Starting Up Your Start Up with Incubators and Accelerators
Fri, 11/09/2012 - 4:26pm | by James Kim
You hear entrepreneurs discussing business incubators or accelerators as viable means to assist startup businesses with fiscal or structural issues. But what exactly are these business solutions and how common is female participation?
What is an incubator/accelerator?
First off, we should clarify that, though they are often used synonymously, accelerators and incubators are not identical in function. Incubators typically provide a shared location for several businesses where accelerators grow one company to invest in. They are run as nonprofit government programs, chambers of commerce, academic related associations, or church organizations. These programs assist companies by offering them discounts on rent or office equipment in addition to technical and administrative support. There are many reasons for creating and operating an incubator: they create jobs in the community and help the local economy. The term “business accelerator,” however, refers to a for-profit entity or in-house incubator controlled by a venture capital firm. Accelerators often require an equity share in exchange for their services.
Acceptance into incubators and accelerators
Acceptance criteria vary quite heavily for different incubators and accelerators. Of course, an incubator aids a fledging business or startup, a company that is less than two years old. Typically, it is easier to join an incubator if your company has acquired sufficient capital for a few months. Having a spectacular business plan doesn’t hurt, either, though some accelerators require only an application form, a personal interview, and demos.
What about us?
Sadly, the percentage of women participation in incubators is remarkably low. Take, for example, Y Combinator, one of the most successful startup funding accelerators in the US, aiding companies like Dropbox and Xobni. While one of the founders of Y Combinator is a woman (Jessica Livingstone), only 10 out of the 145 companies in the accelerator have a female founder. However, Livingstone contends, “this ratio is reflective of our applicant pool.” The cause for this lack of female participation in accelerators and incubators remains uncertain. Companies such as Women 2.0, a 5-week pre-incubator program, aim to aid female entrepreneurs with entrepreneurial issues and increase feminine participation in business operations such as incubators and accelerators.
In the past 14 years, female-founded businesses have grown at twice the rate of male-founded businesses, suggesting that, in time, women will surely become more well represented in incubators and accelerators.
James Kim is a writer for Choosewhat.com. ChooseWhat is a company that provides product reviews and test data for business services and products. Their goal is to help small companies make informed buying decisions on business solutions that help their business.