What is incubation center

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What are accelerators, incubators and company builders anyway?

When entrepreneurs enter the world of startups, their ideas resemble a seed. This seed is apparently a little, but it contains the blueprint of the plant. It naturally needs sun, water, and nutrients to make it grow in the real, practical world.

If we stay in this picture, the seed also needs someone to raise it. For example the incubator: It pulls the seeds up to the first plant, which can then be put outside. They are like gardeners who support the entrepreneurial seedlings in entering the start-up world. It is not for nothing that people speak of “seed funding” in the start-up world.

However, the plant is not yet a plant that can be of any use. This is where accelerators come into play. They are basically the ones who raise these little plants. You put the seedlings out in the field and ensure that they mature and that they can grow quickly. They also ensure that their seedlings can prepare for further growth within a limited time frame.

Company Builders are actually a special form. They take over entire startups or companies as their own. They pull these seeds into a fully grown plant, so they take on the entire process of pulling a seed into a plant and finally bringing it to maturity. From the seed to the full-blown company, they oversee the entire development process. The investment is high, but you can reap the benefits accordingly.

Incubators

Incubators are institutions that support entrepreneurs in developing their start-ups or projects, especially in the early stages. It's a fairly flexible combination of business development processes aimed at nurturing new and small startups by helping them in the early stages of development. As the ones who take startups by the hand in the early stages, incubators act as an integral part of the entire start-up ecosystem.

Good examples of incubators in Germany

1st Mover, European Space Agency (ESA) has incubation centers in Hesse and Bavaria, Greenhouse Innovation Lab from Gruner + Jahr, Hubraum-Incubator, Innowerft, Incubator, Media Lab Bayern, Next Big Thing AG, Project Flying Elephant, Rheingau Founders,

Main functions of the incubator

  • Finding and testing ideas, mentoring, coaching and access to seed capital.
  • Company foundation and technical support in concept development of prototypes and pilot tests.
  • Business capacity building and development support for corporate planning, corporate management such as accounting, taxes, law, etc.
  • Development of the sales model and financial forecasts. That provides connections to potential strategic markets as well as visibility and credibility in the market.
  • Networking events, training courses, exhibitions and workshops.
  • Incubation support includes the provision of technological facilities, advice, cooperation areas, laboratory facilities.
  • Progressive evaluation for a transition to the next level.

Accelerators

An accelerator provides the framework, tools and methods as well as access to knowledge that a young company needs in order to grow. The aim of the "accelerator" is to bring the start-up up to date. In context, this means that the Accelerator does everything it can to bring young companies up to date in terms of understanding, development and management of a company and thus to real growth and initial significant funding for the young company through its very fragile early stages of development to lead. The accelerator goes a step further than the incubator.

Main functions of the accelerator

  • Start-up search and testing, mentoring, coaching
  • Provision of resources and know-how on both technical and personal issues
  • Establish business processes and increase the operational efficiency of the start-up. This creates the basis for start-ups to grow quickly and to be scaled up if necessary
  • Development and refinement of the business plan, with which one can obtain investments in financing rounds and with multipliers with the product and the first pilots
  • Drive implementation processes forward. Carry out and evaluate the first pilot tests with customers, users or test subjects
  • Conduct networking events
  • Development of a sustainable and well-founded corporate identity
  • Here, too, progressive assessments are necessary for the transition to the late stage

Good examples of accelerators

A² Accelerator Program, Airbus Bizlab, APX from Axel Springer and Porsche, Berlin Startup Academy, Blackprint Proptech Booster, DB Startupxpress, Digital Hub based in Bonn, Startup-Accelerator Agile, Founder Institute in Cologne, Free Electrons, Accelerator des Chemie- and pharmaceuticals group Bayer, German Accelerator Tech, Hardware.co, Hubitation, startup accelerator of the chemical and pharmaceutical giant Merck, Metro Accelerator, Microsoft Scale-Up, Next Media Accelerator, Accelerators of the Pro-Sieben-Sat1 group, Plug and Play Tech Center, Iconiq Lab, Retailtech Hub, Spinlab, Startupplatz, Startupbootcamp Digital Health, Techfounders-Accelerator, Techstars-Accelerator, Venturevilla, Wayra, etc. B. also local programs

Company Builders

Company Builders support your projects along the entire value chain. They proactively set up their projects and follow a clear roadmap during the entire development phase (regardless of whether it is Marmer, financing or other development models).

Ultimately, company builders are more involved in the development of their projects than accelerators or incubators. This proximity to the start-up itself also creates another opportunity to measure the company's progress. The company founder is actively involved in the performance and knows all the important success factors on which the company must concentrate.

In comparison, the incubator and accelerator pursue the same goal, namely to support young companies in their first development steps into a viable, scalable and successful company.

The company founder accompanies his young companies all the way until they either leave the company or leave the company. They act as co-founders.

Accelerators and incubators only accompany companies for part of their development journey.

Frequently controversial are some company start-ups that are described as a quick replica model and that "borrow" successful business models from others and bring proven tech ideas to emerging countries. Of course, this does not apply to all, but it is a not insignificant part.

Good examples of company builders from Germany: Rocket Internet, Project A Ventures, Bridgemaker, Crossventures, Finlab, Finleap, Foundfair, Hanse Ventures, Hitfox, Makers, Otto Group Digital Solutions (OGDS), Team Europe, Venture Stars

Main functions of the company builder

  • Accompanying the ideas from the seed phase to the last stage
  • This also includes increasing the profit gained from your own performance after the scaling process in order to make the start-up profitable
  • Expansion of production and operational processes, in turn to increase profits
  • Another part of this is to save the start-up or the young company from dying by introducing innovations and reinventing the company (to a certain extent).
We focus on incubation - so we create our own stuff, looking for entrepreneurs - but we also do acceleration, basically just treasures we see resting and bringing in some support.
- Uwe Horstmann, Project A

In reality there are only mixed forms

In practice, incubators, accelerators and company builders, which have been analytically taken apart, cannot be clearly distinguished from one another. Too often there are programs that turn out to be hybrids.

For example, Rocket Internet is seen by some as an incubator because the company focuses on ideas from the very beginning. Project A Ventures, on the other hand, whose management team consists largely of former employees of Rocket Internet, see themselves primarily as an incubator and accelerator, although they are counted among the company builders here. This is due to the fact that Project A Ventures do more than incubators and accelerators in the narrower sense. They became known as venture capital companies primarily through successful financing funds. But with a team of over 100 employees, the venture company can do more than finance: Teams are put together especially for each start-up, sometimes even with external expertise, start-ups are selected and set up. In the case of the Melitta Incubator 10X Innovations, the threshold to becoming a Company Builder is very thin, as the “Incubator” gives ideas a complete face-lift and reloads them from Alpha to Omega, as is the case with Karl Karlo. After all, there are too many business strategies out there to be able to make a neat differentiation. And finally, the business model is designed by the companies and not copied from the blackboard.

Assecor Venture - a hybrid

This also applies to Assecor Venture. A company builder pulls ideas up to the late stage internally. That's what he's doing according to his name, he's building entire brands or even businesses. The Company Builder enables an idea that comes at a very early stage to grow and become ready for the market. Assecor Venture is doing this, for example, with Keemova, a logistics B2B app that was developed in-house with various partners from practice and is currently in the incubation phase. Assecor provides resources and know-how. As a cooperation project, the app has the best opportunities on the market. Sometimes the idea also comes from outside, as with Karl Karlo. The start-up strategy eventually became an exit strategy. Assecor would therefore be an incubator. The line is undoubtedly not clearly drawn. But a distinction gives an indication of what to expect from the respective program.

Ultimately, however, the decisive factor is always what a convincing idea needs in order to be successful. The important thing is to create meaning (before monetization). Only then can innovation and start-ups assert themselves on the market.