What is best for your startup? Incubators, Accelerators, Startup Academies, or Mentoring Communities? Here in Utah, leveraging several resources can be advantageous.

Early-stage startups often need guidance and input on how to grow their ideas and businesses to succeed. Luckily here in Utah, there’s a thriving community of experts that can provide ad-hoc and proven support to develop companies from the pre-startup to high-growth stage. Often, startups seek support from incubators and accelerators, while also joining a mentoring community hub or a startup academy. There are so many resources that work together to support the entrepreneur and expedite startup success. This article summarizes how incubators, accelerators, academies, and networking groups can work together, and it also highlights a few that have formed partnerships here in Utah.

Difference between Incubators and Accelerators, Academies and Mentoring Communities

Incubators, accelerators, and mentoring communities are designed to improve your business competency, however, each entity takes a different approach to accomplish this goal. Many entrepreneurs incorrectly assume that incubators and accelerators are similar. However, incubator and accelerator programs are designed according to the startup’s maturity and development needs. Both incubators and accelerators provide expert services, but the cost of support and expected return can vary.

Startup academies and mentoring communities are also different in how they are structured, the length of the membership or program, as well as in the cost structure. Both, however, place a major emphasis on education by connecting neophyte entrepreneurs with those who are more experienced.

Incubators focus on “innovation.”

Incubators support startups that are in the early stages of innovation development. Incubators test innovation ideas against market needs and existing competition, verify business plans, and the product/ market fit. To supplement the founding teams’ talent deficits, incubators insert a range of expert service providers who contribute to specific business projects, such as legal, financial, or sales and marketing advisors, to ensure business plans are in place and complement the innovations. Incubators can also provide access to resources for further business validation. Resources often include data analytics, physical business location, investment readiness, or networking opportunities.

Is an incubator right for my startup?

Incubators often select clients based upon previous success criteria, such as business models (i.e. SaaS or direct-to-consumer) or innovation type (such as enterprise technology, IoT, health and wellness). This is because incubators have proven approaches to new innovation launches, and offer in-house experts who can effectively contribute to growing the business to maximize the innovation’s potential.

Incubator business model

Incubators generally do not provide capital and don’t usually take equity in the companies they support. Incubator services are commonly paid for by the startup company.

How incubators benefit companies

Companies using incubators benefit primarily from entrepreneurial education (especially helpful for first-time CEOs), supplemental expert staffing support, third-party target market research and product validation, a viable and fundable business plan, and meaningful introductions to prospective customers, partners, and investors. Incubator programs lead innovations to a path to capital from angel or early-stage investors, state governments, or economic-development coalitions.

Accelerators focus on “scaling businesses.”

Accelerators develop or drive companies with business models in place, and assist them in becoming more productive and profitable. Companies within an accelerator are typically incorporated, have formed a team, and created some traction in the market. Accelerators prepare startups for larger investments and major influencers.

Accelerator business model and program structure

Because accelerators sharpen operational efficiency, they often structure their programs during specific timeframes with pre-defined programs, mentors, and program deliverables. Traditionally, accelerators are run like boot camps or schools, where not all companies that enter the programs will graduate.

Is an accelerator right for my startup?

Accelerators use a screening process that is stringent and automated. Often accelerators ask for a minority equity share in the company to ensure a greater contribution and impact on the startup’s success. Accelerators are popular with startups because they often offer a cash investment and a facility from which to operate. Some accelerators are moving away from the in-person model to provide online, self-paced programs. 

How accelerators help companies

Companies that graduate from accelerators have an improved chance of raising venture capital from a third-party entity, and are often network well with other graduating cohorts. Accelerators benefit startups with their fast-paced shared learning and mentorship programs, access to capital, and the PR value and exposure after graduating from accelerator programs.

Accelerators often work with incubators to help startups build out their ideas, products, or technologies into scalable businesses. 

Mentoring communities focus on “impact.”

Utah is home to many exceptional mentoring and networking communities that affect business growth by creating a cross-pollination network that acts as a catalyst for impact. Some entities cultivate new business formations within under-supported or under-represented communities. We see this in rural location emphases, founder diversity initiatives, and so on. Mentoring communities outside of Utah are also finding similar-minded influencers from a variety of backgrounds and organizations who are willing to connect and construct a supportive ecosystem so the path to success is smoother for future startups.  

How do mentoring communities work?

Mentoring communities often have a two-tier structure with a knowledge source, expert-level that provides direction, structure, and management of the community, and the support recipients. Some communities have three tiers: service providers, mentors, and mentorees.

What is the business model behind a mentoring community?

These communities often have a recurring membership fee, however, the returns are much more valuable than the payment. These communities often present highly-vetted introductions to prospective clients and investors, branding and advertising opportunities, select networking events, and access to public and private sector influencers to help align policy with the impact intention.

Accelerators and incubators will often recommend startups to join these impact-based mentoring communities to stay within the epicenter of growth that directly relates to their business.

Academies focus on “education.”

Startup academies take an educational, classroom-style approach to educating the entrepreneur about growing a viable business. Like a traditional school, startup academies follow a curriculum, develop plans through assignment work, and have a graduation aptitude requirement. Choosing to attend an academy is a wise path for those who want to gain a deep understanding of business creation, yet aren’t inclined to attain an MBA at this time.

What are the benefits of academies?

An academy may be associated with a university, and program completion can lead toward a degree. Other organizations are non-profit entities that provide tax advantages. Academies bolster the reputation of the entrepreneur as program completion highlights their competence and perseverance through supplemental education. Academies can also introduce graduates to prospective investors or customers. Academies validate the business plan and the founder’s business leadership.

Academies business model

How entrepreneurs compensate academies vary. Some offer a membership plan during the educational process. Others ask for equity or future revenue sharing. When considering an academy, ask about the financing approach and how that will affect your company.