July 28, 2017

Although often used interchangeably, accelerators and incubators are different terms that represent slightly different ideas and concepts. The most distinct difference between the two is the time frame of each. While accelerators operate for a short period of time from 90 days to four months, incubators provide mentorship for periods lasting for more than a year or so.

Drawing an analogy with the life stages of human beings, businesses can be roughly segregated into three stages: childhood, adolescence, and adulthood. An incubator nurtures a business throughout the startup phase—childhood—and provides all the necessary tools and advice for the business to stand on its own feet—into their adolescence. Treading through adolescence is a tricky part where companies in the process of gaining their identity often fail to scale up and get lost in everyday operations.

It is at this critical point of time that most business incubators end and business accelerators come in play. By means of acceleration services, business accelerators help companies get through adolescence and prepare them to enter adulthood, providing them with strong arms and legs, sound values and a clear mindset (strategy) for the future. In other words, while incubators help companies stand and walk, accelerators teach companies to run and grow.

It can be understood as a holistic business advisory service, often bearing strong resemblance to traditional management consulting practices, but adjusted to fit small and medium sized organizations.

Our Enterprise business accelerator’s vision is to coordinate and unite the Nepal’s Entrepreneurial Ecosystem—network of entrepreneurs, investors, government agencies, legal experts, consumers, and educational institutions. Accelerators place priority on growing the size and value of the company as fast as possible to prepare the company for the initial round of funding. On the other hand, incubators focus less on quick growth and more on the company becoming successful at the right pace.

Most accelerators around the globe offer a specific amounts of capital in exchange for guidance and equity (usually around three to eight percent of the company). Incubators take little to no equity in the company as most incubators are funded by grants through universities.

The private equity space in developing countries like Nepal is, although very small, growing increasingly. We all know the significant role of small and medium enterprises (SMEs) in economic and social development. Accelerator and incubator programs both help such promising entrepreneurs launch and expand their business and contribute to the development of the entrepreneurial ecosystem.

Part of this post is an adapted version of a post that appeared on Inc.com and Impulsa Business Accelerator’s website.