There’s a slight difference between an incubator and accelerator. An incubator nurses startups in their infancy and doesn’t rush them out. Accelerators house startups for a limited time where they turbocharge their business before sending them on their way. Those differences aside, they’re both designed to help startups take their business idea to the next level by giving them the resources and support they need.
They Give Participants Access To Rich Networks
Accelerators and incubators provide the financial and administrative support many startups lack in their early days, but that’s not the only thing they provide. They also give their cohort access to an extensive network of experienced mentors in the form of executives, successful entrepreneurs, and investors.
One of the main selling points for the Axel Springer Plug and Play Accelerator is the network it shares with its startups.
“We do not just invest money. We know that the real value is in the people. The founders, the people in our team but most importantly the people we know. We connect our company to mentors, founders, and investors.”
With the right mentor, a process that would’ve taken an inexperienced entrepreneur years can take months. An engaged mentor helps a startup focus. They advise startups on hiring decisions when so much rides on bringing the right person on board. They offer a greater sounding board for new ideas and the business acumen to spot distractions. Not to mention they’re great to know when it’s time to fundraise.
So how on earth does this apply to companies that have all of these capabilities in house? It makes their employees more creative, forward-thinking, and dynamic. Employees encouraged to attend conferences and meet external players in the industry avoid a company “ideas bubble”, spot emerging trends, and bring new ideas to the table.
They Take Risks on Big Ideas
Most incubators and accelerators are businesses themselves. Their goal is to get in on the next best thing by making it happen. Consequently, they offer their services in exchange for equity in a startup. They help it grow and when it hopefully does, the program’s returns grow, too. Essentially, it’s an investment in talent.
It doesn’t matter if you have 2 employees or 200. Ideally, you’ve hired some whip-smart, competent people. Whip-smart, competent people are brimming with ideas. Provide a forum within your company where employees can explore these ideas. It doesn’t necessarily mean that you’ll pursue them, but it does mean you’ll get to hear about them and potentially benefit from them. Otherwise, you run the risk of that employee running off and developing it themselves.
Investing in smart ideas is the entire business model of accelerators, and it works. Y Combinator, one of the most famous startup accelerators, boasts success stories like Airbnb and Dropbox in its portfolio.
They Offer a Clear Vision or Purpose
Accelerators and incubators come and go. That’s the nature of the game when you’re gambling on early-stage companies. But those that have a clear vision maintain the focus needed for longterm success. This clarity is either due to a strict application process or because they only cater to startups from a specific niche.
FinLeap calls itself a company builder, and it focuses mainly on “reshaping finance”. Financial services impact everything from our personal lives to our business interactions, so anything that makes these transactions simpler is enormously profitable. One of its companies, solarisBank, raised €26.3 million (approximately $31.4 million USD) in March of this year. In 2016, another one of its startups, BillFront, raised €33million (approximately $39.4 million USD).
Knowing your company’s core purpose, which can be clearly outlined in a mission statement, is a helpful way to avoid distractions, seize the right opportunities, and rally your team around shared goals.
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