Especially now that innovation is on the national agenda, there’s a lot of talk around incubators, accelerators and coworking hubs or spaces. But what is the difference between these? Turns out, there’s a huge amount of difference and it’s important to understand them if you’re thinking of using their services. Depending on your individual requirements, a fintech coworking space for example does not typically provide any structured benefits to you outside of simply being amongst other startups, whereas a fintech accelerator provides a structured program to get you to where you may need to go.
Co-working spaces, like TeamSquare, Fishburners, Stone and Chalk, Inspire9, Spacecubed, Hub Australia, and WeWork are collaborative spaces in which companies work from. This is not a new concept, as more “grown up” versions like Regus and Servcorp have been running co-working environments for decades. Co-working spaces typically charge a monthly or ad-hoc rental for use of shared services like internet, desk rental and printing.
Incubators “incubate” ideas, they provide a space for startups to work within and typically provide mentoring and structured services, and in some cases a financial investment. The difference with an incubator and a coworking space is usually around the equity contribution – startups are usually required to give up some equity to an incubator which means the incubator is aligned with the growth objectives of a startup. Good examples in Australia include ATP innovations, CBRin. This alignment means there’s a lot more action towards driving the startup to success as their business model relies on it. Incubators typically have ad-hoc entry.
Accelerators “accelerate” a company’s development from A to B, usually provide some funding, in exchange for equity. Usually accelerator programs are short sharp bursts of effort with a lot of structure and an emphasis on getting a company to B. Where accelerators differ is the A and B, i.e. where they start and where they end. Great examples include Startmate, AngelCube, Y-Combinator and 500 Startups. The difference between an Incubator and an Accelerator is an incubator is largely ad-hoc and with “pull mentoring” (where startups “pull” from a group of mentors) and accelerators are structured and have “push mentoring” (where the mentoring is pushed onto the startups). Accelerators, obviously, have structured intakes or “classes”.
So where does BlueChilli fit?
Well, we’re a bit of everything. We took the best elements from each of these and mashed them in to a unique business model (which in the past we’ve called “Venture Technology”). We have co-working spaces in Sydney, Melbourne and Brisbane. We take an equity position and provide mentors and shared services, so we’re similar to an Incubator. We have a structured program called 156, which takes startups from ideation (our “A”) through to Series A investment (our “B”) which is chunked down into 4 accelerator programs (Ideation, Develop, Growth, Scale). We’ve designed our program this way to ensure we take the best of each of the models out there, and have created a unique environment which also includes Investment and Venture Capital and digital development to create truely awesome startups.