Seeking support and guidance to help you grow is a natural part of running a start-up or small business. However, finding the right support for your specific business needs isn’t always as easy as you might think. There are several kinds of growth support organisation, but there is a considerable amount of confusion about what they each are, and what they do. These include business incubators, accelerators and innovation centres. In this article, we’ll look at some of the differences between the incubator, accelerator and innovation centre model, and give the pros and cons of each.
All three types of organisation do have one underlying similarity. They all aim to provide support that will help to spark the growth of businesses. However, the methods they each use to help achieve that growth are very different. These will become more apparent as we look deeper.
What are they?
Accelerators aim to increase business growth rapidly, in a much shorter time scale than it would normally take. They exist to facilitate the development of projects and offer the tools to launch strong propositions, with the main goal of helping them gain external funding. Working with an accelerator is often a short and intensive process.
Accelerators tend to fall into one of two categories; they are either owned by large organisations with the aim of supporting their own research and development goals, or are commercial entities that support themselves financially by taking an equity stake in participating start-ups.
DurationThey usually run on a set short timeframe of about 3-4 months. During this time, the accelerator will provide services such as mentorship, office space and supply chain resources. The process is usually predefined, with fixed goals and milestones that the business is expected to achieve. At the end of the programme, the start-up will often get the opportunity to pitch to investors.
Participants must apply for a limited number of spots on the programme. Most good accelerators are tremendously competitive, due to the need to pick the best start-ups, which will be investable and have the capacity to grow rapidly. Often, less than 1% of applicants are selected for accelerators.
- Ideal for opportunities that could result in rapid growth
- Often have experienced mentorship and business support available
- Opportunities to access external funding
- Competitive - only offer limited spaces
- Tend to be less flexible
- Concentrated on short-term growth - little follow-on support if the project is not immediately successful
Want to learn more about business accelerators in the UK? Try here.
What are they?
A business incubator is an organisation designed to encourage the growth and success of young start-up businesses in their early months or years through providing a range of support services. These sometimes - but not necessarily always - include affordable physical space, management training, marketing support, network connections and access to capital.
Incubators are usually positioned to support the medium-term development of a business. While most will have an upper limit on the length of time a start-up can hold tenancy, the focus of the intervention is often on achieving sustainability over short-term growth. It is usual for incubators to be involved with start-ups and small businesses for a while, with the average time being two years.
- Office space offered at below market rates
- Offer experienced advice and expertise in developing business models and marketing plan
- Can help businesses with finding funding
- Aim to reduce operational costs by offering an infrastructure of support, with shared administrative, telecommunications and logistical burdens
- Incubators create a business network, where you can make new connections, potential customers or partners
- Aim to support sustainable growth
- Applying can often be a long, tiring and rigorous process
- Best equipped to support more traditional businesses and business models
Want to learn more about business incubators in the UK? Try here.
What are they?
Innovation centres are very similar to business incubators in that they often look to develop start-up and small business growth and success over the long term. They even use similar resources and services, such as office space, mentoring, training and network building.
On this website, you’ll find Sussex Innovation described as both an ‘incubation network’ and an innovation centre. So, what makes us – and many other innovation centres – distinct from an incubator?
One key feature of an innovation centre is that it is often linked to an educational institute. For example, Sussex Innovation is wholly owned by the University of Sussex. This means that we can use our connections with the University to offer unique support. Some of the ways we do this include building collaborations between academic researchers and commercial enterprises, or providing access to skilled graduates through initiatives like the Catalyst Programme.
Another difference is that our membership is generally comprised of businesses that have innovation at their heart. Most of our members are either based on a new technology, product or platform, are developing a disruptive business model for their industry, or are what we might describe as a ‘knowledge-based’ business, built on some unique research or intellectual property. We also work with more established companies who recognise the need to innovate to stay ahead in their sector.
If you think that your business might be a good fit for the Sussex Innovation community, find out more about our membership options here, or get in touch to tell us more. We love hearing about new ideas, and hold a free consultation with everyone who makes an enquiry.