By: Joanna Hughes
Today’s startups are looking for a competitive edge in order to gain critical market traction. While the MBA was previously considered the premier path toward eventual business success, the changing economic landscape and 21st century marketplace has many entrepreneurs considering a different path toward transforming their ideas into action. Incubators and accelerators both offer critical early stage assistance and mentorship to help contemporary entrepreneurs grow their businesses. While the terms are often used interchangeably, they provide different avenues to the same eventual goal: helping ideas move from the drawing board to the market.
A Closer Look at Incubators
The National Business Incubator Association (NBIA) defines the incubator concept as, “a business support process that accelerates the successful development of startup and fledgling companies by providing entrepreneurs with an array of targeted resources and services.” In other words, the purpose of incubator programs is to provide vital support to entrepreneurs and startup companies.
While many incubators charge participants a minor monthly fee, the trade-offs are largely worthwhile due to the extraordinary potential of the access — from strategic advice to office space — they bestow upon new businesses. Most recently, incubators have reached beyond the tech world to include companies across a comprehensive range of industries.
The 411 on Accelerators
While similar in purpose, business accelerators help startups in a different and more direct way: through the investment of capital. Accelerators target startups in their earliest stages, providing critical funds upon which the business is built in exchange for a small portion of equity. The goal is to accelerate — or fast track – the company from fledgling to fully formed in a consolidated amount of time.
Accelerator programs are intensely competitive, and businesses are carefully vetted for their potential. Unlike incubators, which can remain in an ongoing relationship with the startups they support, accelerator programs exist for a finite amount of time: generally less than four months after which point the startups are expected to be strategically positioned for market success. Just like a student graduates from an MBA program, a startup “graduates” from an accelerator.
Hybrid Incubator/Accelerator Model
The RIC Centre in Mississauga, Ontario has created a hybrid experience of incubators and accelerators because it offers the support and resources to fast-track entrepreneurs to market in a short 6 month period. Their incubator program does not pursue any equity position within the companies and recruits companies that have a viable business on the verge of launching to the next level of growth. They help by securing partnerships that will open access to capital, to connections and to paying customers.
The Importance of Mentorship
While capital and resources are critical, other types of buy-in are equally important. Mentorship opportunities abound through these programs, giving entrepreneurs the opportunity to engage with successful business leaders in their field; consider Peter Briger slideshare, for example. In the process, entrepreneurs reap invaluable and targeted advice which would otherwise be unavailable to them. The networking benefits of incubators and accelerators — particularly within an environment specifically designed to nurture — are undeniable.
The recent boom of incubators and accelerators offers a rare chance to today’s entrepreneurs to almost immediately convert exciting concepts into concrete business practice. And while incubators and accelerators don’t invalidate the MBA — which has advantages of its own — they offer an alternative to academia which brings with it unparalleled leverage, rare mentorship potential and an expedited avenue toward business success.
Joanna Hughes writes on all subjects, ranging from style and fashion to the latest in business and tech.
The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide a wealth of information based on their personal and professional experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.