Author: Skyler H. Hathaway
No, we’re not talking about your car’s gas pedal or the machines that help hatch eggs! We’re talking about the incubators and accelerators for startups and, in Lemonsqueeze’s case, companies that are transitioning to do business in the U.S.. These are the kind of accelerators and incubators that have been popping up all over the Nordic countries and Silicon Valley in California. But what is Lemonsqueeze, you may ask, an accelerator or an incubator? The line between the two options can be confusing, so let’s start by first defining what both an accelerator and incubator are!
An incubator is generally a centralized workspace that includes any number of startup companies. Incubators provide experienced mentors and professionals to guide each company toward their own business goals. These goals can be anything from finding capital investments to searching for a company’s own work space. An incubator typically exists to help startups reach a stage of maturity so that they can “fly the coop.” This should not imply that all companies at an incubator are at an early stage. Some companies enter with little venture capital while others come well-funded. The main benefits from using an incubator include the utilization of information from experienced professionals, well-structured and practiced guidance, networking with CEO’s and professionals from other companies, and a well defined workspace. Other things to consider about incubators are that they generally charge a monthly rate for the workspace and service they provide, but often have instructional and informational classes and events onsite.
Accelerators are very similar to incubators, but are more goal oriented and strictly structured. Accelerators typically support early-stage startups with a small amount of seed-capital in order to kickstart their operations. In exchange for the support and service an accelerator generally requires a percentage of equity within each company. Startups get involved with accelerators through an extremely competitive application process. From there, an accelerator then sets goals to be achieved, provides workspace and mentors, and expedites the growth. This is all done along the lines of a structured operational plan and only takes place within the course of 3 to 4 months. The main values within utilizing an accelerator are similar to incubators: they both provide mentoring and guidance services, workspaces, and networking opportunities. Accelerators, however, focus more on networking with venture capitalists, angel investors, and already-established corporate CEOs. The entire process within an accelerator ends with a “demo-day” where a startup pitches its ideas to an investor audience in order to acquire major funding and further growth.
We now know what both an accelerator and an incubator are, but because they’re so similar it’s important to keep in mind the differences between the two.
An incubator is more relaxed in its approach and lets each company within its workspace grow and mature on their own with proper guidance, allotted time, and professional networking from within the incubator. An accelerator sets a goal to be reached by “demo-day”, assists a company’s growth along the strict time frame, and provides seed-stage capital. In short, an incubator is meant to incubate a company until its ready to go off on its own where an accelerator is meant to accelerate the growth process of a company in order for it to find venture capital and placement within the business world by “demo-day.”
What’s even more complicated than understanding the difference between accelerators and incubators is understanding where Lemonsqueeze falls.
Lemonsqueeze is structured as an incubator that focuses on companies attempting to transition into the U.S. market. This does not imply that Lemonsqueeze is necessarily one or the other, an accelerator or incubator, but instead incorporates similarities from each. An accelerator requires a small percentage of equity from each company it mentors. Lemonsqueeze has done this before with its clients, but typically charges its clients per services rendered. This would be more like an incubator, but, unlike an incubator, Lemonsqueeze does not limit itself to clients interested in a workspace service and mentorship. For example, Lemonsqueeze has recently taken on a recruitment project to hire juicers for a juice bar called ‘Joe & The Juice’. This project has been strictly involved in recruitment and has not involved any kind of workspace incubating or management consulting. Lemonsqueeze does not limit itself to one label or the other, but instead incorporates features from both to produce an undefined accelerator-incubator hybrid.
Mik Stroyberg, CEO and founder of Lemonsqueeze, is well-seasoned in the startup world and knew that Lemonsqueeze would be valuable after his own struggles in entering the U.S. market. Lemonsqueeze is able to create an entry roadmap that will outline the steps to reach the goals that are defined earlier in the process. From there, Lemonsqueeze can recruit, onboard, and manage the U.S. sector of each company. Most of Lemonsqueeze’s clients are already established businesses from their Nordic headquarters and need a turnkey solution to manage their U.S. operation without affecting their success at home.
Now we would like to hear from you!
Why do you think Incubators and Accelerators have been popping up all over the globe in recent years?
How do you think they’re effective, or not, in growing startups and introducing startups into doing independant business?
Do you have any experiences with Accelerators and Incubators that you’d like to share with us?