Insights & Trends
What is a business incubator and how is it different from an accelerator?
Distill Ventures is a business accelerator, not a business incubator. That’s an important distinction - here’s the difference.
When a new drinks brand pops up behind the bar or on the supermarket shelf, it’s easy to forget the thousands of hours of work by the founders to get it there. It wasn't easy for these entrepreneurial visionaries to break into the market, and they've often had help from a business incubator or business accelerator programme.
After seeing how hard it had become for innovators to grow in the drinks sector, we launched as an independent business accelerator for drinks brands over ten years ago. By working with Distill Ventures, many have gained the funding and expert support needed to become established.
Distill Ventures is a business accelerator, not a business incubator. That’s an important distinction - here’s the difference:
What is a business incubator?
A business incubator focuses on very early-stage companies. Typically, these startup businesses are yet to prove their business model is viable. They have no minimum viable product - that is, nothing that’s ready to sell.
Most incubators provide access to the facilities a new business needs: working space, fast internet access, networking opportunities, meeting rooms, administrative support and a steady supply of beverages.
Business incubators are set up and run by a variety of organisations including big technology companies, universities and government bodies.
In addition to support with infrastructure, the incubation programme often includes training, mentorship and financial support. This sometimes includes early-stage investment.
Business incubators allow entrepreneurs to put their energies into refining their idea, shaping their product and establishing whether there's a market for it.
Not every business using an incubator programme will emerge as a success. The entrepreneurial community accepts failure as part of the process. What seemed to be a good idea might not translate into a product for which there is demand.
Many startup companies will spend one or two years in a startup incubator. They may move on to a startup accelerator.
Different types of business incubator
There are many different forms of business incubators. These reflect the wide range of industries that use them and the motives of the sponsors who operate them.
Some incubators focus on nurturing businesses in a particular sector, such as technology, life sciences or engineering. They may include physical space in laboratories or workshops as part of the programme.
Other incubators are linked to particular geographic areas. They may restrict access to graduates of a sponsoring university.
How easy it is to get into a business incubator will vary. Some are relatively simple, allowing you to book space and benefit from their services. Others have a more demanding application process.
What all incubators tend to have in common is an energised community of entrepreneurs. The incubator helps bring them together for training and in more relaxed settings. This encourages the sharing of problems, ideas and experiences.
A good business incubator nurtures a positive, inspirational environment. Many of those entrepreneurs will become business leaders of the future.
The benefits of using a business incubator
Some of the facilities and services you should expect to find in a business incubator include:
- Office space
- Administrative support
- Demo day opportunities
- Business development advice
- Exposure to potential seed funding
- Spaces to network with entrepreneurs and investors
Early-stage companies in any sector can benefit from the support available from a business incubator programme.
How an incubator differs from an accelerator programme
Business incubation is about establishing whether a business idea is viable.
- Can the product be made and delivered for profit?
- Do suitable markets exist for the product?
- Does the brand have the competitive advantage required for growth?
Assuming the founders can answer these questions in the affirmative, they should expect to leave the business incubator with a minimal viable product.
Startup accelerators seek entrepreneurs who have that minimal viable product. An accelerator's objective is to foster business growth. It helps the company go faster while retaining firm control. The accelerator will also open the door to investment opportunities.
Gaining access to an accelerator programme is often highly competitive. The founder must impress a screening committee that they have the vision and drive to achieve success.
Business incubator vs business accelerator
Your business is more likely to benefit from an incubation programme if:
- You have ideas but no clear product.
- You're unsure of your business model.
- You don't know if there's a market for your idea.
You're more likely to be looking for a business accelerator if:
- You have a minimum viable product.
- You have a business model.
- You're looking for investment funding.
Completion of a business incubator, business accelerator, or both, is no guarantee of long-term brand success. But you're giving your business some of the best possible chances of growth.
The Distill Venture business accelerator for drinks brands
We support innovative drinks entrepreneurs looking to bring something new to the market. Brands accepted into our accelerator are propelled by founders with a strong vision, bold ideas and a commitment to growth.
Those accepted into our programme are beyond the incubation phase. Many are still startups, while others are more established but thirsty to grow.
We also offer a pre-accelerator. Again, it's not an incubator. The pre-accelerator is for founders from underrepresented communities such as women, LGBTQ+, Black or Asian.
Both our accelerator and pre-accelerator give access to finance, training, mentorship and broader business support.
Can Distill Ventures help your drinks brand?
If you're in the early stages of establishing your product in the drinks market, we may be able to help create something special.
Our partnership with Diageo has supported around 40 brands, raising investment of over £245 million. We're seeing entrepreneurs become industry leaders.
If this provokes you to think "could we be next?" you can start that journey today. Get in touch to find out more.