Gyms and other fitness centers do the same thing. Often they’ll offer a 7-day pass, which is also something you could consider for your coworking...
Incubators, Accelerators, and Startup Studios: what's the difference?
As a coworking space owner or operator, you likely work with entrepreneurs and startups on a daily basis — you might even cater specifically to them in your community.
Many coworking spaces use terms like "incubator," "accelerator," or "startup studio" without really understanding the differences between these concepts. While they sound similar on the surface, there are some key distinctions that set them apart. Understanding these differences can help you better position your coworking space and the value you provide.
What’s an incubator?
An incubator is typically an organization that provides support services and resources to help very early-stage startups get off the ground. Incubators will often provide things like:
- Affordable office space and shared services (e.g. internet access, printers, meeting rooms, etc).
- Mentorship and coaching from experienced entrepreneurs or business veterans.
- Educational seminars and workshops on relevant topics like marketing, funding, product development, etc.
- Opportunities to network with and get advice from peers.
- Access to seed funding or grants.
The goal of an incubator is to help founders turn an idea into an actual business. The focus is on providing guidance and support during the fragile idea phase. Incubators often take a small equity stake in the startups they support. Startups typically stay in an incubator for 1-2 years.
A key part of Irontek's model is an accelerator program called gBeta, run by Madison-based gener8tor. The 7-week program provides early stage startups with critical support.
So what’s an accelerator?
An accelerator has some overlap with an incubator but is designed for startups that are a bit more established. Accelerators provide:
- A structured program lasting a few months with a specific curriculum. This could cover things like customer discovery, product-market fit, scaling, fundraising, etc.
- Mentorship from successful founders and investors.
- Opportunities to pitch to and network with investors.
- Potential seed funding after completing the program.
The goal of an accelerator is to rapidly grow and scale an existing startup by providing intensive education and support. Accelerators also take an equity stake in exchange for the services provided. Startups in an accelerator may already have an MVP (minimum viable product) but are looking to refine their model and quickly gain traction.
What about a startup studio?
A startup studio (also known as a startup factory) is a relatively new concept. It involves actually forming and building companies from scratch, rather than supporting founders who come with their own ideas. A startup studio provides:
- In-house team of experienced entrepreneurs to brainstorm and validate new business ideas.
- Funding and resources to test concepts and get new ventures off the ground.
- Shared services and infrastructure so each new startup doesn't have to reinvent the wheel.
- Processes and frameworks optimized for rapidly iterating on products.
The goal of a startup studio is to streamline the creation of brand new startups using a proven formula. The startup studio provides the execution capabilities while coming up with promising ideas to pursue. They are typically funded by large investors and then own a majority stake in the startups created.
Incubators support very early-stage startups with an idea and founders, but not much else. The focus is nourishing fragile ideas into actual businesses.
Accelerators help grow and scale more established startups through intense mentorship and educational programs. The focus is rapid traction and growth.
Startup studios form and build startups internally, providing everything needed to quickly test and iterate on new ideas. The focus is startup creation using a repeatable process.
In the world of coworking spaces, understanding these differences can help you determine which approach (if any) makes sense for your community and members' needs. Rather than just adopting one of these buzzwords, think carefully about the level of support and types of resources you are able to provide.
GrowCo helps a new crop of innovators emerge
GrowCo is focused on programs to support founders with a healthy nod to early stage ideas, building a destination at the Boyd Community Innovation Center (BCIC), and creating a culture of entrepreneurship in the Midlands.
For example, your coworking space alone may not be equipped for intensive incubation or acceleration services. However, you could potentially partner with an incubator or accelerator program to provide space for their startups in exchange for access to some of their educational resources and mentors.
Short of creating your own accelerator, there are many existing programs that can make use of your space and bring a fully fledged program to your community. They include:
- Y Combinator
- TechStars (Hey, Coworks did this one!)
- 500 Startups
- Plug and Play Tech Center
- Innovation Works
- Alchemist Accelerator
- StartX (Stanford)
You may also consider hosting periodic pitch events or investor days to help connect your mature startups with funding opportunities. This provides value-added services without getting into actual incubation.
The key is determining how to best support the lifecycle needs of startups in your community. An early-stage entrepreneur just getting started has very different requirements compared to a growth-stage startup already gaining traction. Understanding the differences between incubators, accelerators and startup studios allows you to better address those needs in a more targeted way.
The most important thing is not to simply label your coworking space with one of these trendy terms without fully appreciating what it entails. Focus first on understanding your members' needs and constraints. Then explore options like partnerships or special programs to provide the type of startup support services for which there is greatest demand. Avoid trying to be everything for everyone. Position your specific value proposition tailored to your market and members.