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Incubators vs. Accelerators…

Incubators vs. Accelerators…

What’s the difference?

To find out the differences between corporate incubator and accelerator spaces, one must first define both terms. However, this comes with great difficulty due to the broad umbrella that both incubators and accelerators fall under.

Incubator spaces can be defined as a workspace designed to actively support the growth of start-ups or a business in its early stage of development. An accelerator space provides space to start-up businesses (which might have been operating for several years) with the potential for fast growth and good financial returns.

The main characteristics of an incubator space are:

  • the provision of business support for the incubated firm
  • the competitive application process for all applicants
  • the business support that the incubated firm receives is in exchange for a share in profit or a stake in the business

On the other hand, the characteristics of an accelerator are:

  • the competitive selection process
  • dedicated support from space management for a certain amount of time
  • the accelerator firm provides an equity stake
  • accelerators focus on start-ups and SMEs that may have been operating for
    several years

The main characteristics of an accelerator are illustrated in real estate technology nexus Metaprop NYC. Metaprop NYC has recently accepted eight new start-ups that required the new companies to apply for a place on the 22-week scheme. Once accepted, up to $250,000 will be invested into each firm by Metaprop NYC in exchange for a 3-6% equity. This is a model widely used across both accelerator and incubator schemes, the main difference between them being the accelerator’s focus on firms closer to their inception.

So, what’s in store for the future? The average rate of businesses succeeding whilst in an incubator is at 98%, whilst the survival rate after 5 years is 87%. This suggests that the model is producing longevity for start-ups.

Cushman & Wakefield recognises the importance of this new model through its partnership with Metaprop. At present the long-term advantages and disadvantages of this model where large corporates incubate or accelerate start-ups are yet to be realised. Some argue it may not be sustainable, however, the evidence suggests that the model is successful and therefore we will see a continuation of corporates supporting start-ups through incubator and accelerator workspaces.


Michael-Soetan

Michael Soetan is an apprentice in Global Occupier Services, based in London. He works on identifying topical issues for occupiers in conjunction with cross-industry networking group I-Suite 

The I-Suite is a series of events, tailored specifically for the ‘influencers’ of real estate and related industries.

The objective of the I-Suite is to create a network of motivated, ambitious, professionals who represent the influencers within their respective industries.

The next I-Suite event is on 7th February 2018 in London. Titled ‘Incubate to Accelerate’ it will comprise an expert panel discussion on the growing number of major corporations harnessing the potential of start-ups by creating corporate incubator programmes and innovation spaces.

Find out more about the I-Suite series of events


References

[1] Supporting Places of Work: Incubators, Accelerators and Co-Working Spaces.
– Greater London Authority. Page V

[1] Supporting Places of Work: Incubators, Accelerators and Co-Working Spaces.
– Greater London Authority. Page 31

[1] Supporting Places of Work: Incubators, Accelerators and Co-Working Spaces.
– Greater London Authority. Page 31

 

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