Incubators, accelerators and venture builders

Incubators, accelerators and venture builders

Investment is fundamental to any startup and we are sure that it features at the top of any budding entrepreneur’s priority list. In this post, we’ll be taking a closer look at need-to-know terms and the key differences between investment players found within the startup ecosystem.

Networking

When embarking on your startup journey, it’s essential to seek investment and start pitching your ideas to people in the business community. This activity also proves to be an all-important networking experience and allows you to cover more ground on your route to understanding the market.

Many entrepreneurs dream of finding a business angel willing to invest their own cash in an idea that authentically captures their attention and proves to be too attractive to ignore. However, we all know that this can be a hard feat for any entrepreneur and, while we fully advocate for pitching, it’s important to fully investigate and approach incubators, accelerators and venture building studios in order to start the process of obtaining investment for a project. Remember that business angels are present across the key forms of investment, but the most important thing is to approach different sources of funding.

Incubators: helping to nurture and grow

Incubators tend to be made up of institutions that support entrepreneurs in developing their startup ventures, particularly in the earliest stages of the business journey. Incubators might include academic institutions, non-profit development corporations, for-profit development ventures or interests, venture capital firms or even government organizations in some circumstances.

Major functions of an incubator include idea screening, mentoring, coaching and providing access to seed capital. Involvement in the earlier guidance stage is a good way to think of incubators, although they incorporate a vast range of roles and activities.

Example activities include Idea screening, mentoring, coaching, company financial management, development of a revenue model and early financial projection all from a perspective of nurturing and growing the business.

Accelerators: bringing about a radical change of pace

While similar to incubators in many ways, accelerators can be categorized by some trends and features that tend to set them apart on the whole. For a start, they use a highly systematic approach to set up segments in terms of operational, strategic, financial and organizational difficulties to focus on resolution and rapid growth while essentially troubleshooting.

At the same time, they set tight deadlines designed to boost performance and tend to use fast-paced, fixed duration programmes while also offering many of the same services as incubators such as mentoring, coaching and market strategy. It is also worth mentioning that accelerators tend to be less administrative-focused than incubators and are often more competitive and tech-focused.

Venture builders: building professionally from the ground up

Venture buildings differ much more markedly from incubators and accelerators. They tend to build and create startups from the ground up while strongly boosting efficiency and expertise from the get-go due to the disposition of an internal team of experts in a broad spectrum of areas.

As their name suggests, they tend to adopt projects as their own, acting almost as a “parent-figure” for the startup. They tend to work with the team in the longer-term. This results in longer accompaniment when compared with incubators or accelerators. They are focused on growing an entire company and identity rather than on assessing or coaching specific parts of the organism.

Money is important but it’s not everything…

It’s important to remember that money is certainly not the only factor when it comes to these three players that we’ve reviewed in today’s blog. Mentoring, coaching and guidance are absolutely essential and while meritocracy is a value which we all live by and strive for, knowing people in the business community with a track-record and contacts is priceless. As we often advise, keeping an open mind, being open to advice, changing your mindset and being prepared to listen really do go a long way in the startup ecosystem.

At The Startup CFO, we provide external CFO services and a wealth of track-record and experience in order to help you make the best decisions tailored to your business idea. Don’t hesitate to get in touch with us to discuss your needs and doubts about growing your startup.

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