By October 2021, the Census Bureau’s Business Formation Statistics data reported that nearly 1.4 million startup applications were filed in the United States. Imagine the number of applications in 2022.
If you’re planning on turning your world-changing idea into a startup this year, think about how you’ll be able to grow during the early stages of your venture. As a founder, a startup incubator could be what you need to start off on the right foot.
Define “Startup Incubator”
A startup incubator is where the billion-dollar startup ideas begin to grow!
For a more detailed definition, startup incubators are collaborative organizations that assist startups in growing. According to the U.S. Chamber of Commerce, startup incubators provide startups and their founders with free or low-cost workspaces, funding, mentoring, and access to investors, in the hopes of success. Startup incubators support companies or entrepreneurs that are in the earlier stages of the startup process, essentially nurturing the startup over a long period of time.
Startup incubators typically work with local businesses owners, students, and alumni in their area, and are often organized by:
- Non-profit Corporations meant to stimulate the economy
- For-Profit Development Ventures meant for partnerships
- College/University Affiliations
Incubators may work with young companies in the area, work with students/alumni, or both.
Did you know? Pangea.app participated in Brown University’s incubator program for post-graduate entrepreneurial projects in 2018.
“Startup Incubator” VS “Startup Accelerator”
So, you’ve stumbled upon a “startup accelerator.” While both terms tend to be interchangeable these days, it’s important to differentiate between them.
A big difference tends to be the time a startup may find itself in one of these programs.
A startup accelerator “accelerates” an existing startup’s growth within a fixed time. Startup programs might last between a few weeks to a few months, in which they work with mentors, network with other entrepreneurs, and build their startup while trying to avoid problems that might get in the way of growth. In essence, accelerators cram years of mentorship, education, and growth in a matter of months. In return, accelerators ask for equity.
Compared to a startup accelerator, an incubator allows a startup to workshop its ideas. At the same time, incubators tend to work with startups that don’t have many time commitments, avoiding a set amount of time. However, the average duration of an incubator program tends to be 2 years. At the end of the program, to “graduate,” startups participate in a “demo day” in which they present their startup to potential investors.
Regardless, incubators and accelerators have similar benefits that can help startups grow and stay on the right path. Both offer training opportunities for founders and mentoring with industry leaders. However, both tend to be very selective and will require a long application process regarding who gets to be a part of the program.
An accelerator could even be the next step after participating in a startup incubator. Once startups reach a certain degree of growth within an incubator, they have the tools they need to join a startup accelerator in which they can develop a solid business model and grow further.
More food for thought: Pangea.app participated in the Y Combinator accelerator program in 2021. The Y Combinator has been credited with launching “unicorns” such as Stripe and Airbnb.
Wrapping It Up
Depending on where your world-changing idea finds itself or where you are in the startup process, it might be important to find a place where your idea can be developed and where you can learn as much as possible about the next steps. It might be scary to venture out, but the great thing is that you don’t have to be alone.
Since many founders might lack the knowledge or education experience, it’s important to learn about the nitty-gritty of founding a startup. The right incubator program will be the one that allows you to find the right people to network with, will provide the best workspace to work and collaborate with others, will be affordable based on your budget or needs, and will help nurture your idea for the better.
If you’re ready to take the next steps in choosing a startup incubator, believe in yourself and in your idea!