Incubators are one of several models for supporting startup companies, and operate within a broader ecosystem that includes accelerators, startup studios, and coworking spaces. What sets incubators apart, with some exceptions, is that they typically have a longer period of residency, are angled more toward independent operation, and can provide state-of-the-art equipment in certain industries.
Already-formed companies join an incubator to access office and lab space, specialized equipment, and sponsor-provided resources. They usually pay a reasonable membership fee and hold on to their IP and equity. The residency can range from a few months up to a few years.
Incubators are often established as partnerships or collaborations with institutional sponsors such as corporations, government entities, and universities. These sponsors get early access to the portfolio to discover trends, forecast the impact of disruptive technologies, and build relationships that may pave the way to future acquisitions.
How is an incubator different from an accelerator?
Just looking at the words gives you an idea of how to differentiate the two. An incubator is a stable, controlled environment for growing.
To incubate is to lie in or on, either hatching eggs by artificial heat, or to maintain the optimum conditions for growing cultures or cell cultures. The first incubators were Egyptian egg ovens, which could hatch as many as 4,500 fertilized eggs in just two to three weeks. And incubators were used in the late nineteenth century to keep weak infants alive. An incubator is a supportive space with certain conditions that foster the development of a nascent organism—in this case, an early-stage company.
An accelerator advances, forwards, hastens. It’s something that accelerates in speed, rate, amount, extent, or time; something that speeds development. In chemistry, it’s a substance used to increase the rate of a chemical reaction or process. In particle physics, it gives kinetic energy to subatomic particles. An accelerator speeds the development of startups. A founder who is accepted into an accelerator reaches milestones faster than they would have done on their own.
An incubator usually doesn’t have a curriculum, specific milestones, or a demo day, as an accelerator does. With an incubator, founders often get access to industry mentors and advisors through the sponsoring organization, though not to the extent they would with an accelerator. They can also connect with the organization’s industry partners.
And while an accelerator typically takes equity in exchange for mentorship and a small cash investment, an incubator charges a monthly fee for membership. Many incubators do not take equity or require any additional costs, though there are exceptions.
Why would a founder want to join an incubator instead of an accelerator?
- They don’t want to give up equity
- They don’t feel like an accelerator’s curriculum would benefit them, or they think it would be too much of a distraction
- They want something longer-term than three to four months
- They’re most interested in gaining access to otherwise very expensive tools and facilities
One thing to look out for is that an accelerator may offer the perk of membership or access to an incubator. And a founder may want to first enroll in an accelerator to reach key milestones and get experience pitching, then join an incubator to provide the right backdrop for their next stage of growth.
How is an incubator different from a startup studio?
With an incubator, an existing company joins an informal cohort of other startups and works more or less independently. A startup studio builds companies from the idea stage and assembles a team to take the concept forward, whereas with incubators, the company is typically already formed when it joins the program and remains independent.
An incubator’s sponsors may take a more active role enabling the founders to take their product to market—such as helping recruit a team if it’s an individual founder, or developing and testing a product. This is similar to a startup studio, but the core difference is that the studio creates the company.
Founders benefit from the space, plus other resources the incubator provides, which allows them to save on overhead, equipment, and other costs. Although a studio normally has considerable support and shared resources, it’s for companies built within the studio.
How is an incubator different from a co-working space?
The difference between incubators and co-working spaces is subtle—they have a lot of similarities.
A regular co-working space charges a membership fee like an incubator, but the incubator is apt to be more intentional about the kinds of companies it accepts; it may have more strict requirements for the companies, and a thematic focus on a single industry.
Along those lines, the incubator often provides access to high-end and specialized equipment, along with access to expertise in a particular industry. This access to lab space and equipment is what really sets incubators apart.
In a co-working space, founders get access to desk space and to common areas like kitchens, meeting rooms, and other (some would say crucial) office accoutrements, such as table tennis. Incubators also typically provide access to the same kind of shared spaces, and may have regular events based on learning and networking.
Co-working spaces typically offer workshops, office hours with mentors, networking and community events, and other resources. However, they won’t have the resources and connections that a sponsoring organization running an incubator in a particular industry would have.
What are some examples of corporate and university incubators?
The AI2 Incubator was launched in early 2020 as an initiative of the Allen Institute for AI. AI2 helps entrepreneurs and technical co-founders form new teams, which is more like an accelerator or studio. They build AI-first startups by coming up with ideas, finding co-founders, testing and refining the product, which is more of a studio model. AI2 also provides a $10,000/month stipend for 12 months in the form of an investment, free office space for 12+ months, and resources like legal, design, and recruiting.
The Bayer CoLaborator offers incubator space for up to three years to early stage as well as more mature life sciences startups. They offer shared lab equipment, office space and conference rooms, monthly events with Bayer researchers, and contacts in the pharmaceutical and agriculture industry. A life sciences startup may want to enroll in a focused accelerator, and then join an incubator like this one.
Betaworks calls themselves a “thematic investment and in-residence program,” and is perhaps better described as an incubator-accelerator hybrid. Betaworks Camp provides programs for early-stage startups in frontier technology, and each one consists of three months “in-residence” at Betaworks to get help with product development, platform strategy, data science, branding, and fundraising. Entrepreneurs have access to the Betaworks team, its network, and other advisors. They offer desk space, mentoring, and pre-seed funding of $200K.
CoMotion Labs provides a multi-industry incubation environment for early-stage startups with a focus on UW spinoffs. They provide desks, dry benches, wet lab space, and prototyping capabilities. Their life sciences incubator supports startups with microfabrication, advanced prototyping, optics, and more. Their hardware incubator helps with development and prototyping, and their technology incubator includes three key programs.
Greentown Labs is the largest climate tech incubator in North America, and has incubated more than 350 startups since 2011. They bring together startups, corporates, investors, policymakers, and others to help solve climate challenges. Greentown offers lab space, shared office space, a machine shop, an electronics lab, software and business resources, and a large network of corporate customers and investors.
Johnson & Johnson Innovation (JLABS) helps emerging companies catalyze growth and optimize their research and development. JLABS offers industry connections, and entrepreneurs are free to develop their science while holding on to their intellectual property (which is typical of an incubator).
Portland Incubator Experiment (PIE) is an incubator that has served as an accelerator, an accelerator for accelerators, and a co-working space. The PIE program is focused on seed stage software businesses, while PIE Shop, in partnership with Autodesk, is focused on seed or early stage hardware businesses. PIE Consumer is focused on traditional consumer product offerings from businesses at a growth stage. They don’t take equity and don’t charge what they refer to as tuition.
Deciding if an incubator is right for you
The boundaries between incubators and other models like accelerators, studios, and co-working spaces can be blurry. There are exceptions to every convention, and hybrids of two or more models aren’t uncommon. For early-stage companies who are looking for a place to call home for longer than the usual accelerator timeline, or who need access to specialized tools and equipment that are prohibitively expensive to buy outright, incubators may be worth a closer look.
Author: Nina Post