To incubate or to accelerate, that is the question. The answer could be neither, but it’s a question that many startup retailers will find themselves asking.
The first point to make is that incubators and accelerators are not the same. This may sound like a line out of Captain Obvious’ book, but the truth is that these words are often used interchangeably.
Accelerators are there to speed up the growth of a company that has already been established, whereas incubators are focused on the development or ‘incubation’ of new ideas so that a business model and/or company can be established.
So why consider either of these options in the first place?
Sharing of Ideas: Both incubators and accelerators offer mentoring for your retail business. This is extremely useful for cases where someone already has an idea or product, but doesn’t know what the next step should be or what it should look like. These programs provide the opportunity to hear from and work with industry professionals- an opportunity that can often be hard to come by, particularly if you have never worked in the retail sector before.
Financial Assistance: Sometimes you may have a cracker of an idea, but you just don’t have the $$$ to back it. This is often where accelerators come into play. Whilst the amount offered varies across accelerators (in many cases this means giving up equity in your business for an investment), this can help to reduce the size of this obstacle until your business is on its feet. Of course this in itself is a risk, but in many cases it can be just what the doctor ordered.
Community Support: Incubators and accelerators offer the prospect of a mentor network, and these mentors not only provide support, but are also there to consolidate and suggest ideas. These new perspectives can challenge and develop your ideas in a way that you may have never thought about or heard of before. This point is particularly applicable for incubators that lease a coworking space. So long as this space isn’t overcrowded, the environment can be conducive to sharing ideas not only with mentors, but other startups too. This provides startups with a positive sense of community, which is an effective motivator for individuals who feel like they’re in it on their own.
Time: “I don’t want to save time”, said no one ever. Accelerators in particular can be extremely productive for businesses who need to find a way to scale their idea in a shorter period of time. A case example here is Techstars Retail in partnership with Target- a 3 month intensive startup and accelerator that is focused on bringing new technology, experiences, products, and solutions to retail. A successful company to emerge from this program is AddStructure, which was acquired by marketing tech company Bazaarvoice earlier this year in February. AddStructure uses machine learning technology to analyse customer-generated content and then summarises this information to create the best and most relevant reviews for customers. This makes product search easier, product discovery faster, and as a result makes the shopping process more enjoyable.
Ticking Time Clock: Whilst incubators will usually offer a longer period for growth, with an accelerator you are often limited to a period of approx. 3-6 months. This means a lot of pressure and a lot of business in a very short time frame. The important question to ask here is, when does the ‘support’ end? Are they done with you as soon as your incubator lease or accelerated program is finished? The last thing you want is to be left out to dry, so it’s crucial that all conditions are made known beforehand to avoid finishing the program only to be left feeling lost again with no support when things go wrong.
Too Many Fish in the Sea: A big mentor network may sound exciting, however potential applicants need to consider how many other applicants the incubator or accelerator take on at one time. This is extremely important to consider because startups need to know that that will be given the time and dedication that they’re paying for. Unfortunately, in some cases profit comes before the best interests of the startup. Awareness of the track record of the accelerator or incubator is a vital step here to gauge the likelihood of this problematic scenario occurring.
Too Much Too Soon: Optimum growth in a short amount of time may sound extremely enticing, but this doesn’t mean that your business is ready for it. This point is particularly applicable for startups in accelerator programs. Startups need to make sure that their business is ready to be scalable and need to ensure that this scaling occurs at a sustainable rate to avoid burning out. If you bite off more than you can chew, you may end up in a place worse off than where you started.
Highly Competitive Application: Whilst this isn’t a problem for incubator programs, accelerators are notoriously very competitive. Even if you have a clear vision of your company and know how you want to see it grow, it takes a lot more to convince an accelerator that your business is the one they want to invest in. As a result, this means that accelerators have become more exclusive as opposed to accessible.
Do the pros outweigh the cons? We’ll leave this answer up to you. It depends entirely on your startup and the stage your startup is at. The critical take way from this article is that businesses/entrepreneurs need to determine exactly what it is they want and need before deciding whether an incubator or accelerator is worth it. What may work for one retail startup may not necessarily work for another, and startups need to have this in mind before taking the plunge into either option.