What’s Best for Your Company? See the Pros and Cons of Co-working Spaces, Accelerators and Business Incubators
Startups understand that they have to collaborate and network for them to succeed. Today, business incubators, accelerators and co-working spaces enable interaction in different ways. However, not every startup will reach the top through any of the three connection facilitators. Therefore, the owners of startup companies need to assess the suitability of the three , depending on the business needs and type of operations. To identify the best facilitator for your business, look into the advantages and disadvantages of accelerators, incubators and co-working spaces which are described below.
Incubators have different strategies, but they are all geared towards accelerating the growth and success of early-stage firms and startups. Some incubators operate on a virtual basis while others have physical offices whose primary function is to promote networking among entrepreneurs and their coaches. Apart from that, some incubators are run or sponsored by the government and major corporations while others are independent. As a startup, you can be referred to the incubators by trusted partners, or you can make an application, get accepted and join just like one does in college. Incubators can also be general or focused on specific markets; and they can recruit nationally, internationally or based on a geographic preference. Incubators often have links to potential funding or have the capability to provide capital for investment.
Provides a low-cost or free workspace useful in the reduction of overhead as your company grows.
You are bound to receive quality advice from experienced professionals and seasoned entrepreneurs.
Incubators take startups seriously and their growth is accelerated.
The support structures of incubators will expose you to various talents, networks and leadership that are useful in helping you focus the business towards the right direction. Some business incubators also provide other resources like media coverage that help promote your business.
You are better placed to access capital through business incubators.
You have access to business development opportunities such as accounting, legal, intellectual property and marketing training.
The benefits provided by incubators are in exchange for an equity stake in the startup company. The negotiations for equity ownership can sometimes get ugly and complicated.
The institutional DNA can sometimes be an obstacle on the growth path of startups. If the team, support, mentorship and leadership are not suitable for the startup, the business idea will not go far.
The application process is competitive and rigorous with requirements including disclosure of all business activities and submission of a detailed business plan.
Once you join an incubator, you are compelled to work under it for the designated period mostly a year or two.
Just like incubators, accelerators prepare companies for growth by providing guidance and mentorship. However, incubators help new ventures get onto their feet and the accelerators tend to pick up from where incubators stop supporting businesses. Accelerators are useful when enterprises get stuck along the way with the day-to-day operations and when there is need to feature in long-term strategic planning in the growth process of the business. Business owners need to apply to an accelerator and when accepted , they receive 3-4 months of benefits. However, there are virtual model accelerators which focus on the talents of entrepreneurs and helps such individuals to virtually access relevant expertise. Such models do not provide financial support , but provide recruited companies with a global expert network as they grow and afterwards.
Introduction to mentors and investors.
A workspace for the startups’ teams
Mentorship from experts experienced investors and entrepreneurs.
Provision of seed capital averaging USD 25, 000 in exchange for an equity stake in the startup firm.
Opportunities for formal networking. You get connected to advisors, mentors and former alumni companies. Such networks are useful when none of the in-house experts meet your business needs.
Accelerators also have the potential of raising your brand name since graduating from a top accelerator makes your company attractive to big-name customers, investors and executive team members. That kind of brand recognition places you higher than other startups at the same stage , thus giving you the competitive advantage.
Highly competitive and rigorous application process.
It can hurt to think that you will be giving up a big chunk of your company in exchange for a program that lasts for less than six months.
Accelerators are different and as a small business owner, you cannot just apply to a bunch of them and wait to join whichever recruits your company. On the same note, each accelerator produces different results, therefore, you will have to conduct thorough research and apply to those whose focus meets the needs of your business.
Point to Consider: Since both incubators and accelerators require you to give up a significant chunk of equity and time for their expertise and resources, you should conduct a thorough evaluation when choosing them for your startup business. Some of the crucial things you must know about incubators and accelerators include how their offerings match your business needs, what are the study curriculums like, what is the organizations’ track record, where are their locations and how much they cost. For example, founders of small companies in New York city can look up the over 30 business incubators and accelerators on the internet and choose the most suitable ones to send applications.
Individuals seeking to grow their ideas and companies use co-working spaces to save on the overheads as well as maximize on the networking and collaboration that share working environments offer. Small startups and businesses are also attracted to co-working spaces because it saves them the hurdle of entering into long-term real estate commitments. Co-working spaces are not free, startups and small companies pay for the services and the space in flexible terms depending on the business or individual’s needs.
The office space manager takes care of administrative functions such as answering telephone calls and emails plus cleaning giving you the freedom to research, work and innovate in the process of growing your business.
You have access to printers, coffee, a kitchen and conference rooms.
Impoverished startups get a workplace that belongs to them even if it is just a desk.
Co-working spaces present users with the opportunity to meet technical experts, potential partners, future collaborators and just interesting people.
Co-working spaces increase people’s emotional intelligence compared to working from home and mainly from one’s bedroom. By working together on the same environments, startups with similar or different business interests get to respect each other.
If you are lucky enough, you might get to a co-working space that also acts as an accelerator because they host many startups who are working their way to the top and that will give you the morale to drive the growth of your business. Furthermore, you are highly likely to bump into experts in the co-working space who can give you advice when you are stuck.
The flexibility of tenure allows you to scale up or down depending on your business needs.
Co-working spaces can be distracting and ineffective for work that requires deep concentration. The open space has no proof for sounds of people flicking through books, working on the keyboards, moving around or opening the doors that sometimes gets too noisy for work.
Be ready to deal with negative co-working politics. Humans are social and when put to work in the same environment, non-work related stories will emerge. If you are one of those people who hate office gossip or just having people discussing you, then co-working spaces are not for you. You might end up having a terrible experience with others.
It costs some money to operate from a co-working space and enjoy the services. Be ready to pay a monthly, weekly, daily or semi-annual fee to continue enjoying the benefits of a co-working space.
Co-working spaces do not give you access to capital. Perhaps the connections you make with others can give you hints on how to access money for your business.
The ball is now in your court if you think that co-working spaces are the best for your startup get one. If you consider the accelerators a better way to network and collaborate start researching and choose the best. And if what’s offered by business incubators fit well with your business needs, get your application going.