Accelerators vs Incubators: Which one should you choose for your Hong Kong Start-up?

April 28, 2021

If you own a startup, you might have experienced or are about to experience the overwhelming range of funding options. You might have options like crowdfund or business loan, maybe even incubate or accelerate. In order to grow your business, you need capital. Select the best funding option that allows you to have access to the best opportunities. Most of the startups are unaware of the difference between two of the primary funding options that provide opportunities, such as accelerators and incubators.

Well, the lines that determine the incubators and accelerators are highly blurred. Google shows thousands of results when you search for the difference between the incubators and accelerators. Some people say that incubators are made for startups, and the companies that have scaled up must opt for accelerators. These two terms are also differentiated on the fact that incubators are non-profit and publically funded, and accelerators are used to invest in budding startups.

With increasing difficulty in understanding the difference between incubators and accelerators, many entrepreneurs face issues. We wanted to clarify the differing definitions and elucidate them. Keep on reading to know about accelerators and incubators in Hong Kong.

Accelerators vs Incubators for Hong Kong Startups

For the initial stages, incubators and accelerators in Hong Kong both provide great ways to grow businesses. However, there are slight differences when it comes to Hong Kong startup funding. Let us get straight to the point and read about what a Hong Kong accelerator program is.

Accelerators for Hong Kong Startups

Accelerators for Hong Kong startups begin with a rigorous application process. There are mainly accelerators who are highly selective and accept less than 2% of applicants into their programs. Before we dive deep into it, let us know what an Accelerator is.

What is an Accelerator?

Hong Kong accelerator program is an institution that offers mentorship, capital, and connections to investors. It is designed for selected startups with encouraging MVPs and founders as a way to scale growth rapidly. Hong Kong accelerator program has an MVP that has already been validated in some way. A startup must have a product with few paying clients, a group of free users, or early signs of a strong product that fits the market.

As mentioned above, the acceptance rate is low, and the accepted companies are usually the ones that have already showcased the growth and a minimum viable product(MVP). The reason behind a low acceptance rate is the availability of a limited amount of capital, physical space, and time for mentorship. Also, know that many Hong Kong accelerator programs often take a cut for the placement in the program. Small seed investments and mentors are provided to startups.

The accelerator’s goal is primarily networking, mentorship, and resource allocation to boost proven business ideas. A business’ time at a Hong Kong accelerator program ends with a presentation. The presentation shares the growth and development the company has achieved during its time in the program.

How Accelerators benefit Hong Kong startups?

Hong Kong is a global business hub and the most demanded location for many international companies. Hong Kong law allows foreigners to be a sole shareholder as well as the director of the company. Many other benefits are provided to you as a startup by Hong Kong.

If you have a startup, you will need advice, direction and a little funding. That is where the role of accelerators comes in. If you are still in doubt about going this route, here are few reasons why you should join an accelerator:

Comprehensive support – Operating a startup can often be challenging and lonely. Accelerators can help you get support from the mentors and those sponsoring you. They help provide you direction, experience, and knowledge. Also, you have the permission of other founders in the accelerator program with you.
Investor access – The Hong Kong accelerator programs connect you directly to interested investors who are drawn to accelerators in the hopes of discovering the next big thing. The program also does not give out much in funding. Many investors are invited to watch the presentations during the demo days of an accelerator. You can meet and mingle with investors there and open doors of opportunity with additional funding offers.
Accelerated knowledge – Information from the years of experience and skills that each mentor or accelerator manager has gathered is provided to you in this program. This concentrated form of data enables you to expedite what you are doing with your startup.
An accelerator for everyone – Hong Kong Accelerator programs don’t offer one model or format. The result is an encouraging environment that will help you thrive.

Things you know should when joining an Accelerator:

Correct time: Ensure that you are joining a Hong Kong accelerator program at the right time. Ask yourself the question, “is it the right time?” If you are still at the stage of searching for a co-founder or your first few employees, you may be a better fit for an incubator.
How fast or slow are you growing? If you are a fast-growing company, an accelerator might be the right fit.
Will you relocate? There are several accelerators that will require you to relocate for a few months if you are participating in their program.

Incubators for Hong Kong Startups

An incubator or a startup incubator in Hong Kong is a program that is designed for startup companies to help them get through the early stages, such as MVP.

What is an Incubator?

Startup incubators in Hong Kong usually provide workspace, seed funding, mentorship, and training. This program is similar to accelerators, but there are some essential differences to be aware of. The process of a startup incubator in Hong Kong starts with a business in the early stages of its life cycle. Still, it does not operate on a specific schedule contrary to accelerator programs. They can be independent entities, but they can also be sponsored by venture capital firms, angel investors or angel investment networks, government entities, and giant corporations.

How Incubators benefit Hong Kong startups?

As a Hong Kong startup, you must understand the difference between an accelerator and an incubator. But, before that, as a Hong Kong startup, you must understand the benefits of a Hong Kong incubator. Below are a few of the benefits that a startup incubator in Hong Kong provides:

Networking Opportunities – To grow your business, it may not be enough to have a good product or service. Networking is essential in order to see both short-term and long-term growth. Networking is the act of exchanging information and building relationships with other professionals, leaders, and startup entrepreneurs within your industry. One must develop a strong network to form a solid foundation of professional associations and connections.
Access to Professional Resources – When you partner with an incubator, you gain access to professional resources. These resources include everything from education to software and business tools. At the same time, the professional resources that a startup is provided with vary from incubator to incubator. Startup incubators in Hong Kong also host regular workshops for the numerous startup partners at the incubator. Teaching topics such as future forecasting, business fundamentals, obtaining funding, legal structures, and quick prototyping.
Low Cost Space & Flexibility – Much like a coworking space, startup incubators in Hong Kong offer a range of different types of areas at a fraction of the cost that it would take for you to purchase or lease your own space. While you are searching for the right incubator, ensure that they offer some office amenities such as central printing and access to conference rooms.

What is the difference between Accelerators and Incubators?

The primary difference regarding accelerators vs. incubators is that the Hong Kong accelerator program receives funding from an existing company or network. On the other hand, an incubator is often independent, although it can connect to venture capital firms, angel investors, funds, or government entities.

Next, incubators are focused on stimulating a startup’s innovation by incubating great ideas. Similarly, start-up accelerators in Hong Kong focus on accelerating the growth of a business. The incubators function as a preparation stage for startup accelerators. Another big difference regarding an incubator vs. accelerator lies in the fact that accelerators follow a fixed timeline for their programs, which usually lasts up to 3 to 4 months. On the contrary, incubators do not have a set timeline.

Which one should you choose for a Hong Kong startup?

The next big thing is how you will choose between the accelerator and incubator in Hong Kong. The choice depends on two main things:

what you’re looking for, and
the stage of your company.

If you are a proven startup in need of a cash injection to fuel growth, an accelerator is the best option. Initial-stage companies, or first-time solo founders, are better off with an incubator’s guidance in Hong Kong.

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