always part of the agreement when joining an incubator. It’s often the case that startups benefit from resources such as free office space and mentorship instead. However, there are partners who can provide funds for some startups and introduce entrepreneurs to investor networks.

Drawbacks of startup incubators

• A competitive application process

Given what startup incubators do and the perks on offer, it’s not surprising that the application process is rigorous and competitive. You must usually submit a detailed business plan as part of the process and attend a thorough assessment and interview.

• The process is demanding

If you’re not 100% committed to joining a startup incubator, then it probably isn’t for you. Most incubators ask for a time commitment of between one and two years. You’ll learn a huge amount during the programme, with many training sessions, workshops and networking events - but it will demand a lot of your time.

• You may have to give up equity in your business

Not all startup incubators provide investment in return for equity in your business, but plenty do. You must consider whether you’re willing to give up part of your business before it’s even gotten off the ground.

Benefits of startup accelerators

• Validate your idea

The truth is that good ideas don’t always translate into good businesses. Startup accelerators give you the chance to validate your idea and prove your concept before you get too far in. Is there a market for your product? Do the financials add up? Are the costs involved too high? Is it investable? Discovering this in the early stages of the business could save you a lot of wasted time and money.

• Understand what investors want

Startup accelerators are designed to help you grow your business quickly, and a big part of that is finding investment to fuel your growth. Accelerator programmes teach you how to pitch to investors, what they want to see and how to present to this type of audience. Accelerators usually end with a pitch or demo day where you can put everything you’ve learnt into practice.

• Work with like-minded entrepreneurs

Building a new business can be a lonely experience with plenty of highs - but there are also lows that can dent your confidence and motivation levels. Joining a structured accelerator programme alongside other inspiring and ambitious entrepreneurs can help to keep you motivated and on track. The bonds you build can also lead to fruitful opportunities in the future.

Drawbacks of startup accelerators

• A loss of equity

Unlike startup incubators, accelerators may provide their services in return for an equity share. That’s a big part of your business to give up, so make sure you join an accelerator programme that gives you plenty in return.

• Relocation

Depending on where you live and the type of business you run, you may have to relocate to join an accelerator programme. While that can bring plenty of opportunities, it may not be something you’re initially prepared for.

• Choose your network carefully

Not all startup accelerators are created equal. While some could provide huge value to your growing business, others may not have an established network of investors or mentors that add much value. That’s why you should always look for accelerators that have a proven track record of producing successful startups in your industry before applying.

How to Join a Startup Incubator or Accelerator

Now you know how startup incubators and accelerators work, here are a few quick tips to help you join one.

Step 1: Research incubators and accelerators in your area

This guide is a great place to start if you’re a London-based business. However, if you’re looking for something UK-wide you can search through the top 10 incubators and accelerators to find one best suited for your business.

Step 2: Apply

Once you’ve found an incubator or accelerator with a proven track record in your industry, you can apply. You will be asked for specifics about your business idea, the market, your team, your traction and other aspects that are relevant to your success.

Step 3: Assessment

If your application is well received, you’ll be moved through to an assessment stage, where you’ll be screened for investability, revenue potential and the strength of your product or service.

Step 4: Interview

As well as an assessment, there’ll also typically be an interview stage. Here, the programme leaders will dig a little deeper into the team, your product and your progress to date.

Step 5: Evaluation

If all of the stages have gone well so far, you’ll be asked to provide financial and legal documents that support the claims you have made about your business.

Step 6: Acceptance

Cue the popping of Champagne corks. The onboarding process will begin and you’ll learn more about the programme and the rules you must follow.

Get your startup off the ground

At Knight Frank, we offer flexible office space that’s perfectly suited to the needs of startups and growing businesses. Whether it’s coworking spaces, serviced offices or private spaces for meetings and pitches, we have everything you need to take your startup to the next level.