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Growth of Startup Accelerators and Incubators Provides Opportunities for Small Businesses

By | 05.28.12

Entrepreneurship in the U.S. has become increasingly important, as multiple studies by the Kauffmann Foundation and other organizations have shown that startups have the power to really spur on and maintain strong economic growth. Right now, there are over a 100 active startup accelerator programs up and running across the United States, and these programs have expanded well beyond traditional tech hubs and into cities not traditionally known for tech development. And there are more programs being announced each week.

Startup accelerator and incubator programs provide a great opportunity for entrepreneurs and small business startup owners to receive mentoring, guidance, and a small amount of funding in developing and launching their new business idea. In return, the accelerator/incubator company receives a small stake in the company. These two business support models do work somewhat differently, in that accelerators are structured around a very focused program (usually around 90-days long) along with monetary support, thereby providing an early form of investment. On the other hand, incubators tend to be a more saturated investment model focused on quick growth of the company. While originally prominent in technical industries, these various programs have extended to other sectors, including those aimed primarily at social entrepreneurs and social impact organizations.

Accelerator and other programs have been shown to offer important benefits for fledgling businesses. They are able to provide practical support on multiple levels: including incorporation development, product prototyping, customer development, and investor outreach. In addition, the seed financing in many cases provides exactly what the entrepreneur needs to give his or her business a solid start. All this results in a higher-quality, stronger company overall, and thus one with a greater potential for attracting investors.

References
Greathouse, John. “TechStar Co-Founder Brad Feld: Are We Experiencing a Startup Accelerator Bubble?” Infochachkie. 3/5/12. (5/21/12.) http://infochachkie.com/techstars-brad-feld-startup-accelerator-bubble/.

King, Steve. “Cleveland’s Startup Accelerator Program.” Emergent Research. Small Business Labs. 5/14/12. (5/21/12.) http://www.smallbizlabs.com/2012/05/clevelands-startup-accelerator-program.html.

Roush, Wade. “There Is an Incubator Bubble—And It Will Pop.” Xconomy. 8/12/11. (5/12/12.) http://www.xconomy.com/national/2011/08/12/theres-an-incubator-bubble-and-it-will-pop/2/.

Viola, Nicole. “3 Best Social Good Startup Accelerators.” Worldways: Strategy + Creative. 4/16/12. (5/21/12.) http://marketingsocialimpact.com/2012/04/3-best-social-good-startup-accelerators/.

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