What is most needed when you think of having a startup?
A vision, an office space, a good team, some basic necessities, and most importantly, some capital to fuel your dreams into reality. Only a good idea will not make a good start-up. There are other things that support your idea and convert your dream into reality.
Some put in their life savings to bring their start-ups on the floor, while some opt to seek finances from investors. If you have an idea in your mind which you would like to convert into a startup, then certain concepts should be absolutely clear in your head. What are incubators? What are co-working and start-up accelerators?
You will often come across these terms when you are preparing to launch your idea of dreams. This article gives you a clear picture of these terms and what they mean to a budding entrepreneur.
Before we get into how startup Incubators are helpful for budding entrepreneurs, let us first understand what incubators are.
A start-up incubator is a cumulative program designed to help startups launch and succeed. Basically, an incubator is the first push that any start-up needs to roll on in the beginning. They help incubators solve some commonly faced problems associated with running a startup and also provide them with a workspace.
The main aim of an incubator is to see to it that any startup associated with them runs well and evolves with time. They help the startups to move from zero to one. Mostly, what incubators provide startups is technical assistance, workspace, an ecosystem and may also give them a digital hub for smooth functioning.
The best part of getting associated with an incubation is that they do not have any time duration to get things done. You can associate with them for weeks, months, and even years. However, to avoid delays, they mostly operate within a time frame of six months to one year. This is because they want the startups associated with them to become independent and self-sufficient.
Not all incubators are open for all kinds of startups. They are not easy to apply. You have to follow a procedure for incubation to incubate your startup. You have to make a checklist before you join an incubator.
However, before applying make sure your startup has completed the necessary paperwork and registration formalities.
Well, most incubators provide capital funding to budding entrepreneurs so that their startups can survive the initial struggling phase. But, it is not necessary that you get the whole committed amount in one go. Many incubators ask their startups for weekly or fortnightly progress reports before they release their next funds.
The amount always varies and mostly depends upon the size of the start-up and the incubator. Mostly, startups need to give their incubators 5-12 % of their equity.
There are some major benefits of startup incubators.
This specifically caters to financing a startup. In recent years, accelerators are playing an important role in startup communities throughout the globe. Startup Accelerators have received a great deal of attention in the ecosystem of start-up funding. Like everything else, we also have the pros and cons of accelerators for startups.
Let us understand the meaning and importance of startup accelerators and their role in pushing startups to the next level.
Startup Accelerators support startups at an early stage through education, mentorship, and financing. This is an intense, rapid, and immersive learning experience for any entrepreneur who is struggling to accelerate his dreams into reality.
The main aim of a startup accelerator is to accelerate the business of budding entrepreneurs. Unlike incubators, accelerators rope in the startups that wish to incubate and polish them with their mentoring and providing a proper ecosystem.
To enter a startup accelerator a startup needs to have a few customers in their pockets. Here, the startups are introduced to investors in an attempt to create a synergy that facilitates fast innovation and better productivity.
Accelerators work in a time frame. A startup gets support from an accelerator only for a period between 3 -6 months. It is only in these months that the startups are expected to set up all legal and financial operations and make a profit.
To join a startup accelerator you have to send your applications which will be reviewed and then accepted. Most accelerators accept teams, however, there are a few who also accept solo founders if that founder strikes the right chord.
Startup studios are a program that provides resources and support to the companies to take off from the ground. One of the biggest advantages of joining a startup Studio is that sometimes they are financed by some venture capitalists. Though this provides ample opportunities for new startups to find capital and resources, unlike incubators and accelerators, the studios lack mentoring and education.
Applying to become a part of a start studio is a tough process, for they chose the startups they wish to take in. They draw talent and skills and their team decides whether this startup suffices their expectations or not. Here, entrepreneurs do not get a chase to put up a pitch.
Startup studios rarely have any program or open applications where entrepreneurs can apply for.
Though, things remain blurry on whether startup studios take equity from the founders or not because it is touted that most of the startups that come up from the studios are completely or partially owned by the studios only.
Though not a funding platform, co-working provides startups with working space, for which every startup has to struggle initially.
The main goal of a co-working space is to provide budding entrepreneurs with cost-effective co-working space. For any new startup, taking a huge commercial office space on rent is a financial risk. Therefore, this concept of providing cost-effective co-working spaces is an advantage for any entrepreneur. It initially saves a lot of money.
There is no time boundation for a startup to opt for a co-working space. They can use it as long as they wish to. Though they are not offered for free, they are comparatively cheaper than taking huge office space in any commercial hub on lease and paying hefty rents.
The concept here is very much simpler than incubators, accelerators, and studios. If you have money and they have space, you are in. Co-working does not require equity exchange because it takes money from the startups in the form of rent.
Incubators, startup accelerators, and studios are important for your startup to get the one push you need in the initial days as an entrepreneur. If you manage to get funding and have a cost-effective workspace, nothing can stop your start-up to become a success.
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An artist by heart and a writer by profession, Prachi is a vivacious reader. She believes in hard work and her dedication has never let her down. She puts her heart and soul in everthing she does. Though life has not been a bed of roses for her, she affirms that the best way to live it is to maintain an equillibrium between the tunes of life.