The startup community is always talking about spaces like Coworking Spaces, Incubators, and Accelerators. For normal folks, these three terms might mean the same thing but in reality, there is a huge difference between them all and your choice among them will depend on what your needs and requirements are from an office space. Startups are all looking for the best spaces available so that they can evolve into multi-million dollar businesses and each of the three provides them with different environments where the startups are given the opportunities to grow.
One of the important things is to find an office space that is easily accessible for both you and your employees since everyone is going to be commuting on a daily basis. You will have to make the choice between a coworking space, an incubator, or an accelerator, depending on the things that you need from your office space.
For instance, if you are a startup located in Delhi, you will want to look for a coworking in Delhi or an incubator or accelerator in Delhi and you will have to understand the difference between all three of them. To help you better understand them, we have explained all of them in detail so that you will be able to make the choice on your own.
Coworking Space is one of the most famous forms of office space that is available for startups today. Almost every major city has one or more coworking spaces to help startups grow and every business from a startup to a large corporation is looking to take advantage of the flexibility and cost-effectiveness of the coworking spaces.
Coworking spaces are built to provide flexible and effective solutions for businesses without involving a huge financial risk for the business. They are an effective and exciting way to avoid a traditional lease office and gain access to a huge network of coworkers from a similar industry.
There is no fixed time period for which the startup or business will have to work out of a coworking space. However, there are some coworking spaces that provide discounts to the companies that are ready to sign a long-term lease. This usually happens with startups that are confident about turning a profit. For the others, the rent is paid every month that they want to continue their business out of the coworking space.
There is no long application process for joining a coworking space. All you have to do is search for a coworking space near you and ask if they have seats available. Then, you just go in with the money and start working out of the office space. For instance, if you are based out of Bangalore, try searching for Coworking space in Andheri and select the one that you find to be in your budget.
The only downside to working out of a coworking space is that there are no financing options available. All the equity remains with the founders of the startup and if you are looking for seed money for your startup, you will have to look for an investor on your own.
The system of accelerators is built to speed up the growth of a startup. They are very selective of the startups that they invite and there is an eligibility criterion for each accelerator. For instance, most accelerators will look for startups that are already ready with a product but are not ready to launch it on a larger scale. These accelerators will then invite these startups and put them in contact with venture capitalists and investors. This incredible networking opportunity is one of the main reasons why startups are always looking to get into an accelerator program.
There are protocols that have to be followed when you are looking to join an accelerator program. There are certain times in a year when the applications for the accelerators are open and usually, these are open for teams and not solo founders.
The accelerators ask for equity in the startup in exchange for the benefits and financial aid that they provide to the startups. In the United States of America, accelerators like TechStars and Y-Combinator offer up to $300,000 per team and keep equity of less than 10% for themselves.
There are a lot of benefits that the startups enjoy being a part of the accelerators. These include getting a structured program of proceedings, education of the market, investor network, alumni database, and mentorship.
Incubator programs help the founders to come together and build a business together. The incubator programs also help the startups to get their first customers and often tend to operate within a certain niche.
Incubators help the startups to go from an idea to a minimum viable product and help them go all the way up to the market stage as well. There is no prediction as to how long the total process can take, so the time frame can go from anywhere between six months and a year.
Getting into an incubator program is quite hard and every incubator has its own application process. They are prone to letting solo founders into the program and there are very few incubator programs that allow teams to enter the system.
Incubators provide the capital fund to the founders but this fund is never deposited in a full amount immediately. The capital investment can range from as little as $5,000 to as large as $100,000. This depends on the size of the incubator and the requirements of the startup. In exchange for this seed money, the incubators require a 5-12% equity from the startups.
Incubators are a boon for the startup industry and are quite valuable for startups. The founders do not have to pay anything for getting into the program, working out of their office space, or taking advantage of all the benefits. Instead, they get space and the capital to begin their business and a network of mentors who are available to guide them throughout the process.
ABOUT THE AUTHOR: SANDHYA1030