Incubators and Accelerators: Options for Helping Entrepreneurs

October 20, 2014

The DC metro area has seen an explosion of entrepreneurial startup activity over the last several years. A variety of resources, including incubators, accelerators, and co-working spaces seek to help startups succeed. Entrepreneurs face a myriad of options when it comes to incubators and accelerators. How are they similar? How are they different? Most provide space, mentorship and training, and some provide capital. Some focus on specific industry verticals, while others are broad in scope. They can be run by nonprofits or by big corporations, and arrangements can last for a fixed short term or many years. What are the pros and cons of doing either or none?

What’s an entrepreneur to do with so many options?

Recently, I led a panel discussion for the NVTC Entrepreneur Center to explore this very question. Panelists included Evan Burfield, co-founder of 1776; Fletcher Jones, managing director of AOL Fishbowl Labs; Dan Wooley, general partner of Mach37; Rachael Stott, director of Refraction; and Juan Pablo Segura, founder of 1EQ.

While definitions vary, the distinctions aren’t always clear cut.

  • Incubators typically provide entrepreneurs co-working space, collaboration opportunities with other startups, workshops, casual mentoring, networking, etc. A startup could be involved in an incubator for several years.
  • Co-working is an “incubator light” option that typically doesn’t offer much in the way of mentoring and workshops.
  • Accelerators typically work with startups that are a little farther along and often provide an intensive three to four-month full time immersion designed to accelerate the growth of a startup enterprise with a very structured program of mentoring, curriculum, etc. Accelerators will often provide some seed capital, say $25,000 to $50,000, in exchange for a small amount of equity.

While each option generally involves an application and vetting process, selection into an incubator is normally more grueling and competitive.

To get a sense of the variety, consider our panel of local organizations. 1776 is an incubator and global hub for startups tackling major challenges in education, energy, healthcare, government and other critical industries. 1776 offers a wide variety of mentoring, training, networking, etc. and also provides co-working space. AOL Fishbowl Labs provides corporate linked (AOL) co-working space with informal opportunities for mentoring, collaboration and networking. Mach37, a subsidiary of state funded CIT, is a cybersecurity accelerator with a 13 week full time program with a structured curriculum focused on the validation of product ideas and the development of relationships that produce an initial customer base and investment capital. Mach37 does provide some capital in exchange for a small equity interest. Refraction, linked to Reston based startup Canvas, is a co-working experiment focused on making collaboration an art and a science; simple, repeatable, scalable and fun. 1EQ is a health IT startup that participates in a non-traditional accelerator, StartUp Health, and in an incubator, 1776.

Clearly, one size does not fit all in the incubator/accelerator world and every startup does not need to be a part of an incubator or accelerator to succeed. A corollary is that participating in an incubator or accelerator does not guarantee success. So what are some of the questions an entrepreneur should ask to consider which option, if any, might be a good fit for a particular startup?

  • What mentoring is offered? Are the mentors experienced in what you are trying to do and provide networks that will help you succeed?
  • What training and workshops are offered? How structured is the curriculum? Does the curriculum address my needs?
  • If the option involves co-working space, is the location beneficial to your startup?
  • Are any industry verticals emphasized and if so do they align well with what you are trying to do?
  • Does the option provide any capital? Does the option require you to give up some equity?
  • What benefits can you expect to receive?
  • What are your obligations including time, money, etc. for you to receive the benefits you hope to receive? Can you meet the obligations?
  • Are there any unique benefits with this option?
  • How many startups have worked or are working with this option? How does this option measure and describe its success?
  • Can you speak with some alumni companies, both successful and otherwise? Prepare in advance what you want to ask them.

Entrepreneurs have a number of options to consider for their startup. Be careful to do your homework and do what gives you the best chance to succeed. For more information on options and solutions for startups, please contact Norm Snyder of Aronson LLC’s Technology Industry Services Group at 301.231.6200.