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, scalability...). 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 8 startups, all based on our ideas but this has recently changed. Now, we have a fund that allows us to invest in external startups as early as the idea stage, 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 are industry agnostic because we believe that our execution capability is what matters most when it comes to turning an idea into a revenue-generating business.
- 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 15 people working there full-time who bring the needed technical resources to our startups. They are software engineers, designers, developers, marketeers 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. Now that we have our own investment fund, we spend 25% of our time working as a service provider and 75% building 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 that 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 very limited implication in their daily lives.
Here at Make it, the approach is completely different. Not only do 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. In other words, we concentrate on a smaller volume of startups, but we are directly involved in their growth.
Interested in collaborating with us?
There are 3 ways to collaborate with us and benefit from our Startup Machine.
#01 Make it Capital One
We invest financial and technical resources in ambitious founders to turn their brilliant ideas into revenue-generating startups.
👉 You can apply here.
#02 Startup as a Service
We give the opportunity to CEOs, Executives, Business Angels and Corporations to outsource their startup projects to our team of Professional Venture Builders. Validation, development, growth, fundraising and recruitment: we take care of everything.
👉 Click here to learn more.
#03 Product Development
We’ve created multiple million-dollar startups. Our software and mobile development teams can help you build a great tech product people actually use. This is the 25% of the time we spend providing our skills to great startups.
👉 Schedule a call with our team here.
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.