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Answer:
incubators can bring substantial benefits to startups, including:
1. Mentorship and advisory services
The mentorship and advisory services offered by incubators allow the startup’s management team to reduce the gap in their knowledge or experience needed to make better decisions.
2. Time- and money-saver
Startups save time and money spent on day-to-day operating activities (e.g. accounting, marketing, human resources), as incubators cover either some or all of the services.
3. Access to industry experts and mentors
Finally, incubators guarantee invaluable access to industry experts and mentors that otherwise would be inaccessible.
Generally, the incubators specialize in a particular industry. For example, one incubator focuses on the food industry while another concentrates on the fintech industry. Nevertheless, some incubators admit companies without industry restrictions.
The incubators deliver their services to a startup in exchange for a stake in the company. The shareholding can vary from 2% to 10%. In addition, some incubators ask for a flat fee. Note that, in most cases, the services are provided at a below-average rate.
Although the terms “incubator” and “accelerator” refer to close but still different concepts, they are frequently used interchangeably.