Incubator Or Accelerator? What Should A Hardware Startup Choose?

Hardware startups often ask us: ‘Incubator or accelerator? What’s our best choice?’ 

The answer depends largely on where you’re at with your product idea, how mature your business/company is, and what kind of investment you are looking for.

What’s the difference between a startup incubator and accelerator?

Figuring out which option is best to help grow your business starts with understanding the differences between them. You’ll often hear the terms thrown around, but what are they?

Startup incubator

Who do they cater to?

Startup incubators are more focused on startups that are at a very early stage in their development, such as having a preliminary product idea and just having been founded. They usually are not trading and may not be self-sufficient at all at this stage.

What do they provide?

The onus is on building a company which is ready to successfully gain investment with a well-developed product and to do so, the incubator will usually provide office space (often co-working), mentorship from relevant experts in your product’s field, workshop facilities, exposure to potential investors, and also broad assistance to set up and run your business. Sometimes they provide seed capital, too, but this varies from incubator to incubator. Incubators may be connected to local authorities and various VCs, meaning that have a good source of potential investment if successful.

How long do they last?

Unlike accelerators, they often last for a long time or are even unlimited, allowing the founders to grow the company at a slow pace until they’re ready to take the next step (get investment and go to market).

What do they require in return for their support?

Incubators either charge a monthly fee or take a slice of equity in their startups. It’s not uncommon for the equity demanded to be a higher percentage than accelerators, due to the difference in their business model. Accelerators don’t last as long and will deal with startups which likely need ‘less work’ to achieve their goals.

Startup accelerator

Who do they cater to?

Startup accelerators tend to focus their attention on companies startups who are already somewhat mature and are already well on track to being self-sufficient. These may be companies who have already gained some investment, sold a product and are looking to improve it, or who at least are well-positioned to go to mass production. These startups need mentorship and resources that will help them go to market more quickly than if they were going it alone.

What do they provide?

They regularly offer seed capital, mentorship and expertise laser-focused on the areas where the startup is deficient, working space, workshop facilities, access to manufacturers, marketing assistance, and often culminate in a ‘pitch day’ where their startups can meet interested investors and pitch for investment. Many accelerators are connected to VCs, so startups who are doing well will probably have an easier time gaining their investment than those who are new to them.

How long do they last?

Compared to the incubator, an accelerator aims to condense many months or even years of progress into an intensive program that usually lasts just a few months.

What do they require in return for their support?

In return for their seed capital and mentorship, accelerators often require an equity percentage, although generally less than incubators. Some also charge a fee that successful applicants must pay to join.

Which is right for us?

Good question. Choosing between incubator or accelerator to find the perfect option to grow your startup depends on how mature your business is. If you have yet to perfect your product idea, an incubator is going to let you hammer out the details and know what you’re going to bring to market, for example. Whereas if you know there is a niche for your product, have made preliminary prototypes, and are ready to take steps to prepare to manufacture the products and go to market, an accelerator could get you there quickly.

How easy is it to apply?

Given that there are material and financial benefits to becoming part of an incubator or accelerator’s stable of startups, the quick answer would be: not very easy.

Each organisation usually has an application process starting with a form on its site. Accelerators, in particular, often do several intakes per year, but only at certain times. Later on, you may go through some rounds of interviews where your ideas and startup will be discussed and investigated by their experts and investors before finally being accepted or rejected.

Some will have a mandatory requirement to base yourself in their workspace which could be in a different city or even country to where you’re based, so a commitment to travel and move areas or countries may be required.

What might startups not like about being part of an incubator or accelerator?

Both incubator or accelerator usually place an onus on co-working, so founders who have issues with working in an open space where privacy may be less than a personal office may baulk at needing to grow their company and develop their products in such an environment.

It’s also clear that mentoring, funding, and support don’t come for free. If losing a percentage of your company’s equity is a deal-breaker, then they probably aren’t for you.

Incubator VS Accelerator: A List Of Options

We made a list of startup incubators and accelerators that may be suitable for today’s startups with electrical or mechanical product ideas.

You have 2 options, you can read and download our list as a PDF by hitting the button below, or keep reading to see the list right here on this page.

*Please note, this list was created through our own research from their sites, etc, for specifics, please contact the organisation in question.

List of incubators suitable for hardware startups

Zahn Innovation Center

• Country – USA
• Focused on hardware? – No, hardware and software
• Tightly linked to a venture capital or other funding organization? – Partner of the Moxie Foundation and Standard Chartered Bank
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Provides coworking space and rapid prototyping workshop – may win a prize from partners, such as Standard Chartered
• Website – http://www.zahncenternyc.com/
• Instagram – https://www.instagram.com/zahncenternyc/

Hax

• Country – USA/China
• Focused on hardware? – Yes
• Tightly linked to a venture capital or other funding organization? – Yes, tightly linked to the venture capital company SOSV: https://sosv.com/
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Accepted applicants are provided with $100,000 pre-seed money, product development support, prototyping infrastructure, mentorship, and follow-on funding. Hax takes a 7-15% equity initially with a view to 15-20% ownership prior to series B for companies they like.
• Website – https://hax.co/
• Instagram – https://www.instagram.com/hax_co/

Futureworks NYC Incubator

• Country – USA
• Focused on hardware? – Yes
• Tightly linked to a venture capital or other funding organization? – Yes, linked to New York City Economic Development Corporation (NYCEDC)
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – NYC-focused. Take no equity and no cost for selected companies. Provided with business, legal, marketing & branding, manufacturing, and prototyping and UX mentorship.
• Website – https://futureworks.nyc/incubator/
• Instagram – https://www.instagram.com/futureworksnyc/

Usine.io

• Country – France
• Focused on hardware? – Yes
• Tightly linked to a venture capital or other funding organization? – No
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – They are a paid service who provide resources for hardware startups to get to market. They provide development, prototyping, and manufacturing support, as well as mentorship to assist companies to gain funding etc. No equity is taken as they invoice per project module.
• Website – https://usine.io/
• Instagram – https://www.instagram.com/usineio/

FFWD

• Country – UK
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? –Links to numerous large VCs.
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Take no equity. 6-week program – deliver support around business planning, Minimum Viable Product, identifying first sales, and preparing for the next stage of growth support; whether via one of the Top 20 UK accelerators, initial seed funding or non-equity based finance (grants and loans). Workspace, coaching and industry introductions for the selected teams, on a small contribution basis (£450+vat per team).
• Website – https://ffwdlondon.com/
• Instagram – https://www.instagram.com/ffwdlondon/

Idea Lab

• Country – USA
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? – No
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? –Focuses on tech companies. In addition to capital, Idealab provides support to rapidly introduce innovative products and services. Resources include office space and the accompanying office services, development and technology, product and graphic design, marketing, financial advice, human resources, competitive research, legal, accounting and business development support and services. In addition, Idealab provides advice on strategy, branding and corporate structure.
• Website – https://www.idealab.com/
• Instagram – N/A

Y Combinator

• Country – USA
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? – No
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? –  $150k on a post-money safe in return for 7% of the company when the safe converts. 3-month cycle including mentoring on business growth (the usual aspects as seen in others here), group office hours, and support to find funding.
• Website – https://www.ycombinator.com/
• Instagram – https://www.instagram.com/ycombinator/

List of accelerators suitable for hardware startups

R/GA Accelerator

• Country – USA
• Focused on hardware? –No, focus is on technology startups, but also consider software services in the IoT/connected device space.
• Tightly linked to a venture capital or other funding organization? –Techstars provides the investment and retains 6% equity for the seed funding
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – The Accelerator model gives you the opportunity to pitch investors, venture capitalists, influential industry leaders and R/GA executives and clients at the end of the program during Demo Day. Each company will receive $20,000 as well as hosting services, workspace, connections and deep mentorship. In addition, companies accepted to the program have the option to accept a $100,000 convertible debt note.
• Website – http://rgaaccelerator.com/
• Instagram – https://www.instagram.com/rgaaccelerator/

Techstars

• Country – USA
• Focused on hardware? –No, many types of startup from finance to aerospace
• Tightly linked to a venture capital or other funding organization? –Techstars retains 6% equity for the seed funding
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Provides financial, human, and intellectual capital to get businesses started + 3mths of working spaces and mentoring – provide $20k finance.
• Website – https://www.techstars.com/
• Instagram – https://www.instagram.com/techstars/

Startup Bootcamp

• Country – EU & global locations
• Focused on hardware? –No
• Tightly linked to a venture capital or other funding organization? – Partner of many large corporations including AWS, Unilever, Mastercard, Lloyds, Red Bull, etc
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – They take 6-8% equity for 3 months program with €15K in cash, €450K+ in partner services, 6 months of free collaborative office space.
• Website – https://www.startupbootcamp.org/
• Instagram – https://www.instagram.com/startupbootcamp/

Industrio

• Country – Italy
• Focused on hardware? – Yes
• Tightly linked to a venture capital or other funding organization? –Linked to the regional Italian government
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Focus on hardware startups automation and mechatronic, robotics, biotech, automotive and smart transportation, digital manufacturing and agritech. Italy focus. Provides in-house prototyping, assembly, PCBA, co-workspace. Receive a total investment value of up to 125.000€ and give up between 10-15% of common stocks
• Website – https://industrio.co/en/
• Instagram – No

AlphaLab Gear

• Country – USA
• Focused on hardware? – Yes
• Tightly linked to a venture capital or other funding organization? – Linked to Riverfront ventures VC company: https://www.riverfrontventures.com/ and Innovation Works: https://www.innovationworks.org/
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – 30-week program, providing funding, free office space, access to the AlphaLab Gear hardware lab, and use of other onsite facilities (conference rooms, full kitchen, etc), education sessions, connections to customers, and mentorship from industry experts + optional eight-week manufacturing-focused module. Companies participating receive up to $50,000 investment. AlphaLab Gear’s standard term is $25k – $50K for 2.5% – 4% of common equity.
• Website – https://alphalabgear.org/
• Instagram – No

500 Flagship Seed Accelerator

• Country – USA
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? –Yes, tightly linked to 500 Startups VC: https://500.co/
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Companies receive an investment of $150,000 for around 6% of their company, but membership costs $37,500. Includes mentorship, help with distribution, fundraising, branding and PR, etc.
• Website – https://500.co/accelerators/san-francisco
• Instagram – https://www.instagram.com/500startups/

Buildit

• Country – Latvia
• Focused on hardware? – No, but focused on IoT hardware and software
• Tightly linked to a venture capital or other funding organization? – No
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – Provide Pre-Seed fund & Accelerator Program (4 months) and additional Seed fund with a follow-on support program (2+ years). Invest 50,000 EUR as a convertible loan with discount and valuation cap. Office space provided, also mentoring for business idea validation, product design and development, product-market fit, sales and marketing, fundraising and legal issues, contacts with Asian manufacturers and then pitching & fundraising, too.
• Website – https://www.buildit.lv/
• Instagram – https://www.instagram.com/builditacc/

Plug and Play

• Country – USA
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? – Yes, linked to numerous large VCs
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – No equity taken in the first round. Prefer to invest in the second round for equity. Invest between $25,000 to $500,000 to be a future stakeholder if you are a good fit. Silicon valley-based. Office provided, VC intros, mentorship, and links to global companies to help them discover you.
• Website – https://www.plugandplaytechcenter.com/
• Instagram – https://www.instagram.com/plugandplaytc/

Activate Capital

• Country – UK
• Focused on hardware? – No
• Tightly linked to a venture capital or other funding organization? – No
• Tightly linked to a manufacturer in particular? – No
• Specialities, value provided, etc? – 12-week program. 5% equity for £40k to £60k investment by Activate & Partners. Mentors help craft your business model and strategy. You will perfect your pitch and you’ll take a big step towards market readiness. Building your business into a viable, investor-ready prospect. Further programs and investment possible up until market readiness.
• Website – https://activate.co.uk/startup-programme
• Instagram – No

Conclusion

Depending on how mature your product idea and startup company is either incubator or accelerator can be a great way for you to make progress fast, as nothing is better for founders who lack experience in certain areas than guidance from experts who have ‘been there and done it.’ If you’re lucky enough to be accepted you can expect to make progress in a matter of months that might otherwise take you years.

That said, there’s still work to be done by the founders outside of the assistance the incubator or accelerator’s mentors can offer. For instance, honing your product idea and getting ready to manufacture by creating prototypes are important steps to take before joining an accelerator, for example.

By the way, as beneficial as incubators and startups can be, hardware startups don’t need to join them to launch new products successfully. It’s possible to do it yourself, and you can read more about this on our post over at QualityInspection.org: Incubator VS Accelerator VS Go It Alone: The Startup’s Conundrum

Are you designing, or developing a new product that will be manufactured in China?

Even if you have the ambition to work with an incubator or accelerator, Sofeast has created this Importer’s Guide to New Product Manufacturing in China for entrepreneurs, hardware startups, and SMEs which gives you advance warning about the 3 most common pitfalls that can catch you out, and the best practices that the ‘large companies’ follow that YOU can adopt for a successful project.

It includes:

• The 3 deadly mistakes that will hurt your ability to manufacture a new product in China effectively
• Assessing if you’re China-ready
• How to define an informed strategy and a realistic plan
• How to structure your supply chain on a solid foundation
• How to set the right expectations from the start
• How to get the design and engineering right

Just hit the button below to get your copy: