Cash is the most important factor to raise and sustain any kind of trade. Most of today’s business startups begin with investor confidence and real high hopes. The long careful yet energizing journey from the plan to income-producing business needs capital. As per recent reports, over 94% of new startups come up short during the first year of starting. The need for financial support is one of the common reasons. That is the reason, at every phase of the business, business owners, entrepreneurs come up asking – How would I account for my startup?
When you require funding capital, it depends on which genre of business you’re in. Here in this article, we will discuss one of the sources of finance choices for start-ups and businesses that will guide you to raise capital, whenever you feel the requirement of fundraising.
In this post, we will take a look at the growing trend of start-up incubators and Accelerators and also discuss what are the prospectives and constraints of this approach.
Business Incubators and accelerators:
In early-stage businesses, as a funding option, you may consider Incubator and Accelerator programs. These programs assist thousands of startups every year in almost every major city across the globe.
These two terms though have used interchangeably and are synonymous, but have slight differences;
Business incubators act as a parent to a kid that helps/nurtures/assists by training, providing shelter tools, support, and guide and helps to grow the network of the business. It allows companies to jump-start the business. Whereas, accelerators help the startup who already have developed an idea or a foundation to fast track the businesses.
But ultimately both of these are designed to support a business at a different stage of it. It requires a time commitment from your end and normally runs for 4-8 months. Through this, you will also be able to create better bonding with the investors, mentors, and other fellow startups who are using the same platform.
But are these hubs best for your business? Let us list down the pros and cons:
Provide a free or low-cost workspace
You have to count all the small things when running a business. If your workplace is not well equipped it’s just a wastage of money and time. Business incubators and accelerators provide a low-cost workplace with free resources like Wi-Fi and IT equipment. This may look small but it’s significant support that is crucial for the earliest days of your business when both the time and budget are tight.
Networking with fellow startups
This is the most obvious benefit of choosing such a program. The network effect is incredible. You get a chance to connected with advisors, mentors even to the former alumni companies. By this, if you need to face any challenge either you get direct support from the hub or connect with someone who could help in that matter.
Offer business development programming (workshops and panel discussions)
Apart from benefits like seed funding, accounting assistance, and legal guidance, these hubs also provide development programming like training and monitoring schemes too. Through the workshops and panel discussion, you got a fair chance to interact with people who were once an entrepreneur, and know-how to build a business from scratch. You can develop your business vision and strategy from the personal experience shared in such a program.
Giving up a chunk of your business:
Incubators and accelerators take a percentage of the equity to get an advantage of their funding. Sometimes the idea of giving a significant piece of your company may stink as the program only have a maximum of six months’ influence. It may look like a tough call to take. But it’s said that the effect of such a program is long-lasting, the connection to such a network is for life and this connection is beyond price.
Aligning your business needs with incubator and accelerator’s needs
Once you enter such a program, you will face a lot of pressure. These hubs put a lot of stress on fundraising and dealing with investors. At the end of the day, if you’re looking for outside fundings, these programs are the best.