Accelerators select promising startups with an MVP and offer specific programming that allows startups to achieve in months what would have otherwise taken them years.

Today’s technology landscape is perfect for the emergence of new business ideas. Globalization, the deepening of the digital world and disruptive technologies provide solid ground to foster entrepreneurship. Today, new projects and ideas have access to a wide range of tools and platforms to help them go through the early stages of their project and find their place in the market.

In this interconnected context, both incubators and accelerators form part of the toolkit available for projects to scale. Undoubtedly, these are two of the most important growth platforms for startups, and as such, they are competitive.

Both accelerators and incubators are important epicenters of innovation and investment, however, they are designed to meet different needs of the startups they support. For this reason, the decision to join one or another must be correctly aligned with the stage of the company. Choosing incorrectly could be counterproductive for the startup and end up in a waste of time and/or money.

As such, it is necessary for the startup founders to be clear about what their main objective is of each: 

What is an accelerator?

Accelerators main objective is to push early stage companies and startups through accelerated growth in just a few months. To do this, accelerators select startups with high potential and put them through an intensive mentorship and business program. Business accelerators are specially designed for projects with a “MVP” (Minimal Viable Product). Their objective is to push growth onto the business model and boost it within a fixed time. Rather than developing it from the ground up.

How does an accelerator work?

In a nutshell, accelerators invest in developing startups with a strong business plan or product-market fit and offer them an acceleration program with expert advisors and specialized mentors that help them achieve results in a short space of time.

Often accelerators take equity in the companies they work with in exchange of the acceleration programme offered. However, there are nonprofit accelerators, such as FAROL.

Benefits of accelerator programs:

  1. Accelerators offer access to one-of-a-kind mentors and experts in charge of advising and supporting the companies throughout their growing process. It is with their help and expertise that the activities that drive the companies over the months are developed.
  2. Accelerators offer a model that promotes rapid growth. One of the main characteristics of accelerator programs are the fixed times of their plans. Their model is designed to boost startups through the initial phases of their project within a short timeframe.
  3. Accelerators are designed to be innovation hubs. Therefore, within their programs there are always great networking opportunities for stakeholders in the technology sector or specific industry (if applicable). Regardless of whether the accelerator plan works with a specific topic, in general, they create a startup environment of mutual and collaborative growth for the chosen projects.

Differences between accelerators and incubators

Accelerators and incubators are programs designed to respond to different stages of a startup. While incubators are rightly there to “incubate” ideas and help them rise, accelerators are there to push an idea that already has a business plan and grow rapidly within a short time.

For this reason, incubators programs usually take around 2 years and divide the incubation process into 3 different phases:

  1. Pre-incubation: Development of the business plan from which the idea transforms into an enterprise.
  2. Incubation: Development of the company through the business plan and orientation of the essential tasks for the operation of the startup.
  3. Post-incubation: Monitor the evolution of the project and analyze growth expectations.

Business accelerators last between 3 and 6 months and are focused on the quick growth of already established business ideas. For this purpose, they usually culminate in a demo day or pitch day, where startups demonstrate their potential to an audience of media and investors.

Incubators on the other hand exist to support startup founders in the early stages of their idea. Their programs are designed to refine business plans and build a profitable company around it. To this end, incubators often have a wide funding network that supports early-stage companies.

An incubation and acceleration center

In recent years, Portugal has positioned itself as a center of innovation and technological development for Europe and the world. With the arrival of the largest technology convention, Web Summit, and the opening of multiple technology centers, such as those of BMW, Portugal is strengthening its position as a pivot country for innovation and entrepreneurship. Which, of course, is the perfect cradle for the emergence of multiple incubators and accelerators.

With the Portuguese government’s funding and support FAROL was created, a unique accelerator that combines the acceleration of emerging startups with Human Rights.FAROL has adopted a pioneering approach that will position Portugal as a benchmark in the fight against Slavery through technology. This non-profit accelerator has a 6-month program that brings together and impulses different technological projects with the potential to fight modern-day slavery. The admission process has a deadline of August 31st until when startups will be able to apply. 

By: Juan Diego Valenzuela

August 10, 2021