Startup incubators and accelerator design programs explicitly to help startups grow and expand. With the advancement of digital technology, several individuals have discovered their entrepreneurial potential and are actively working on starting their own companies and businesses. As such, the need for incubators and accelerators has proportionately increased.
Accelerators and incubators offer productive ways to grow their business for early-stage companies. While there are numerous incubators and accelerators in the UK, choosing the right one can be tricky. Keep reading if you want to find answers to some central questions such as “why do we need an incubator,” “what is the difference between an incubator and an accelerator,” “how do I choose the right accelerator or incubator,” as well as top 20 incubators and accelerators in the UK.
What are Startup Incubators and Startup Accelerators?
A startup incubator is a collaborative endeavour curated to help startups and small businesses succeed. But what is the difference between an incubator and an accelerator? Incubators seek to help entrepreneurs solve some of the most common challenges of running a startup. Helping entrepreneurs includes the following.
- Helping get with the workspace
- Finding the seed funding
- Providing mentorship
- Training them to become accomplished entrepreneurs
The primary goal of a startup incubator is to help small businesses expand and grow.
On the other hand, a startup accelerator offers
- short-term expansion opportunities through different programs,
- mentoring developing companies,
- assisting companies to find investors,
- and making companies stable, successful startups.
Accelerator programs, unlike incubators, focus on businesses that moved past their early stages of establishment. These businesses are typically self-sufficient businesses that still need guidance and support to reach the next level of success.
How Do Accelerators and Incubators Help Startups?
An excellent idea is not enough in today’s highly competitive startup environment. Experience, skills, resources, and funding are essential tools a startup needs to succeed. Here are some of how incubators and accelerators help startups:
- Direct Investment In Startups:
Startups under incubators do not consider typical business expenses such as office rent and overheads. Instead, the resources are shared with other startups, helping them manage their costs conveniently.
- Accelerators Offer An Ecosystem Of Support:
Accelerators are often pre-equipped with critical support systems such as patent attorneys, law firms, CFOs, and regulatory experts interested in partnering with early-stage startups. For detailed information on the question of “why do we need an accelerator,” please refer to the Harvard Business Review’s excellent piece on accelerators.
- Excellent Investment Opportunities:
Raising capital for your startup can be a tricky affair. Often you will meet elusive investors you may have to chase for months before securing an appointment, and the chances of your pitch getting rejected are high. However, incubators and accelerators can save time and effort as they know prominent venture capitalists, angel investors, and individual investors.
What Is the Difference Between Incubators and Accelerators?
While both incubators and accelerators are pretty similar, there are notable differences that entrepreneurs must learn about before choosing the program that best meets their needs. Here are the key differences.
- Accelerators support established companies, whereas incubators are independent, often connected with prominent venture capitalists and angel investors.
- Accelerators focus on helping existing companies accelerate their growth plans. Incubators, on the contrary, focus on very early-stage startups and help them with office spaces, securing seed funding, and motivating startups.
- Accelerators have a clearly defined time frame to help startups accelerate their business growth. On the other hand, incubators generally have long-term goals and are more open-ended.
- Accelerators are more structure-oriented than incubators, and they focus on aligning the startups, where they often buy a small stake in the company. On the other hand, incubators typically focus on a more significant number of startups and are less selective than accelerators with a specific focus on fostering a co-creation environment.
Understanding the critical differences between them is essential, and it is pertinent to note that every incubator or accelerator has unique approaches. So if you figure out how they operate, let’s look at the top 20 Incubators and accelerators in the UK.
The Top 20 Startup Accelerators & Incubators In The UK
Bethnal Green Ventures
Bethnal Green Ventures specifically focuses on working with startups that cater to social, green technology, healthcare, and education markets. They target startups with innovative concepts with a positive impact on society.
Activate capitals focus on working with startups in the digital platform. As an essential prerequisite, startups must have brilliant ideas with an incredible entrepreneurial mindset.
Barclays Accelerator looks for fintech startups, and they actively provide funding and support to fintech startups. They typically offer an investment of up to £120K for a 6% equity stake.
Entrepreneur First is most likely to invest in technology-oriented companies. They select companies based on their potential to make a significant impact. Most importantly, they provide opportunities to work with experienced individuals and companies, possibly helping startups grow. Part of their deal includes £80,000 for a 10% equity stake.
Food Institute London
A pre-seed accelerator, Food Institute London focuses explicitly on funding technology-driven businesses. They prioritize creating a solid support network and typically require a 4% equity stake in exchange for their support services. They support both solo entrepreneurs and teams at the initial stage of their existence.
Hatch Enterprise prominently supports startups working on social inequality problems. They seek to work with social enterprises, female-led startups, and entrepreneurs from disadvantaged backgrounds.
Cylon is an excellent option for entrepreneurs and startups working in cybersecurity. They focus on working with startups with a minimum viable product, positively endeavouring to secure the digital space with innovative ideas.
Founders Factory prefers working with tech startups and actively funds and supports them. Some of the startups they have supported include Luckytrip, Sampler, Senseon, and more.
JLAB Accelerator focuses on startups working in the retail tech industry. They provide mentorship and expert advice from industry stalwarts and offer a product testing and prototypes marketplace.
Level39 constantly seeks to work with Cybersecurity Space, Retail Technology, and Fintech startups.
WeWork Labs actively invests in Fintech and Tech startups, providing funding and support. Notably, they actively help businesses expand globally and do not demand any enquiry in return for their services. They charge a monthly membership fee for their services, but unlike other incubators and accelerators, they do not demand a stake in the company.
Wayra looks for entrepreneurs with an innovative mindset focused on making a difference. Hence innovation and creativity are critical to them.
Like most accelerators and incubators, The Bakey also focuses on tech startups. They tend to work prominently with innovative entrepreneurs, early-stage startups, and companies with disruptive ideas.
As a part of their essential requirement, for Techstars, working with startups that are well balanced and with a wide-ranging skillset is paramount. Coconut and Memgraph are two of the most notable startups they have worked together.
They focus on Insurance Technology, a relatively unique field. They seek to work with startups in the early stages, working in the Insurance Technology space.
Seed Camp funds and supports tech startups who innovate and resolve more significant market sector challenges. Essentially, they offer funding of £100K for an equity stake of 7.5%.
RocketSpace has a unique approach, and they like working with Agri & Mobility Tech companies. Their programs cater to major-scale startups seeking to grow their existing business.
Platform-X looks to work with innovative tech startups to bring about a meaningful change in the market. Notably, they offer investments up to £25M with no equity, making them a highly unique platform to approach.
Oxygen Accelerator essentially works with innovative tech startups with a high potential to impact the market. They invest up to £25K for an equity stake of 8 per cent.
Microsoft ScaleUp provides funding to Technology businesses and offers mentorship advice from Microsoft sales experts. GoSlope and Openhour are some of the companies they have partnered.
Why Do Startups Need an Incubator?
Startups and entrepreneurs start with a bright set of ideas, but they rarely have the experience and the exposure needed to survive. As a result, the initial members are often uncertain about their approach, and they go through several trial and error processes before finding their groove.
Working with an Incubator can help you get the needed mentorship and exposure to network partners, which will give you training, experience, and exposure to several different aspects of running a successful startup.
Why Do Startups Need an Accelerator?
Startups will assuredly come to the point of stagnation where the growth is not necessarily diminished, but progress becomes perplexing. Most startups at such a stage can benefit from mentorship from experienced industry experts and a set of solid networks and funding, which can help them scale rapidly, helping them break the stagnancy barriers. Accelerators fulfil all such needs of a startup, where they help startups accelerate their growth.
For more information, please refer to the report published by the UK Government detailing the impact of Accelerators and Incubators in the UK.
How Do I Choose the Right Incubator?
Before selecting the preferred incubator, entrepreneurs should monitor the program’s record of helping startups in the past. Conduct deep analysis of the companies that have benefited from the program and make your decision accordingly. Furthermore, you should verify their package details and meet your specific needs.
How Do I Choose the Right Accelerator?
An essential component of selecting the right accelerator is their ability to connect you with the right mentors throughout the program. In addition, the accelerator program should specify their offering to request an ownership stake in your company. Furthermore, avoid choosing an accelerator based on someone’s algorithm of ranking. Most importantly, their program should match your business model, or else there is a high chance of the endeavour’s failure.
Both have their specific advantages and benefits, but selecting either one with a careful understanding of your goals is essential when making a decision.