By Akinpelu Babatola Guest Writer, The Xpress Train
So you are trying to get your startup idea off the ground, but there’s a problem, everyone has been talking about incubators, accelerators, venture capitalists, and venture builders. This has left you all but confused about how to go about things. It is understandable after all, everyone has been mentioning these things, but, likely, you have not been given the right education about what they all mean and the differences between them. Fear not, the Xpress Train has you covered. Not only will I be clearly defining these very important Startup terms, but I will also try to highlight the differences between all of them.
So let’s get started.
Startup Incubators: If you have a startup idea and are still working out the kinks, then incubators are for you. A startup Incubator is a joint program designed with the sole purpose of helping startups succeed. They help out by providing a working area, initial capital, and training and mentoring.
Most incubators, if not all, are created without profit in mind, that’s right they are non-profit. They can be owned by the government, a college or university, a civic group, or a startup organization. There are cases where entrepreneurs also create incubators to help others and promote the spirit of entrepreneurship. And contrary to what you might think, incubators take care of startups outside the tech industry too. There are farm incubators and fashion design incubators, just to give examples. The most popular incubators around include 500 Startups, Y Combinators, and Capital Factory.
Startup Accelerators: Accelerators are a little like incubators, the main difference between the two lies in their structure. While incubators let you refine your idea for as long as you possibly can, Accelerators come with time restrictions. You are mentored for a period, usually a few weeks to a few months and within that period results are expected.
While Incubators will let just about anyone with a sound idea join up, accelerators are usually more selective. Techstars, one of the more popular accelerators around, only selects about 10 from thousands of submissions. In exchange for their support and seed capital investments, accelerators also receive a little equity in your company.
Venture Capitalists: When someone or a company puts money, known as venture capital, into your business or startup, then that person or company is a venture capitalist. Usually, once a startup has shown the potential for long term growth or has a good track record, then it will attract a lot of venture capitalists. The venture capitalist, unlike the incubator and the accelerator, is profit-driven. In exchange for the venture capital, they usually get a stake in your company and will sit in on your board. They will become part of the decision making. This is understandable because, in the end, a venture capitalist worries more about making a profit than any other thing. Popular venture capitalists are SoftBank Capital and Accel.
Venture builders: if you are looking for the perfect amalgamation of the previous three, then venture builders are what you are looking for. Venture builders, like the Xpress Train, will not only help you nurture your ideas like an incubator or an accelerator, but they will also pour in resources just like a venture capitalist. They are dedicated to helping startups build, launch, and grow. This means you will receive mentoring, a workspace, assistance with things outside your area of expertise alongside help that will not only make your idea blossom but will also make it a sustainable idea.
The one thing that differentiates Venture builders from the rest is that they are concerned about what comes next. While Incubators and Accelerators are concerned about getting you going, and venture capitalists look out mainly for themselves, venture builders want to see your startup idea grow beyond what you thought was possible and survive long after they are no longer involved.