Startup Accelerator and Incubators: Benefits and Drawbacks

Launching a startup is no easy feat. It requires hard work, planning and resources which often leads founders and their team to look for external support. Whether you’re just developing an idea or looking for outside funding, an accelerator or incubator program may be the answer. 

While partnering with an accelerator or incubator program can be pivotal in pushing your startup to that “next level”, it’s important to keep in mind there are both benefits and drawbacks. Whether you decide to apply for a program will depend on what’s important to your startup, its unique needs and growth roadmap. Each accelerator program is unique in its offerings and timeline. Let’s outline the pros and cons below. 

Accelerator or Incubator Benefits:

• Funding Opportunities: Funding can range from seed funding to angel investors or venture capitalists who assist with fundraising. Amounts range from anywhere from $10,000 to half a million dollars. 
• Free Office Space: Typically looks like a co-working space with a conference room, which is important because it can limit recurring expenses and encourage collaboration with your team.
• Mentorship: This aspect is crucial for a lot of founders, since every startup will face roadblocks or make mistakes. A network allows you to connect with other entrepreneurs and understand how they overcame hurdles.
• Resources: Resources range from intellectual property to legal advice. There can also be discounted programs or products. 

Accelerator or Incubator Drawbacks:

• Giving Up Equity: Many accelerator programs require that you give up some form of equity. When new investors join the table, you should consider how they will benefit or contribute to the startup over its lifetime. Consider the team equity, ability to raise future funding, or your return on investment after the program is over. 
• Not Enough Time or Funding: It’s also important to note that accelerator programs often have limited timelines. These can range from three months to six or more months. Meaning, if you don’t have enough funding or time, you can leave the program with little progress or growth. 

Wherever you are in the growth stage, it’s helpful to weigh your options by checking out different programs. Check out an interactive table Embroker compiled over 160 accelerators and incubators around the world. Sort by factors such as location, mentorship, office space, or demo day to find the unique program for your startup. The program you ultimately choose should depend on where you need support and if the program is a natural fit with your team and goals.