Incubator, accelerator, venture studio, VC fund: what’s the difference?
Please… do not use the following terms interchangeably: “incubator”, “accelerator”, “startup studio” and even “VC fund”.
There are clear distinctions.
Max Pog did some excellent research into the increasing popularity of startup studios (I’ll add a link in the comments), but one thing that jumped out at me was this diagram and explanation:
Venture capital funds Invest in startups that have already exhibited traction and hold the potential for hundredfold growth. They don’t usually intervene in the startup’s operations, but they can offer expertise and networking opportunities.
Accelerators Take on startups with a prototype or MVP and sometimes the first revenue – they boost them within 3-6 months and help attract investments. The assistance from an accelerator typically concludes once the startup begins to attract clients or holds a demo day with investors.
Incubators Engage startups at earlier stages and assist with refining the idea, building a team, and launching. Typically, incubators and accelerators offer a structured educational program that dozens of startups can participate in simultaneously.
Startup studios Do more than merely support startups. They create them with entrepreneurs together and allocate their resources across multiple projects. They take on the responsibility of business and its development as full-fledged co-founders, from inception to achieving PMF, reaching self-sufficiency, attracting external investments, or any other stage determined by the studio itself.
If you’re doing something in the startup world, get these right or you’ll look like a numpty.
