In the innovation, entrepreneurship, and corporate venturing sector, there are many different types of support agents. But three of them stand out and often get mixed: accelerators, incubators, and venture studios (also known as venture builders or company builders). T
There are certain difficulties when it comes to classifying and differentiating each of these agents -even among experts from this sector- since their foundations, their particularities, and their differentiating aspects get mixed up in some cases. Today, we define them, elaborate on their differentiating features, and explain the differences between them.
🥚Incubators: A collaborative project for new-born startups
A startup incubator is a collaborative program designed to help new startups succeed. In the incubators, entrepreneurs meet with startup projects in a very incipient phase. In many cases, there are also newly formed companies -or even entrepreneurs with a project but without a company- in search of a co-founding partner.
Incubators help entrepreneurs solve some of the problems commonly associated with running a startup in its early stages by providing a workspace, seed funding, mentoring, and training. The sole purpose of a startup incubator is to help entrepreneurs grow their businesses.
Incubators are usually non-profit organizations, which are usually run by public and/or private entities. Incubators often partner with universities and business schools that allow their students and alumni to participate in these programs. However, there are other incubators promoted by corporations, startups, or successful entrepreneurs.
The basic features of an incubator
- The goal of an incubator is to help startups with the typical obstacles of the earliest phases.
- They are totally oriented to offer basic services for new companies, for example: a workspace or teams for marketing, logistics, finance, etc.
- The startup they host is in a very early stage. It may not even be incorporated or the main product may not yet exist.
- The incubator always welcomes startups or external projects.
- They may or may not take shares.
- They usually limit the maximum incubation time, but with some flexibility.
- They are not based on cohorts or promotions limited to a number of startups. They go in and out indistinctly.
In this way, incubators usually offer services such as workspaces, advice and mentoring, networking opportunities and contacts with strategic partners, access to financing, etc.
🐣Accelerators: A growth lever for incipient companies
Startup accelerators support early-stage companies with the goal of helping them grow through connections with other industry players, mentoring, and funding. Startups enter accelerators for a fixed period of time and as part of a promotion of companies limited in number.
The experience of a startup in an accelerator is an intense, fast and immersive process whose objective is to accelerate the life cycle of young and innovative companies, compressing the value of years of practical learning in just a few months.
The basic features of an accelerator:
- Its main objective is to accelerate the growth of the startup in a shorter period of time.
- They are totally oriented towards mentoring entrepreneurs and culminate in a graduation or demo day in front of investors.
- Startups are incipient- but more advanced than in incubators. They start from an idea already created and validated by the startup. They are companies already created with a product and market already identified and with certain metrics. They do not necessarily have to be billing already.
- They welcome startups or projects outside the accelerator itself.
- They usually keep a share of the startups, generally somewhat less than in the case of incubators.
- They are of a very intense and inflexible fixed period with clear start and end dates. Generally these programs last 6 months.
- Based on cohorts or limited promotions of a number of startups.
The main objective of an accelerator is to speed up the life cycle of young and innovative companies, compressing years of learning in just a few months.
🐔🐥Venture studios or company builders: Building startups for other companies
If you haven't heard of venture studios or company builders yet, you should know they are organizations that create companies using their own ideas and resources.
Unlike incubators and accelerators, venture studios do not accept startups or external projects, nor do they run any type of competitive program that culminates in a demo day. They draw business ideas from their own network of resources and assign internal teams to develop them.
Venture studios develop many projects at once and then build separate companies around the most promising ones by allocating operating resources and capital to those companies.
At its most basic form, a venture builder is a holding company that owns shares in the companies it helped found. Venture studios are however much more operational and practical than portfolio companies: they raise capital, offer staff resources, design business models, work with legal teams, create minimum viable products (MVPs), hire staff for new companies. They also create and are in charge of the marketing campaigns of the startups they launch.
Within the venture studios, there is a variant known as corporate venture builder. This variant is where Corporate Lab is. Although the projects are developed internally and with our own resources, the idea to be validated is given by an external company that hires Corporate Lab to execute it.
Unlike incubators or accelerators, venture studios draw business ideas from their own network of resources and assign internal teams to develop them.
The basic features of a venture studio:
- The objective of the venture studio is to create a new startup for an already consolidated company.
- This company is in charge of finding an opportunity in the market, validating and developing it, and then delivering it to the company that contracts the services of the venture studio.
- The startup does not exis- it is created from scratch within the venture studio.
- Venture studios do not accept startups or external projects. These projects are conceived within the company. They also develop with their own resources.
- When the startup is already created, the venture studio usually becomes the majority shareholder and looks for a founding team to continue developing the new business. It is also common for employees to be paid in salary and in shares.
- The venture studios can work in flexible periods of time, previously agreed with the company that hires their services.
👉Discover in depth what is a venture builder and why is a hot trend in the business world.👈
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