Startups seeking support from incubators, accelerators or startup hubs should not only evaluate the resources and programmes on offer, but also look closely at the issue of company shares. The conditions under which these structures support startups vary considerably - especially in terms of equity requirements, also known as equity. In this article, we analyse how incubators, accelerators and startup hubs operate in this area and highlight the advantages and disadvantages for founders.
Incubators
Rarely demands for company shares
Incubators are often run by public institutions, universities or business support organisations. Their main objective is to promote innovative ideas and create a sustainable innovation environment. The focus is often on long-term goals such as promoting regional economic development or the commercialisation of research results.
Approach to equity:
Often free of charge: Incubators generally do not require shares in the startups. Financing is often provided by public funds or institutional grants.
Alternative models: In rare cases, incubators may ask for a small equity stake (1-5%) in exchange for more extensive support, especially if they are privately funded.
Long-term benefits: As incubators aim to develop and validate ideas, founders benefit from a protected environment without having to hand over equity immediately.
Who is this interesting for?
Founders who are in the early stages and want to further develop their idea without pressure benefit from this model. It allows them to concentrate on business development without having to give up shares.
Accelerators
Clear equity requirements for rapid growth
Accelerators usually work with a clearly defined business model that aims not only to promote start-ups, but also to benefit financially from their growth. They offer extensive resources such as coaching, networks and often also direct financial investment. In return, accelerators typically demand company shares.
Approach to equity:
Direct participation: Accelerators usually ask for between 5% and 10% of the company shares. This depends on the amount of financial support and the reputation of the accelerator.
Investment: In addition to services, many accelerators offer seed financing (often between 20,000 and 150,000 euros), which serves as the basis for their equity requirement.
Exit orientation: Accelerators are strongly focussed on ensuring that start-ups scale quickly and achieve a successful exit or financing round, as this secures their return on investment.
Who is this interesting for?
Startups that are ready to grow in a short period of time and want to take advantage of a strong network and access to investors are right for accelerators. However, founders should ensure that the shares they give up do not jeopardise future control of their company.
Startup Hubs
Flexible models without direct equity requirements
Startup hubs differ fundamentally from incubators and accelerators as they do not offer programmes with clearly defined terms and resources. Instead, they serve as long-term platforms that provide startups with infrastructure, networks and a community. The focus is on creating an innovation ecosystem, not on direct returns from individual companies.
Approach to equity:
No equity requirement: Startup hubs usually do not require company shares as their business model is often based on membership fees, space rental or funding.
Indirect monetisation: Some hubs offer additional services such as consulting, workshops or access to investors, which may be chargeable but do not entail equity requirements.
Long-term value: Startup hubs benefit from the fact that successful startups settle permanently in their ecosystem and contribute to the attractiveness of the hub.
Who is this interesting for?
Startups that already have equity capital and are looking for long-term support in the form of networks and infrastructure will find ideal conditions in a startup hub.
Advantages and disadvantages of equity claims
Incubators:
Advantages: Founders retain full control over their company; no financial obligations.
Disadvantages: No access to capital; focus is more on long-term development, not rapid growth.
Accelerators:
Advantages: Access to capital, investors and networks; rapid scaling possible.
Disadvantages: Giving up shares can limit control over the company in the long term.
Startup hubs:
Advantages: Flexible model without equity requirements; long-term support.
Disadvantages: No direct access to capital or intensive support.
Making the right choice
The question of whether an incubator, accelerator or startup hub is suitable for a startup depends not only on the stage of the company's development, but also on the founders' willingness to give up shares in the company. Incubators offer an ideal opportunity to develop business ideas without pressure, while accelerators are suitable for startups that are willing to give up shares in exchange for rapid growth and access to resources. Startup hubs, on the other hand, offer a long-term platform that supports startups at all stages without making direct demands on equity.
Founders should therefore carefully consider the long-term implications of equity demands and ensure that the shares given away do not compromise the future vision or control of the company. A balance between support and autonomy is crucial for the sustainable success of a start-up.
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