Quick reads

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Incubators and accelerators have been instrumental in readying healthtech entrepreneurs and their companies into investable, tractable businesses. For many, and even for some seasoned founders, the entrepreneurship road can be daunting. Entrepreneurs face the uphill battle of demonstrating disruptive business value in marketplaces that serve host to established players and fragmented stakeholders. In order to stay afloat in such a competitive environment, entrepreneurs require significant amounts of expertise, mentorship, networking, practice, pitching and most importantly, funding.

 

This is where incubators and accelerators come into the mix and provide the most value for emerging founders. Because most founders starting out are novices, many do not have access to all of these resources on their own. As a result, incubators and accelerators, community-based organizations of entrepreneurs, mentors, advisors and investors, run programs that provide services to these ambitious entrepreneurs looking to make an impact in their respective fields.

 

Our second blog in the Healthtech Incubator/Accelerator series will focus on the types of services that both of these programs provide, how they may differ from one another and at what cost. Note that our first blog covered the differences between an incubator program and an accelerator program and so both the types of services and their quality may differ.

 

Here are the five key services that these programs offer to those accepted into their cohort:

 

Workspace: Having a large and vibrant enough space to work is often critical for founders to get their businesses up and running. Many unfortunately lack a large enough space or cannot afford rent for proper space. This is especially the case when businesses are looking to scale and human capital requirements go up. Incubators and accelerators offer workspaces for those accepted into the cohort, but at different rates. Incubators typically offer space in exchange for rent payments, anywhere from $100-$800 per month based on size requirements. For example, Matter a Chicago-based healthtech incubator, offers different rates for different size requirements and access to premium ammenities on a monthly basis.  Accelerators also provide workspace, but those accepted do not pay any rent. Their workspace is subsidized by the Accelerator per terms outlined in agreed to contracts.

 

Mentorship: Mentorship is critical in helping founders get proper footing in the world of entrepreneurship, especially if they’re new to the game. Guidance and wisdom from those who’ve done it before can be invaluable. As mentioned earlier, both incubators and accelerators are community-based organizations made up of entrepreneurs, investors, advisors and other business leaders. Those accepted into either program have unfettered access to those affiliated and can seek them out for guidance during the duration of their stay in the program. For example, BluePrint Health hosts “one-on-one sessions” which allows program cohorts to identify mentors most relevant to their business or industry throughout the program’s duration.

 

Events: Networking is another major point of emphasis when it comes to building out a business. Whether it’s for getting your name out there, finding new customers, finding investors or all of the above, it’s important to have as many people as you can at your side to help with visibility. Both types of programs serve host to different events for entrepreneurs, but their quality and quantity differ. Incubators for one host general networking events or some coffee chats for those affiliated with their programs. For example, Duke University runs an Incubator program called DuHatch, which sets up events at local Durham-based Innovations centers and provides alumni resources for those in the Duke community.  Accelerators like Healthcare Wildcatters on the other hand offer a much more comprehensive array of events which include weekly coffee chats, Q&A sessions, office hours, cocktail parties, alumni town halls, etc. These events are coordinated multiple times a week throughout the 10-12 week program.

 

Access to Capital: In order to continue growing out any business, founders need access to capital. Most startups typically require a few hundred thousand to a few millions dollars in the earlier stages of their business’ lifecycle to support sales and marketing efforts, or product development, testing, etc. Most founders can receive capital by one of two means: taking out a loan or by having an investor. Most incubator programs do not provide access to capital following the completion of the program, since the focus is on helping founders build out their ideas into plausible business models. These programs are less capital intensive than accelerators and oftentimes founders will need to go through an accelerator program to continue on with their business. Accelerators on the other hand terminate with a pitch or demo day, where founders present their startup in front of a majority investor audience. Additionally, some programs like Audible’s Newark Venture Partners Accelerator can provide follow on fundraising opportunities for exceptional startups. Other programs can introduce you to personal investor networks or relationships with various private equity or venture capital firms and make introductions on the founder’s behalf.

 

Alumni Advising: As mentioned in the ‘Mentorship’ section, incubators and accelerators are very community-based. As a result, all those accepted into the program have access to alumni from previous year’s program cohorts. Some programs like Startup Health often invite back the founders to do a talk or to help with advising the current year’s class. This can be a huge benefit to founders operating in the same industry as those who came before them, offering guidance and learning experiences that they may not have considered previously.

 

Image Source: https://avia.blob.core.windows.net/images/image/3ba9689c258e4b7696a51d31a0129c98/matter.jpg

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