Business Acceleration and Incubation: What is it?

Por: Pedro Ferreira - June 29, 2022

Business Acceleration and Incubation: What is it?

The dissemination of business incubation and acceleration practices around the world, although apparently new, is an old reality that has implied a new dimension in the theory and practice of business management as we currently know it. So, what is it and what is it for? The need to improve management and assist the creation and growth of startups has become increasingly important, in an environment of technological development and growing competition, marked by globalization and the open market. This reality provides an opportunity for early-stage startups to maximize their chances of success by shaping specific incubation strategies that combine several complementary incubation tools. This includes, for example, the provision of marketing assistance, help with day-to-day business operations, networking activities, internet access or help with accounting and liaison with strategic partners.

To establish a successful startup, entrepreneurs often look for business programs that can help their business growing. In this way, incubators and accelerators are the chosen entities or programs that aim to boost the successful development of newly created companies, increasing their probability of survival and growth. Incubators and accelerators must allow a smooth start and facilitate the sustainable growth process for startups. An incubator helps entrepreneurs develop business ideas, while accelerators accelerate the growth of existing companies with a minimum viable product (MVP). Incubators operate within a flexible timeframe that ends when a company has an idea or product to present to investors or consumers. The timeline for accelerators is usually a few months during which the entrepreneur receives guidance, funding and help.

Business acceleration or incubation?

Accelerators

The purpose of accelerators is mainly networking, mentoring and resource allocation to trigger business success. A company's time at an accelerator typically ends with a presentation sharing the growth and development they have achieved during the weeks or months on the program. It is important for every entrepreneur who wants to enter this path to carry out a self-assessment to consider whether he is at the right time and stage to join this type of program or, perhaps, an incubator would be the most appropriate. If the company is growing rapidly, an accelerator may be the right choice. If your growth plan is still in development, an incubator might be a better choice.

The emphasis at accelerators is on rapid growth and successful product launches. At the end of the period, entrepreneurs have the opportunity to make a proposal to funders for further funding. An accelerator is therefore best suited for startups that want to reduce their time to market .

Incubators

Incubators focus on equipping the entrepreneur with the business model, plan and guidance needed to confidently present their business plan to investors. In the incubators , participants spend their time in contact with other entrepreneurs, developing their ideas, adjusting their product or service to the market and perfecting the business plan. This process usually takes a few months and ends with a demonstration in which the entrepreneur presents his business idea to investors . For those interested in this type of path, it is necessary to check that they have the right mentors and guidance for your needs and those of your business. If the problem is just funding, an accelerator may be the most appropriate.

The important thing to note here is that the startup incubation mechanisms act as models of evolution, allowing the entrepreneur to build the stages of his business in a solid way.

In an increasingly competitive market, many entrepreneurs, especially beginners, have already understood that their success depends on being integrated into structured business acceleration and incubation programs to guarantee more chances of consolidation in the market.

Factors to consider when choosing business acceleration and incubation partner

Startup maturity stage : a startup still in the initial stage of the idea will have very specific needs resulting from this reality, very different from those of a startup already present in the market. Often, the model of an incubator can be more suitable for companies that are still in the idealization phase. An accelerator has selection criteria that normally combines market assessment , technological differentials and the potential to scale the business, which is not yet present in startups that are at the idea stage.

Alignment of values : Incubators and accelerators are more successful when they are able to align their mission and values with the vocation of startups that you want to guide . Consequently, so are startups. Therefore, it is imperative for entrepreneurs to know well the mission, values and focus of action of accelerators/incubators.

Selection and graduation policy : incubators and accelerators, when selecting startups, apply criteria that carry their values and focus of action. In addition to these criteria, entrepreneurs should be aware of other applied factors such as, for example, accelerators that also examine the potential for rapid growth (scalability), team composition and experience , possible existing prototypes, intellectual property and market opportunities.

Nature and scope of services provided: Incubators and accelerators typically offer five services and resources such as access to physical resources, space support , access to financial resources, direct technical support to entrepreneurs, and access to networks of relevant contacts. Organizations with fewer than four of these services technically should not be considered incubators.

Partner networks : One of the most critical components for incubators and, in particular, accelerators with a focus on market traction, are partner networks , including mentors, corporate partners and service providers . Many incubators and accelerators, for example, include the provision of services such as legal advice, accounting, financial management, and others.

CONCLUSION

Accelerators and incubators act in the markets as vital mechanisms for the promotion of innovation and sustainable economic development. Many of the initiatives and projects that can be accelerated have greater chances of survival in the future , and it is up to the entrepreneur to study the individual possibility of joining each of the programs taking into account the previously mentioned factors such as: the stage of maturity of the entity; o the alignment of the entrepreneur's needs with the mission, objective and focus of the action ; selection and graduation policy ; the nature and scope of the services provided , as well as the network of partners. 

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