If you have been in the world of startups for a while, especially within the technology space, chances are that you have heard about the terms “tech incubator”, “ startup incubator” or “startup accelerator“ – company or organization that assists technology-oriented entrepreneurs in the start-up and early development stage of their firms with wide ranges of business support services. Since more and more entrepreneurs have been establishing their own businesses as part of the tech startup craze, the number of startup incubators and accelerators has also increased – according to ReadWrite, the US is home to over 1,000 tech incubators.
Indeed, for startup founders and entrepreneurs seeking support – community, education, mentorship, and capital – to help grow their companies, an incubator or accelerator is the perfect cure for the hardships of startup life. Should you be one amongst them, let’s hit the ground running with our pick for top tech incubators in 2020.
Tech Incubator Vs Accelerator: Are They the Same?
Before diving into the specific names of your would-be startup incubators and accelerators, it’s significant to first grasp the basics understanding over them.
Whereas these terms are often assumed to represent the same concept, there are a couple of key distinctions that first-time founders, like you, should be aware of if you are planning on signing up.
So, to which extent they are different? Let’s start off by breaking down the specific goals of each of these types. Although both of them are collaborative programs designed to help startups succeed, accelerators “accelerate” growth of an existing company – while incubators do “incubate” disruptive ideas with the hope of building out a business model and company. Hence, it may indicate that typically, accelerators are mainly focused on scaling a business while incubators will orient more efforts to innovation.
One of the noteworthy differences between startup accelerators and incubators is in how the individual programs are structured.
By and large, collaborative accelerator programs plan a set timeframe in which individual companies will spend anywhere from a few weeks to a few months working with a group of mentors to build out their business and avoid problems along the way. Almost all accelerators start with an application process, but the top ones are typically very selective. For instance, in case of Y Combinator and Techstars – two of the most well-known accelerators, Y Combinator often accepts about 2% of the applications it receives and Techstars usually has to fill its 10 spots from around 1,000 applications.
Then, these early-stage companies are typically given a small seed investment, and access to a large mentorship network, in exchange for a small amount of equity. The mentorship network, generally composed of startup executives, venture capitalists, industry experts, and other outside investors, turns out to be the greatest value for prospective companies. At the end of an accelerator program, you’re likely to see all the startups from a particular cohort pitch at some sort of demonstration day (often shortened and referred to as a demo day) attended by investors and media. At this point, the business has hopefully been further developed and vetted.
“The goal of the accelerator is to help a startup do roughly two years of business building in just a few months,” said Mike Bott, general manager of the Brandery, another leading accelerator. “If you go through a good one, you’ll know at the end where your startup founding team and business stand.”
Relatively different from accelerator’s approach, startup incubators begin with companies – or even single entrepreneurs – that may be earlier in the process and normally, they do not operate on a set schedule. Truly, to illustrate, should an accelerator seem like a greenhouse for young plants to get the optimal conditions to grow, an incubator will match quality seeds with the best soil for sprouting and growth.
Although there are a large number of independent incubators, they can also be sponsored or run by VC firms, angel investors, government entities, non-profit organizations, and major corporations, among others. Whereas some incubators have an application process, many others only work with companies and ideas that they come in contact with through trusted fellows or partners.
Depending on the sponsoring party, an incubator can put emphasis on a specific market or vertical. For instance, an incubator sponsored by a hospital may only be in search of health technology startups. While tech incubators remain the most active niche and most of the media coverage focuses on tech startups, incubators aren’t just limited to one industry. In fact, there exist all-purpose incubators that consider all kinds of startups, irrespective of the specific industry.
As a rule, startups accepted into incubator programs will relocate to a specific geographic area to work with other companies in the incubator network. Within such a network, a startup will refine its idea, build out its business plan, work on product-market fit, identify intellectual property issues, and expand networking in the startup ecosystem. Mentorship is usually at the heart of an incubator, allowing startup founders to leverage the experience of successful entrepreneurs who have been in tough spots just like you.
Other common business support services can include:
- Marketing assistance
- Accounting/financial management assistance
- Access to bank loans, loan funds, and guarantee programs
- Connections to higher education resources
- Connections to strategic partners
- Access to angel investors or venture capital
- Comprehensive training programs
- Advisory boards and mentors
- Management team identification
- Help with business etiquette
- Technology commercialization assistance
- Help with regulatory compliance
- Intellectual property management and legal counsel
Furthermore, a typical incubator has shared space in a co-working environment, a month-to-month lease program, additional mentoring, and some invaluable connection to the local community. Actually, co-working is a critical part of the incubator experience and also has been split off as its own separate business offering around the country, with co-working spaces charging rent for access to utilities. Whereas some accelerators offer a co-working space, most provide incubated businesses with private office space or let them find it on their own.
After all, both startup incubators and accelerators do offer golden opportunities to assist early-stage businesses and ideas for startups get headed in the right direction. Sometimes, there is a fine line between these given concepts and in practice, you will get to know several incubator-accelerator organizations. Then, it’s up to you which the greatest starting point you should choose!
Tech Incubators & Accelerators: The Best Ones In 2020
#1. Y Combinator
- Number of investments: 2,818 (Their most recent investment was on Mar 19, 2020, when Pahamify raised $150K)
- Number of exits: 280
As previously mentioned, Y Combinator is regarded as the supreme startup accelerator- accelerator around the globe. Founded by Paul Graham in 2005, it is practically amongst the oldest startup accelerator having expedited the success of Dropbox, Airbnb, Instacart, Stripe, Twitch, Coinbase, Weebly and Reddit. Up to now, Y Combinator has funded 2,000+ startups estimating an overall total of more than $100 billion.
Y Combinator is a trailblazer in the startup accelerator space. With a new model of startup funding, twice a year they invest a small amount of money (around $120,000) in a large number of startups (most recently 68). Located in Palo Alto, Silicon Valley, Y Combinator is run by a 40-person team and receives around 13,000 startup applications via the Internet alone every year. The company then picks out between 200 and 240 projects to back per year, adopting a very stringent selection process.
The investment is made through a standard contract known as the SAFE and essentially represents an injection of capital. The accelerated companies will get a chance to get their offering in shape and get on a path to growth by targeting further investments.
- Number of investments: 2,858 (Their most recent investment was on Mar 2, 2020, when Apres raised)
- Number of exits: 225
Founded in 2006 with a presence over 15 countries, Techstars is a worldwide network that allows businessmen to set forth advanced technology in the market, no matter where they choose to live. Actually, Techstars is the name behind Startup Week and Startup Weekend, which spur entrepreneurs to kick procrastination to the curb and launch new ventures in a matter of hours. With numerous mentor-led acceleration programs being put forward as well as more than 1000 startup projects active all around the globe, Techstars assists entrepreneurs on their business journey – all the way from a flash of inspiration to IPO.
Taking a deeper look, Techstars operates four major divisions: Techstars Startup Programs, Techstars Mentorship-Driven Accelerator Programs, Techstars Corporate Innovation Partnerships, and the Techstars Venture Capital Fund. Whereas Techstars Mentorship-Driven Accelerator Program supercharges success, Techstars Startup Programs inspire, educate and connect entrepreneurs. Besides, Techstars Venture Capital Fund invests in the most innovative and disruptive Techstars companies to fuel their success – typically Uber, DigitalOcean, Twilio and SendGrid. And Techstars Corporate Innovation Partnerships empowers a plethora of brands to create world-changing products and services.
#3. 500 Startups
- Number of investments: 2,249 (Their most recent investment was on Apr 6, 2020, when RaRa Delivery raised $1.2M)
- Number of exits: 223
With over 150 people based in 20 countries managing venture investments across 75 countries as well as speaking over 25 languages, 500 Startups is amongst the largest and most active global venture firm and startup accelerator – on a mission to discover and back the world’s most talented entrepreneurs, help them create successful companies at scale, and build thriving global ecosystems.
Since its inception in Silicon Valley, 500 Startups has invested in staggeringly over 2,400 companies via its 5 global funds and 17 thematic funds dedicated to either specific geographic markets or verticals. Notable investments in the 500 portfolios include Credit Karma, Twilio, Canva, Grab, Bukalapak, The RealReal, Talkdesk, Knotel, Udemy, and Ipsy.
Beyond providing seed capital, 500 Startups also supports entrepreneurs via their Seed Accelerator Programs which emphasize digital marketing, customer acquisition, lean startup practices, and fundraising for pre-Seed companies. In fact, they further contribute to the development of innovation ecosystems by supporting startups and investors through educational programs, events, conferences, and partnerships with corporations and governments around the world. Their investment teams and mentor network have operational experience at companies such as PayPal, Google, Facebook, Instagram, YouTube, Yahoo, LinkedIn, Twitter and Apple.
#4. Angel Pad
- Number of investments: 171 (Their most recent investment was on Jan 24, 2020, when Chec/Commerce.js raised $1.7M.)
- Number of exits: 30
AngelPad is a seed-stage incubator-accelerator program based in NYC and San Francisco, which is dedicated to finding product market fit, defining a target market to get first validation for a company. Launched in September 2010 by Thomas Korte with six former Google employees, AngelPad has accomplished a really impressive track record, having been ranked as the Top U.S Accelerator by MIT’s Seed Accelerator Benchmark, every year since 2015. Also, AngelPad teams have become one of the most reliable hit machines in Silicon Valley – it’s done it largely by operating as a kind of anti-Y Combinator, even while the famed incubator was its first inspiration.
Focusing on seed-stage financing, they have provided a launchpad for over 170 companies since 2010. Every six months, it selects around 12 startups from an enormous pool of candidates (usually around 2000). In aggregate, all AngelPad companies raised over $2.2 Billion in funding and the average funding for all AngelPad companies is over $14M.
- Number of investments: 87 (Their most recent investment was on Nov 5, 2019, when Glide Apps raised $3.6M)
- Number of exits: 26
Founded in 1996 by Bill Gross, Idealab remains the longest-running technology incubator, founding or advancing the development of over 150 tech-powered companies with more than 45 IPOs and acquisitions. With a mission to create and operate pioneering technology firms, Idealab built out their structure that allows for testing several business ideas at once and turning the best of them into real companies, attracting the human and financial capital necessary to bring them to market.
In practice, many of these companies were among the first to introduce new business ideas to the market. Let’s take a look around! CitySearch, now a part of InterActive Corp., established the category of local online community directories. eToys demonstrated the tremendous potential for online consumer retail and became one of the most recognized brands during the early days of e-commerce. Overture Services, which began life as GoTo.com, was the first company to introduce the concept of paid search. Now part of Yahoo, Overture’s business model is the underpinning of a multibillion-dollar online search market.
Plus, Idealab delivers a broad range of operational support to its companies, allowing the company management teams to focus on getting to market quickly and cost-effectively and to take advantage of the serial start-up experience of the Idealab team. Their current operating firms are providing innovative technology solutions in industries such as software, search, Internet media and services and alternative energy fields.
In addition to capital, Idealab also offers a full range of resources to infuse start-ups with the support they need on the path to develop innovative products and services – which consist of office space and the accompanying office services, development and technology, product and graphic design, marketing, financial advice, human resources, competitive research, legal, accounting, and business development support and services. Besides, Idealab teams provide advice on strategy, branding, and corporate structure.
#6. The Brandery
- Number of investments: 76 (Their most recent investment was on Oct 9, 2018, when Natalus Inc. raised $30K)
- Number of exits: 7
The Brandery is a nationally-ranked concierge accelerator that leverages the expertise of the Cincinnati region, namely branding, marketing, and design. In addition to an elite mentor network, startups are paired with world-class creative agencies and have access to some of the biggest names in the world, which include Procter & Gamble and Kroger. The Brandery runs one,12-week accelerator program a year for five companies, each participating startup will receive $100K, a year of free office space, and more than $200K in additional benefits. The Brandery’s most notable exits include FlightCar, Roadtrippers, and Place.
Remarkably, The Brandery is a SILVER-tier accelerator in the U.S. as ranked by the Seed Accelerator Rankings Project. This adept accelerator does invest in high-growth startups within five verticals: Digitally Native Vertical Brands, CPG, Marketing Tech, Retail Tech, and Ad Tech.
And yes, this is 1 of 5…not 10…not 15…not 100! But, why? The Brandery invests in only five companies per program, which means a concierge and white-glove experience – they make a commitment to focus all of their time, energy and network on you.
Moreover, The Brandery is a member of the GAN, an invite-only community of the world’s most respected organizations that provide startups with the best resources to create and grow their businesses, wherever they are. Startups accepted into a GAN accelerator will have access to a variety of exclusive perks – typically over $1M worth of free services, introductions to a network of investors and access to soft landing spaces worldwide.
Other Marvelous Incubators & Accelerators Around the U.S.
#7. Capital Factory
Located at the heart of the entrepreneurial scene in Austin, Texas, Capital Factory is a 50,000m2 coworking space dedicated to startups and entrepreneurs.
The company’s accelerator gives Texas startups a competitive advantage in attracting talent, advisors, investors, and customers. Its focus is on helping startups raise funding and increase customer growth by providing co-working space, hosting credits, a Startup Evangelist to advocate for your startup and access to a mentor network of the top investors and entrepreneurs in Texas.
#8. Launchpad LA
Should you and your team live or are willing to relocate to LA, then Launchpad LA may turn out to be a great fit for your technology startup.
Launchpad LA’s four-month accelerator program does offer funding, free office space, an extensive network of mentors, investors, and advisors, as well as various cool free perks. When it comes to collaboration, they are indeed a very flexible venture in how they choose which companies to work with. Typically, they’re interested in strong teams with amazing products that need a push and support in the right direction, which could be fundraising, business development, product refinement or any other aspect of the startup growth process.
#9. Portland Incubator Experiment (PIE)
Portland Incubator Experiment, better known as PIE, is another outstanding within the startup world: throughout the years they have been an early-stage startup incubator; a community hub and co-working space; a consultant for a global incubator and accelerator programs.
Up to now, they have grown into a flourishing ecosystem that nurtures and mentors startups from all over the world with a view to “building better founders”, sharing successes and failures to inspire and educate founders everywhere. If you’re curious about them, then let’s find their own book covering these things called “PIE Cookbook”.
What initially started as a conversation between a creative advertising agency and the Portland startup community, PIE now enables organizations (from government and corporations to educational institutions) to collaborate with startup communities effectively and beneficially. As a participant in their incubator and accelerator program, you will get funding and office space to spend up to nine months in Portland and learn from the extensive PIE network, which includes other startups-in-residence, alumni, mentors and thought leaders.
#10. Entrepreneurs Roundtable Accelerator (ERA)
Entrepreneurs Roundtable Accelerator (ERA) is a huge investment fund as well as New York City’s largest accelerator program digital accelerator – created by New Yorkers forNew Yorkers. Also, ERA has NYC’s deepest and strongest mentor network with 500+ expert investors, technologists, product specialists, marketers, customer acquisition strategists, sales execs, and more, across all major industries represented in NYC.
ERA combines seed capital, hands-on help and a great co-working location with an expert team to positively impact the trajectory of early-stage startups. Each year, they organize two four-month acceleration sessions per year, each involving ten companies. The chosen startups will receive $40,000, office space, legal support, and other free services, in addition to practical assistance from a team of over 200 mentors specializing in various sectors.
The Bottom Lines
All things considered, joining a top accelerator or incubator will definitely be a smart idea when your startup company is looking to take the next step in its growth trajectory. From funding to mentorship, from networking to supporting swanky coworking spaces, from refining business ideas to offering precious educational resources, there exists tons of great accelerators and incubators out there that are going to kickstart and expedite your startup’s success.