When meeting people through our workshops and events, we realized that the difference between incubators, accelerators and startup studios was quite often misunderstood. This why we decided to write this digest that will presumably help you figure out which is which. Disclaimer — this is not an exhaustive guide but rather a brief summary to clear things up.
1. Incubators 0:45
Most incubators are public institutions. They're organizations which take very early stage startups and incubate them. In the same way a bird who would keep its eggs warm, doing what needs to be done in order to bring them to hatching.
Most incubators candidates apply when they are at the very beginning of their journey. They have an idea and they need help to bring structure to this fantastic idea. They usually don't have any business model, product or paying customers yet. Incubators will therefore guide them head towards the right direction by providing mentoring, recommendations, tools and network. Many times, incubators will also provide you with office space. While it’s appropriate to say that they help you draw the first blueprint of your business idea, they do nothing that implies actually executing the work for you.
2. Accelerators 2:22
Accelerators work with more mature startups that already have a defined business model and have actual clients. They tackle bigger problems that are directly related to growth (human resources, globalization, scalibility...). They usually don't invest in startups. However, they often organize demo days where you pitch your project in front of investors who could actually put money on the table.
3. Startup studios 3:01
Now for startup studios, it’s a bit different. Startup studios' teams are not just coaches or advisors. They are also executors. Their job is to actually build startups on a daily basis. The main goal of a startup studio is to found as many successful startups as possible — all from the ground up.
Generally, they identify problems and everyday pains. Then, they generate and validate their idea using their experience and execution abilities. Assuming that there is traction for the solution they have tested, and most importantly, a real market need, they hire an external individual who will become the startup’s CEO. The CEO of this newly founded company will obtain a share of the startup’s equity and his role will be to make it grow.
The differences between startup studios 4:30
- The origin of the idea
While the vast majority of startup studios generate their own ideas, some studios take ideas coming from the outside: other entrepreneurs co-founding a company with the startup studio or corporations that want to test new products or services. So far, we have built 5 startups, all based on our ideas but this has recently changed. Now, we have a fund that allows us to invest in external startups, so that we don't have to start from scratch everytime and accelerate our growth. We'll explain how you can join us further in the article.
- The sector
The niche markets startup studios are studios that focus only on one sector. e-Founders is an example of a niche based startup studio. They’re focused on creating SaaS (Software as a Service) to improve productivity at work. Rocket Internet's focal point is e-commerce. As far as we are concerned, at Make it, we try to find technical solutions to everyday problems, whatever the market.
- The support they bring to their startups
Some startup studios give their startups mentorship and guidance only. Make it has what we call "a Machine". This machine is made of out 30 people working there full-time who bring the needed technical resources to our startups. They are software engineers, hardware engineers, designers, developers, marketers and experienced entrepreneurs. If the studio’s startup needs some specific skills, the startup studio’s employees will put in the work. Our all crew is directly involved in the growth of our startups.
- The source of funding
Often, startup studios founders are experienced entrepreneurs who know exactly how to acquire venture capital. From the beginning, their track record allows them to raise money and then burn it hoping to make their startups profitable. Here at Make it, we're some kind of a bootstrapped startup studio. For the first years of our existence, we have been providing paid services to other companies so that we could finance our internal startups.
Here’s a question that we get asked quite often.
What's the difference between Make it and The Family? 7:35
It’s in fact quite not the same model.
The family is similar to an accelerator.
They do not focus on early stage startups to join them but rather on startups that whether have a proven traction, a minimum viable product, paying customers or at least something that indicates than they one day might become a profitable business.
The Family provides you with a good network, tools and helps you throughout your journey with good advice and recommendations against 5% of the startup's equity. They focus on a high volume of startups while having a low implication in their daily lives.
Here at Make it, the approach is completely different. Not only we provide our startups with guidance and mentorship but our team is deeply involved in each startup’s daily life until it becomes independent and hire it’s own employees. To give a brief summary, we concentrate on a small volume of startups, but we are directly involved in their growth.
Interested in collaborating with us?
There are two ways to collaborate with us and use our machine.
You just want to test your idea, develop your solution or simply grow your existing company but you don't feel like joining the studio or co-found your startup with us? Then just get in touch with us and we'll see how we can help you with that.
If you want to join the studio and co-found a startup with us, then you have two options :
- #1 If you already have a proven traction and KPIs to demonstrate, then we might invest in your startup with money or technical resources.
- #2 You don't have those KPIs, then we won't invest. However, you should still apply. Why? Because if we believe that have what it takes to take your project to the next level, we will figure out how we can get these KPI's together and make you a potential investment.
To make a long story short, if you feel like you have uncovered a real pain and you have the right solution to solve it, just get in touch with us.
Learn more about the “Make it way of de-risking ideas”