Accelerator vs. Incubator: Comparing Benefits for Biotech Startups

A seed growing into a seedling into a plant, representing the growth of a biotech via an incubator or accelerator program.

Biotech accelerators offer funding, mentorship, and a variety of business support to early-stage biotech startups looking to scale and, eventually, commercialize a product. Many of these organizations also work with healthcare and life sciences companies not necessarily focused on using biotechnology for business and product development.

While biotech incubators tend to offer similar educational resources, they’re more known for providing office and lab space to early-stage companies. This is just one of the key differences between accelerators and incubators, regardless of the industries each organization focuses on.

In this article, we define accelerator and incubator, compare the two, review what a good program should look like, compare each to more biotech-focused options, and more.

What Is an Accelerator?

Almost every startup requires some level of support, guidance, and funding to develop a product or business model, in addition to achieving growth more quickly. For any growth-driven startups, growing quickly is essential to their mission. 

But support, guidance, and funding can often be difficult to find. In fact, lack of funding is one of the biggest reasons startups fail. Accelerators can offer all three. These elements are a potent combination that can increase a startup’s chances of success in both the short- and long-term.

An accelerator, also known as a startup accelerator or business accelerator, is a program designed to accelerate the development of early-stage companies that are, more or less, ready to take an idea to market and scale up. In theory, a company attending an accelerator program will experience the same amount of growth in a few months that would otherwise take a few years.

Accelerator programs provide mentorship, funding, education, business development support, and future investment and partnership opportunities to help a company accelerate the development and growth of its product.

As laid out by Susan Cohen in “What Do Accelerators Do? Insights from Incubators and Angels,” the criteria for being counted as an accelerator includes:

  • Fixed-term; from three to six months
  • Cohort-based
  • Investment-based business model; can be nonprofit
  • Competitive and cyclical selection
  • For early-stage ventures located on-site
  • Provides education via seminars, intense mentorship

However, according to Harvard Business Review’s Ian Hathaway, in 2016, nearly 700 US-based organizations that identified as an “accelerator” or “accelerator/incubator” or similar, either through self-identification or leading investor databases, did not meet the criteria for an accelerator laid out by “What Do Accelerators Do?”

In other words, an actual accelerator is going to be a cohort-based and fixed-term program designed for early-stage ventures that attend the program on-site and receive educational courses and access to mentors. A typical accelerator program will culminate in a graduation day, or “demo day,” as well, where participants get to showcase their business to potential investors and partners. These combined elements are a hallmark component of accelerators and make them relatively unique to other types of early-stage institutions, such as angel investors, seed-stage VCs, and even incubators.

Getting into an accelerator starts with a rigorous application process. Top accelerators like JLABS, Y Combinator, Illumina Accelerator, and Techstars are highly selective. A small percentage of applicants—it can be less than 2%, in some cases—are accepted into their programs each year.

Accepted companies are able to show a strong and viable growth strategy, or have already demonstrated fast growth. Additionally, depending on the type of business, startups that have been accepted will have supportive research and data, a prototype, and/or a minimum viable product (MVP) to show the progress they’ve made on their business idea and product. Accepted companies typically receive a small seed investment and are paired with an expert from the accelerator’s vast network of mentors.

Any accelerator’s primary goal is to provide networking, mentorship, and resource allocation to facilitate the success of proven business ideas more quickly than is possible without the program. As mentioned, a company’s time in an accelerator program typically ends with a presentation on ‘“demo day,” where they can share the growth and development they’ve achieved during their weeks or months in the program with potential investors and partners.

Startup accelerators typically run one or two programs each year and accept a small number of applicants to each program, which generally takes place over the course of three to six months.

What Is an Incubator?

An Incubator, also referred to as an incubator program or business incubator, provides resources that almost any early-stage startup might need, from office space to conference rooms to internet access and more.

They are designed for startups who need to work on their business plan as they traverse the challenges of taking a business from the idea stage to the growth stage, which can match up with financing rounds like Series A, B, and C. The main benefits of joining an incubator include:

  • Access to desk and office space
  • Conference rooms for larger or more important meetings
  • The ability to collaborate or co-create with other startup founders
  • Structured support and mentorship from experts in different fields and industries

Incubators typically work with multiple early stage startups, and can often be easier or simpler to get into compared to an accelerator. The companies can represent a wide range of disciplines, working with a number of different industries.

Incubator programs are generally focused on regional economic development and can be funded through a combination of public sources and private grants. The partnerships with regional universities, institutions, and even venture capital firms can help nurture a pipeline of talent that supports regional development and innovation. 

While the goal of joining an incubator is to eventually mature out of the work space and/or program by reaching important milestones, companies can typically opt out of the incubator whenever it suits them best.

Applications are approved on a rolling basis, and the duration of a startup’s time with an incubator can often be open-ended. However, some incubators may cap the amount of time you can rent space, possibly due to the program’s high demand.

Key Differences Between Accelerators & Incubators

Accelerators and incubators, for all intents and purposes, might seem similar. Especially when a lot of programs offer similar services. Are the terms really that different? In some cases, “accelerator” and “incubator” are even used interchangeably. 

To avoid confusion, you might see people simply use either term to describe a program designed to help a business grow with the help of space, equipment, services, and capital. But, as you compare programs, you’ll realize that each offer can be very different, not only from incubator to accelerator but from incubator to incubator or accelerator to accelerator.

By checking out what each program provides, it becomes clear there are key differences between the two. Some people might actually argue they are nothing alike. After further inspection, you may feel the same as well.

One of the most important and easiest distinctions to spot is the type of company each organization works with. More specifically, the company’s current stage of development.

Accelerators generally work with companies that generally have a minimum viable product, or MVP, and are generally ready to go to market. Incubators, on the other hand, tend to work with companies and founders that are developing or refining a business idea and just beginning to build a company from the ground up.

While an accelerator program’s process involves intense, rapid, and hands-on education designed to accelerate the life cycle of nascent, innovative companies, condensing years’ worth of learning and growth into just a few months, incubators are much more open-ended. They don’t run fixed-term programs, and incubator memberships can go on for years.

Accelerators don’t generally offer physical space to their companies. For incubators, this is often their main draw—offering office and lab space to startups so they can work on an idea and turn it into a reality. Incubators often look to put companies in contact with other entrepreneurs working in a shared space as well, while accelerators support you and the other startups in your cohort in isolation.

Additionally, a major difference between the two is that an accelerator will generally require participants to provide equity in order to join the program. This type of equity-based payment may not be ideal to all founders. In contrast, most incubators are fee-based, and only require that you make payments in cash for the space and services you’re using.

While these are important differences to keep in mind—fixed duration vs. open-ended; equity-based vs. fee-based; limited physical space vs. technical facilities—there is also some overlap between accelerators and incubators, as shown in the illustration below:

Source

Knowing what each startup program can offer, and what each requires, will help you decide which type is best for you and your company.

What Makes a Good Accelerator Program?

A good accelerator program is staffed by experienced scientists who understand what it is their biotech startups do technically. It’s well known that industry-specific accelerators can do better in this regard. Its network of investors, partners, and mentors needs to be strong and well-suited to your needs as well. Make sure the program you want to join is well-networked.

You can also investigate the program’s active companies and its graduates to determine whether or not your business would be a good fit. If they have supported similar companies in the past, it can be a sign yours will benefit from the program as well.

Furthermore, a good program should directly invest in your business. If you have their cash, you will be and remain a main concern of theirs. In other words, they will want you to succeed. Accelerators can play a strong role in de-risking your company for future potential investors, something that is invaluable in both the short- and long-term.

Additionally, the program should gather pace and maintain momentum throughout its duration. Everything should be happening very rapidly, from business plan creation and strategy to market and customer segment analysis to product development. You want to make sure the program is well outlined, comprehensive, and involves rapid iteration.

And a Good Incubator Program?

A good incubator will have a strong network of mentors with relevant experience in your field. Having specific and experienced guidance for your business or idea will benefit you greatly. It won’t help you if you have somebody advising you on your business idea who has spent the last 25 years mentoring an entirely different industry.

Additionally, the incubator should have a community of entrepreneurs that actively participate in events and with one another. Being able to talk with people who have gone through what you’re going through is going to be invaluable.

It should also, ideally, have a wide range of space options, from single desks or benches to larger suites. It should also have the equipment you need, whether that’s as simple as desk space and an internet connection or something more specific, like core and specialized lab equipment and wet lab space.

What’s the Difference Between an Accelerator & Biotech Accelerator?

We’ve gone over the differences between an accelerator and incubator. Now, let’s review some of the differences between a typical startup accelerator and a biotech accelerator. The biggest difference, obviously enough, is one of focus.

Many startup accelerators work with a wide range of companies from many different industries, providing resources that generally apply to all, or at least many, early-stage companies. Biotech accelerators, on the other hand, specialize in working with companies in the life sciences and healthcare industries. While accelerators that work with many different industries can be a great choice, they may not always offer the expertise you need to develop a biotechnology or healthcare product.

Because these two industries are so different from others, startups working in these sectors can greatly benefit from attending a biotech accelerator program. The mentorship, resources, and networks will be much more aligned to your needs and goals, as will expectations for what you can accomplish during the program.

And, like the industry-agnostic program, biotech accelerators are cohort-based, fixed-term programs as well, ones that offer startup founders the same type of access to early-stage capital, hands-on mentorship, industry-specific education, and tailored resources needed to refine pitches and business plans in addition to accelerate business development, strategy, market analysis, customer segment analysis, and much more. 

The goal of a biotech accelerator program is to help a life science- or healthcare-focused startup scale its product and business much faster than it would be able to without the accelerator program. In this way, growth that happens over a number of years instead happens in a number of months. 

That’s not to say that “general” startup accelerators won’t have the resources you need. Many do. For example, while Y Combinator works heavily with tech companies, they have also accelerated a lot of healthcare companies. So even though you’ll likely check out biotech-specific programs, it’s important to not rule out an accelerator just because it works with other industries.

Review each accelerator’s offerings and company portfolio to get an idea of who they’ve supported in the past and how or if they can support you now.

What About Incubators & Biotech Incubators?

Let’s also compare a typical business incubator to a biotech incubator, which might also be referred to as a life science or wet lab incubator, and will most likely also focus on other verticals in the life sciences, such as medtech and healthcare.

Despite the varying nomenclature, just know that incubators all operate with the same goal in mind: to incubate a life sciences business and help it grow by providing the program’s attendees with laboratory space, office space, and (shared) lab equipment. Each business in the incubator can use these resources for research and development, allowing them to create data points and work towards an initial product, whether that product requires translational research or product prototyping and development.

It’s especially important for biotech startups to have access to the lab, and, unlike a typical incubator program, biotech-focused incubators will provide wet lab space, equipment, and even access to core lab facilities. This is the key difference between an incubator and a biotech incubator: an industry-specific set of resources.

An incubator might work with several different industries, providing office space and shared working space to startups that don’t necessarily need much more than a desk, conference room, and access to WiFi, while a biotech incubator will be able to provide shared wet lab space, core lab equipment, and specifically-tailored programming for scientists, in addition to industry-specific networking and mentoring, and even potential investors and partner opportunities, too.

By providing lab space, equipment, and mentorship, biotech incubators are well-suited to help early-stage startups “incubate” their business model, product, and more, providing a “suitable temperature” to develop and grow a scientific idea from simply a thought in a founders head to an actual reality.

Eventually, if all goes well, the company and its founders will grow beyond the support of the incubator and move on from the program into their own dedicated lab space—a figurative hatching.

While the biotech incubator model may not offer much outside of physical lab space and equipment needed to operate, more and more programs are including supportive features, such as a la carte business and lab services, extra bench space or desk space, consultation and networking opportunities, and even access to capital, either through direct investments or connecting you with a potential investor or network of investors. All of these extra services can help founders reduce friction and risks at the earliest stages and provide them with the right space and tools to thrive and grow.

What makes a biotech incubator invaluable to a founder is that it provides a support system. Starting a company on your own is hard. Especially in the life sciences. You’ll often need specialized equipment and a highly regulated lab space to conduct any legitimate research. Plus, your first experiment can take months and cost millions. Add all of these costs up, and you’ll soon realize the amount of money you’ll need to run R&D is significant. 

Biotech incubators, if they’re thinking innovatively, focus on the difficult position founders often find themselves in: to secure funding, you need to have data. But, to get data, you need to have funding. By providing the space, the specialized equipment, the connections, and more, incubators can help founders complete their work. Incubators take care of the equipment maintenance, upkeep, and logistics as well, so you can focus on the science and nothing else. Your only requirement is to pay for the bench space. 

Now, depending on the program you’re interested in, bench space costs can vary. For example, at MBC Biolabs, benches start at $1,750/month, and include tips, tubes, and gloves. Rather than ask for an equity stake in a startup, incubators work on a fee-basis instead. This can make joining an incubator an intriguing option for a founder who is looking to grow their business but isn’t eager or willing to give up any equity. 

However, your startup may not even have the funds to afford the monthly payments. No matter which way you paint it, getting a life sciences business off the ground is difficult.

What Are Some Accelerator & Incubator Alternatives?

Yes, there are alternatives. One such alternative is a simple coworking space. Accelerators aren’t for everyone, for all sorts of reasons. Some founders don’t like the idea of parting with equity. Some startups might not meet the criteria for a program. There are numerous possibilities why an accelerator may not be a good fit. A coworking space might be a better option if you don’t necessarily need to validate a business idea, secure funding, learn about business development, or be mentored.

You’ll get access to the office space you need, and the space often comes with networking opportunities, events, and more that can help with growth. Depending on the coworking space, you might even be able to outsource some of the administrative work that comes with running and building a company. Most importantly, however, you won’t have to give up equity in order to join.

An incubator or accelerator might not be what you need right now, depending on the state of your company and its funding. That’s why it’s important to look into alternatives, and determine whether or not something else might be better suited, especially when incubator space can be expensive and accelerator programs take a stake in its participants’ businesses.

Another alternative—one that’s more specific to biotechs—includes lab shares, or lab share facilities and core labs. Shared lab coworking spaces, like typical coworking spaces, offer companies the space and equipment needed to work on mission-critical research and development, but don’t usually require members to give up equity in order to join. Core labs maintain and support lab equipment for use by researchers of the institution that funds them as well as external customers.

Lab coworking space and core labs usually don’t provide as much support and additional services compared to incubators and accelerators, and are simply a place for you to rent some space to work on your scientific idea. However, they can often be much less costly to join.

Which Program is Best Suited For Your Company?

It can be hard to decide between joining an incubator or accelerator, but once you establish what your business needs are and what each program can offer you, it becomes much simpler.

Do you need to develop a growth strategy? Are you still looking for a co-founder? Do you need to research more, and spend more time gathering data points, or developing an MVP or prototype? It’s possible that an incubator with a fully-equipped lab facility will be the choice.

Or, are you growingly quickly, have a founding team, and need some seed funding and structured guidance from an expert in startups and, quite possibly, your field of discipline? Then an accelerator program might be your best bet.

One of the best ways to determine if you should join an incubator or an accelerator is to look at the stage of your startup. Incubators provide space and resources that early-stage companies can use to grow from the idea stage to growth stage. On the other hand, accelerators are ideal for startups with a minimum viable product looking to accelerate through the growth stage.

Moreover, accelerators have much more competitive application processes. If you don’t meet an accelerator’s requirements, joining an incubator might help you get where you need to increase the chances of joining the accelerator.

Another way to determine whether or not an incubator or accelerator is right for you is to anticipate how long you will need to use the program. If you’re looking for a collaborative work environment that you can use long-term, then it’s possible an incubator is the ideal fit. Many programs provide a range of space options, and allow you to scale accordingly, giving you flexibility when it comes to company growth.

That said, if you need more space, you have to pay for it. Do you have the money available to rent two or three more bench spaces? If you need more space and have the money to rent, it’s possible you’re growing quickly enough to consider applying to an accelerator, and being accepted.

Before you apply, find out whether or not there are funding opportunities available through the incubator. It may be easier to try and seek funding through the incubator than it is to get accepted into an accelerator. The amount of equity you hand over may be different as well.

You might also consider continuing to build your company and developing a growth strategy during your time at an incubator without scaling, until you are finally accepted into an accelerator. It’s possible that going through the program and then looking to scale using a financing round secured via that program can be a much more viable path forward to growth and success. This is because you might be able to secure more funding through the accelerator and its network than the incubators.

Whether you decide to join an incubator or accelerator, the two are not mutually exclusive. You might meet founders who have participated in both. It’s not uncommon for startups to simultaneously rent space at an incubator and participate in an accelerator program. There are even some incubators with built-in accelerator programs, or vice versa. IndieBio is an example of an accelerator with available wet lab space.

That said, no two biotech startups are alike. How you operate and what your path forward looks like will be unique to you. You’ll have to put in the time and effort to find out what works best for you—something that can, ultimately, only be understood in hindsight. So get out there.

Graduating From an Accelerator or Incubator? Lease Your Equipment

Although accelerators and incubators are not the only option you have to grow your business, they have proven to be a key part of the life sciences ecosystem, helping many emerging companies grow from a concept into a company. That said, they do not guarantee success. But, they can definitely help.

And while it’s important to know the terms “accelerator” and “incubator”, as well as how they can differ, remember that nomenclature isn’t the most important thing here. What’s more important is the types of services provided and the quality of those services.

When you start looking for programs and facilities, it is important to look at each holistically, and not base the decision on whether or not the incubator or accelerator is self-categorized in a particular way. Look at what they can offer you, and whether or not these resources will help you succeed in building your business and your product.

If you’re planning on joining an incubator or accelerator, or have recently graduated from either, you may be looking to scale up and use some of your funds to lease more space and acquire new lab equipment. If that’s the case, lease your equipment with Excedr.

Our leasing program helps you stretch your budget, keep upfront costs low, and make payments much more predictable and manageable. Get in touch to learn more, and let us know what you’re interested in. 

We’ll be able to start putting together a lease estimate for you, depending on how far along in the equipment procurement journey you are.