• 4 MIN READ
How to Choose Startup Incubators and Accelerators
January 30, 2023
The UK is a leading and ever-growing startup hub. Businesses that are just starting to gain strength and aspiring entrepreneurs who want to offer their ideas may need accelerators. The Payrow platform strives to support the development of British startups, so we are also involved in the field of startup accelerators and incubators. But how exactly can they help? Accelerators and incubators offer early-stage companies various productive ways to develop their business.
While there are many incubators and accelerators in the UK, choosing the right one can be a real challenge. In this article, we will explain why businesses need incubators, what the difference between an incubator and an accelerator is, and how to choose the perfect one for you.
What Startup Incubators and Accelerators Mean
Before comparing accelerators and incubators, we need to mention that they are not in competition with each other. Both of these mechanisms can be useful to a startup but at different stages of development. Incubators are more useful for an early startup. If a startup has already created a product and assembled a team but realised that it is unable to unleash its potential fully, it is better to choose an accelerator.
A startup incubator is a collaborative activity aimed at helping new companies and small businesses succeed. A startup incubator aims at helping entrepreneurs solve the most common problems associated with launching and running their businesses. The core goal of a startup incubator is to help these companies expand and grow.
The assistance offered by an incubator usually includes:
- Helping people get used to the workspace;
- Searching for initial financing;
- Providing mentoring;
- Teaching businesspeople how to become successful entrepreneurs.
According to Fundsquire statistics, about 20% of businesses fail in their first year, and 60% more are likely to go bust within three years. There are several causes for this, but the main reason determined by Fundsquire is that there is no market need for their services or products. Incubators can be helpful here as well, as market experts can advise you and assist in defining a business strategy for your product.
A startup accelerator is a short-term and intensive programme aimed at stimulating business development and growth. Such a programme has practical significance and usually takes place over a short period of time. Startup accelerators are mentor-based and include workshops, training, consultations, and general guidance.
A startup accelerator offers:
- Short-term expansion opportunities;
- Assistance in finding new investorsё
- Strategic support in promoting and scaling;
- Improved stability for companies.
Main differences between incubators and accelerators:
Acceleration programmes, unlike incubators, are focused on enterprises that have passed the early stages of formation. These businesses tend to be self-sufficient but still need support and guidance to reach the next level of success.
How Can Accelerators and Incubators Help Startups?
In today’s highly competitive market environment, having a great idea is not enough. Experience in the target sector, proper skills, and multiple kinds of resources and funding are the most important tools a startup needs to succeed. Here are some of the ways incubators and accelerators help startups:
- Direct investment in startups. Startups in incubators do not have to worry about typical business costs like office rent and overhead. Instead, using a cohort-based approach, resources are distributed among several startups, helping them to manage their expenses conveniently.
- A supportive ecosystem. As a rule, accelerators are pre-equipped with mission-critical support systems, including patent attorneys, law firms, finance directors, and regulatory experts interested in partnering with developing startups. You can read about how this works in the Harvard Business Review article.
- Excellent investment opportunities. Raising capital for your startup may not be easy. Often there are elusive investors that you may have to chase for ages before making an appointment, and the likelihood that your offer will be rejected is high. Luckily, incubators and accelerators can save you time and effort because they have contacts with well-known venture capitalists, individual investors and angel investors.
How to Choose the Right Incubator or Accelerator for Your Business
Both incubators and accelerators are fast ways to develop a startup. They provide access to the right experts who will help correct the mistakes made throughout a project and discuss business development, operational management, marketing, and more. But how should you go about choosing the perfect one for your business? There are several factors to consider, such as the size and type of the business, the business model, and the target industry.
- Start from the size and type of your business. When choosing between an accelerator and an incubator, think about your company’s size and type. If you are a small business, you may not need all the resources an accelerator provides. In contrast, if you want to expand your startup, you may need a growth-based approach and more support.
- Analyse your business model. An important factor to consider is your business model. Beginners with an idea but without a clear action plan and stable profits are ideally suited to using incubators. There you will take the first steps, assemble a team, conduct market research, and turn an idea into a business project. If you are just planning to launch a new product or service, you may not need significant support from the accelerator. However, if your company is already successful, accelerator stakeholders may be more willing to invest time and resources in your company.
- Focus on the industry and the market. Incubators and accelerators with experience working in your target market can provide quick access to the necessary expertise and partnerships. Let’s say you work in MedTech. A specialised accelerator for medical technology businesses can contact a medical holding sponsor or a potential partner so that you get the necessary funding and resources.
Consider the type of incubator or accelerator and the number of incubators or accelerators available for you in your region. There are plenty to choose from in the UK. Additionally, it’s a good idea to check the rating of your accelerator or incubator and the reviews they get from clients.
Choose Payrow Financial Services for Your Startup
Payrow is a platform that provides many useful tools for your business. We offer financial services for SMEs and startups across the UK. We help startups to plan and analyse financial streams and track expenses efficiently using digital tools that monitor all aspects of financing.
Being a startup as well, Payrow understands all the pain points our clients may have. We know how crucial the security of finance and smart management are. Our experienced team is ready to answer all your questions related to creating invoices, processing payments, and paying taxes.
We offer high-quality financial services that will help you free up time and resources and allow you to focus on your major goals. Delegate the routine tasks and simplify your business processes with Payrow!
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