The Real Difference Between Incubators and Startup Studios

  • Networks (of talent, investors, and partners)
  • Education (blueprints on how to accomplish objectives like fundraising, hiring, setting up legal entities, etc.)

There are 3 entities that fall under the “helping others build” umbrella: accelerators, incubators, and Startup Studios (also known as Venture Builders).

Each of these structures has a unique value proposition.

Accelerators

Wikipedia describes accelerators as “fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day.” Accelerators help founding teams move their venture from the “initial traction stage” to the “series-A stage”. Accelerators typically only accept ventures into their program if said ventures have market traction and some form of the product built. They run cohorts at specific points during the year (typically winter and spring) and only accept applications for those cohorts within a specific time frame. These entities are not for entrepreneurs who just have an idea.

Incubators

Incubators function much like accelerators but they’re more open to working with early-stage ventures without traction. Unlike accelerators, incubators don’t have cohorts and they don’t have a structured educational programming process for entrepreneurs to follow. Incubators work with founders to build their venture from “MVP stage” to “first round of funding stage”. While accelerators are likely to offer seed-stage funding, incubators typically don’t. Incubators are for early-stage founders/ founding teams with a great idea and some proof of demand, but traction is not a requirement.

Startup Studios

Startup Studios are entities that create startup ventures. Their goal is to develop startups within their studio and spin-out these ventures when they’re ready for their first round of fundraising. Some Studios work with outside founders (meaning an entrepreneur can pitch them a great idea and, if they like the idea, they’ll bring the entrepreneur into the studio to develop the startup with them as a co-founder) and other Studios develop all of their ideas internally (meaning their innovation team comes up with the ideas, they work on building the startup in-house, and hire a new founding team to take over and run the venture once the product is built and it has market traction).

Incubators vs. Startup Studios

It may sound like Incubators and Startup Studios are the same, but there is one very distinct difference. While both entities do work with early-stage founders/ founding teams to launch and grow startups, the difference lies in their unique approaches.

Incubators don’t co-found ventures, Startup Studios do.

Once an idea has been chosen by the Studio, the Studio will enter into an equity agreement with a founding team.

When to use which?

Both incubators and Startup Studios help founding teams launch and grow their businesses. They both provide mentorship, connections, strategy, physical resources, and help with fundraising. But the similarities stop there.

Endlessly curious about the human condition. Founder of Studio Upstart. Chief of Staff @ Untapped Ventures.

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