The first few steps of founding a company are often the hardest part. How do you decide on your idea? How do you connect with customers? How do you build your first product? How do you fundraise and connect with investors? If you’re an aspiring founder or early-stage entrepreneur, surely many of these questions are on your mind.
Entrepreneurship is such an individual journey that can frequently feel quite lonely. Particularly if you’re a first-time founder, you may sometimes feel like you’re missing the guidance you’d typically get in a team or corporate structure.
This is where startup incubators come in: they provide startup founders in the earliest stages with the necessary capital, physical resources, guidance, and network to start building and get their company launched.
But how should you go about deciding whether or not to join an incubator? To help you make this decision, and provide you with the most up-to-date information on the top programs Elpha members recommend, we’ve put together this ultimate guide. We cover:
What is a startup incubator? How do incubators make money?
What is the difference between an incubator vs. accelerator?
Is joining a startup incubator a good idea?
Where can I find a startup incubator?
What is a startup incubator? How do incubators make money?
In short, a startup incubator is a program through which early-stage companies are empowered to form, grow, and succeed. Incubators help founders in the earliest stages of their company-building journey (many of them work with founders even before they have an idea!).
While every incubator is slightly different in their value proposition, they typically support founders through providing co-working space, some amount of investments (typically under $100K), programming (such as office hours with mentors, fireside chats, and community events), pro bono resources (such as free AWS credits), and credibility (through the startup being able to say they are incubated at X incubator).
In exchange, incubators take equity in the startups they incubate. While every incubator has slightly different terms, the portion they take is generally meaningful (low to high single-digit percentage).
Some incubators, including some of those listed below, do not take equity. These incubators are usually a part of a larger company that supports the program not as a monetization or typical investment tool, but rather as a way to stay close to up-and-coming innovation.
What is the difference between an incubator vs. accelerator?
“Incubator” and “accelerator” are often used interchangeably in casual conversation and even among those in the industry (for example, venture capitalists often use the terms interchangeably.)
There is little meaningful difference between incubators and accelerators. The commonly accepted distinction is that incubators are usually focused on early-stage companies in the formation, or “zero to one” phase, whereas accelerators help take companies that already have some meaningful traction to the next level.
Given most of what we cover here is focused on the former group (the earliest stages), we will refer to them as “incubators,” but know this advice and information applies to both for all companies in the formation, pre-seed, and seed stages.
Is joining a startup incubator a good idea?
Joining an incubator will have both its benefits and costs! We recommend understanding what your needs are and how they align with these pros and cons.
Benefits:
Brand name: being backed by a well-known incubator can help grow your company’s brand for attracting talent, getting in touch with journalists, and connecting with corporate partners and customers.
Coworking space: oftentimes, incubators provide a space for you and your team to work out of, complete with resources like technology, whiteboards, food, and more. If you are looking for office space but want to save on costs, incubators are a great option.
Investment: incubators often invest in companies and bring other investors to a demo day event where they can meet participating startups. Through an incubator, you may be able to raise your fundraising round more easily.
Company building support: if you’re a first-time founder or a previous founder building in a new space, incubator team members and mentors can offer support in brainstorming around key company formation and growth topics in engineering, design, growth, hiring, and more.
Costs:
Equity: generally, incubators invest in your company in exchange for equity (similar to the typical venture capital model). If you are looking to bootstrap, not looking to build a venture-scale company, or not willing to give up equity at the moment, incubators may not be for you.
Misalignment: If you join an incubator that is not fully aligned with your needs (for example, if they focus on B2B businesses but you end up pivoting to a B2C model), then you may feel as though you wasted your time engaging with the incubator when you could have been building more valuable connections and building your business in a better-aligned community.
Lack of support post-graduation: while incubators are very helpful and focused on you while you are a part of their program, once you inevitably graduate (typical programs last for a few months), that support may disappear or at least decrease as the incubator focuses on their next batch of startups. If you are very reliant on the support from the incubator, you may feel a meaningful gap when you graduate.
Beyond these general considerations, you should also do your diligence on the specific incubators you are considering by:
Reaching out to friends or friends of friends who have gone through the program
Looking at where the alumni startups are now - have they raised meaningful amounts of venture capital? Have they grown quickly?
Understanding what types of programming the incubator offers - are the office hours with relevant people? Are the topics the ones you need help with?
Learning more about the culture between the startups in the incubator - are they collaborative with each other? Or are they more competitive?
Determining what types of investors attend demo day - how many attend? Do they usually invest? Are they right for your sector?
Where can I find a startup incubator?
If you’ve determined that joining an incubator is a fit for your startup, the next step is to apply. We put together this startup incubator list with some of the most highly recommended programs from Elpha members!
500 Startups is an incredibly global program that helps founders operate and expand in their local markets and learn from a very diverse network of mentors and other founders. Read more on Elpha about 500 Startups.
Alchemist is focused on enterprise companies. They support immensely on the sales front, helping companies develop monetization and growth strategies.
If you’re looking for a co-founder to start your startup, Co-Founders Lab has a great program. Elpha members highlighted the comprehensive support of the incubator.
Entrepreneurs Roundtable incubator (ERA)
ERA is NYC’s first and largest early-stage startup accelerator and seed VC fund. They look for companies from around the world that are able to take advantage of the NYC opportunity as a starting point to successfully enter the market. Iynna , one of Elpha’s community managers, was previously the Global Programs Manager at ERA.
Envision is the first no-equity, student-focused incubator supporting diverse founders. Envision’s unique focus brings together an enriching community of founders supporting each other and tons of great mentors looking to help the next generation of entrepreneurs.
Female Founders Alliance - Ready Set Raise
Female Founders Alliance’s Ready Set Raise is one of the top incubators for female founders. Most of the programming is virtual, which helps more founders participate with minimal logistical disruption. Elpha members highly recommend Female Founders Alliance.
Fledge is focused on social impact companies. They are a great partner for mission-driven early-stage startups. Elpha members shared great feedback on the team behind Fledge.
Forum Ventures (previously Acceleprise)
Forum Ventures is a B2B software-focused incubator with a special focus on Canadian and US pre-seed tech startups. Elpha members highlighted immensely positive interactions with their team members.
Founders Factory partners with founders as early as the business idea stage. They have a unique model where they invest both cash and services support. Elpha members shared very positive experiences with Founders Factory.
Gener8tor is a rapidly growing and up-and-coming incubator program. It has a special focus in the Midwest. Elpha members mention hearing good things about Gener8tor.
Grid110 is a Los Angeles-based business incubator where you work with a cohort of 20 other early-stage entrepreneurs in a very communal and supportive environment. An Elpha member highlighted how her experience with Grid110 helped her get past the idea stage and into prototyping.
HAX is a great incubator for hardware startups. While many other programs focus on software-powered companies, HAX has deep experience working with hardware companies through their unique product and growth journeys.
Huckletree Alpha is a pre-seed incubator for Europe-based startups. There is a big focus on supporting founders in their fundraising journeys with tons of pitch practice, deck feedback, and investor networking. Here's more info on Elpha about Huckletree Alpha.
IndieBio provides research-driven startups the lab space, network, and support to commercialize their transformative work. An Elpha member shared more about IndieBio’s robust programming and community.
LAUNCH is a business incubator founded and run by Jason Calacanis, one of the most active angels. They typically work with companies that have some traction already, to take their business to the next level. Here’s more info on the LAUNCH accelerator program on Elpha.
Launch Alaska offers an incredibly unique program for women-led startups in the food, energy, water, and transportation space. They help these founders test and deploy their technology in an arctic environment. Elpha members recommend Launch Alaska.
MassChallenge has worked with over 1.9K startups in the past 12 years. Their deep networks and experience help early-stage companies incubator their growth. The program is especially mission and impact-focused.
Pear runs a close-knit incubator program for early-stage founders. All founders in the program get tons of individual attention and time from the Pear partners who are all former founders and operators. Elpha members suggest Pear.
Plug and Play offers sector-specific programs around the US to support early-stage founders specifically through connections and introductions to large corporations in their space for customer acquisition or partnerships.
SAP.iO is SAP’s accelerator focused on diverse founders for software startups (seed to series C stage). The program helps founders connect and integrate with SAP and SAP’s network of 400K+ enterprise customers. The program does not take equity. SAP.iO New York is run by an Elpha member .
Techstars is a global incubator with many location and industry-specific programs spread out around the world. With Techstars, you can find the program best fit for your startup. Elpha members recommend diligencing the specific program you are applying for to make sure its particular culture and structure are a good fit, since the caliber and experience can vary by location.
Women’s Startup Lab is an accelerator focused on female founders. The program helps founders launch, grow, and fund their startup company. Alumni mention how collaborative and supportive the community of mentors, team members, and other founders is.
XRC Labs is focused on consumer goods and retail companies. They provide a coworking space in Manhattan, funding, and a big network of retail partners including Saks Fifth Avenue, Gap, CVS, and more. Here's more info on Elpha about XRC Labs.
Xx incubator focuses on founders who are just getting started. They provide investments, free SF housing, an immigration attorney, and tailored mentorship. An Elpha member shared her great experiences with the program.
Y Combinator was an early pioneer of the incubator model and is now one of the most widely known programs in the world. They offer a deep investor network, excellent branding for your startup, and a rich community of incredible founders. If you apply to YC, check out the Elpha Office Hours with Carolyn Conway , on the admissions team at YC. Also read the advice from Elphas here , here , and here .
We hope this guide has helped you start your journey in navigating the startup incubator and accelerator worlds. For even more investors and accelerators supporting underrepresented founders, check out this list of 135 resources.
