Incubators and Accelerators

What is an Accelerator? 

The word ac·cel·er·a·tor /əkˈseləˌrādər/ describes a person or a thing that causes something to happen or develop more quickly; in common parlance, it describes a device, typically a pedal, that controls the speed of a vehicle's engine. That same perspective - pushing a team with an early-stage startup in a fast-learning, fast-failure, and fast-growth mode through mentorship, education, and resources - is at the heart of a start-up accelerator. An accelerator may not be part of a university environment. Instead, it is more likely to be run by an independent entity that may be privately funded. A well-structured start-up accelerator is typically run as a cohort-based program for a fixed period of time (often three to six months) with intense mentorship, guidance and structure. In exchange for these services, the start-up accelerator often seeks a small equity stake in the startup (such as 3–10%). To leverage this mentorship and guidance from the accelerator, the team must be at  at the right stage. Very early stage startups that are still unclear about their product/service idea, market segment, scaling potential, operations or value proposition may consider learning the basics by participating in an Incubator first. 

Top Accelerators 

It is difficult to rank-order different accelerators because their industry vertical focus may be different, their equity stake policies may be different, and their geographical focus may be different. The fit for a team building a start-up, therefore, requires individual conversations and guidance. The E-Hub, along with the network of mentors, can provide this guidance when the time is right for each team. Nevertheless, there are a few accelerators that are known because of their reputation, track-record and high quality mentorship they offer. They include: 

• MassChallenge (Equity free funding, Focusing on AI, ML, Mobile)
• YCombinator (Uses SAFE (Simple agreement of future equity), Industry-vertical agnostic)
• Techstars (Equity plus Debt structure, Industry-vertical agnostic)
• 500 Startups (Equity stake plus SAFE with MFN clause (early investors receive same terms as future investors), Industry-vertical agnostic)

Getting into an Accelerator

Accelerators tend to be selective, competitive (some accept 2% or less of the applications). Because they tend to be short duration (often 3-6 months), include intense mentorship (drawing on the talent of a few individuals), and provide funding - they must marshall all these resources (time, talent and treasure) to ensure that they are focusing on teams and ideas (entrepreneurs) that, in their assessment, have the potential to succeed. Significant preparation is, therefore, essential to gain entry into the accelerator. Most accelerators have rigorous criteria such as (adapted from Neklo): 

• Product or Service with a validated product-market fit with a proof of concept (POC) prototype or minimal viable product (MVP). 
• Market Opportunity that points to sustainable revenue growth in a particular market segment with a competitive advantage.
• Traction demonstrated by initial success such as user engagement, revenue generated, customer acquisition rate, or others. 
• Vision and potential for growth in terms of features for the product or service and revenue streams. 
• Team with expertise and experience with a track record of successful projects or a skill set to engender trust.

References

1. Best University Accelerators. 2024. https://www.boringbusinessnerd.com/post/best-university-accelerators-and-incubators 
2. Best Start-up Accelerators. 2024. https://neklo.com/blog/best-startup-accelerators 
3. HBS Insights. 2023. How to Create a Term Sheet for Investors. https://online.hbs.edu/blog/post/term-sheet-for-investors 

Incubators vs. Accelerators 

If you read through the descriptions of Incubators and Accelerators, it should be clear to you that they are a little different. For a start-up venture in early stages of their journey - particularly as they are developing their idea (product/service) - an Incubator program is the right first step. 

• As the team enters the Incubator program, they will often see their assumptions challenged, their ideas questioned - but they will also learn a lot. They will go through this experiential journey help from multiple mentors. They will hear commentary and receive help from mentors who will provide them new perspectives and several suggestions. The team will learn that they have to be the ones who will make the final decisions, and quickly. An Incubator program will often be the first semi-structured approach the team will pursue as part of their entrepreneurial journey. Here, it will only be weeks or a couple of months before the teams will participate in the next phase. As a part of this, the teams will need to learn new skills, such as being responsible for managing seed funds (turning in expense reports), dealing with multiple deadlines, seeking help from different mentors, making use of the many resources that the Incubator program would provide and so on. 

• The knowledge the the team will gain as a part of their experience in an Incubator program will be invaluable as they leave the confines of the university (where they are likely to receive at least some preferential treatment from the program itself, the mentors and the judges most as fellow alumni). In contrast, as the team leaves the nest, they will need to be ready for greater scrutiny. This may happen as the team competes in other Incubators (beyond their own university) as well as Accelerators (note the acceptance rates for Accelerators). Therefore, the teams would want to prepare fully, learn about the evaluation criteria and much more before placing themselves in contention for programs such as other incubators and accelerators. A recommended path for a student ream (particularly as they are going through their student experience at Bentley would be to consider additional incubators, access new resources and mentors before moving to accelerators): 

   

References

1. University Lab Partners. 2021. Incubator vs. Accelerator: What's the Difference? https://www.hubspot.com/startups/resources/what-is-an-incubator 
2. HBS Insights. 2023. Startup Incubator vs. Accelerator: Which Is Right for You? https://online.hbs.edu/blog/post/startup-incubator-vs-accelerator 

Incubators and Accelerators at Bentley and Beyond

Every year, universities, governmental entities, non-profit entities organize and run a number of incubators and accelerators. For a team interested in pursuing an entrepreneurial journey, they provide (a) multiple entry points as well as (b) multiple opportunities for progressing through this journey. As a team of Bentley community members, the E-Hub recommends the following sequence: 

• Bentley E-Hub Incubator → Other University Incubators (open to all) → Accelerators → and Beyond

Please take a look at the funding journey options that an entrepreneurial team may consider to help in your decision-making.

Options to Consider

Here are some of the options you may consider, organized with attention to the start date. Most have an annual cadence, so you can plan ahead based on your stage in the entrepreneurial journey.