In search of comprehensive expertise, founders sooner or later consider collaboration with an incubator and/or accelerator. But the trouble is that those who are far from the venture capital market or start-ups often mistakenly believe that these organizations are almost identical (if they know about their existence in principle). This is a serious misconception that we will try to “eliminate” with this material.

First the Incubator

The first and most fundamental difference has to do with the stage of development of the accepted projects: incubators usually admit startups at the idea stage, when the project founders just begin to discuss the future business model, look for a team of like-minded people, study the market, and think through the architecture of the realized solution. In their turn accelerator take more mature startups-usually at the prototype or MVP stage or if they have their first users, preferably paying ones as well.

Most incubators are spaces where entrepreneurs get a workspace, mentorship support, access to private events and other valuable resources through which they learn how to build and grow a business from the ground up for a monthly fee.

Incubators typically do not charge for their services, but they do not provide funding either. Their main goal is different: not so much to give startups cheap office space, but to help aspiring entrepreneurs avoid rookie mistakes and thereby increase the survival rate of businesses at the earliest stage.

Once the funder(s) bring the startup to the incubator, they typically build a prototype or MVP, build a team backbone, and prepare to bring the MVP to market. Then the company grows and the value of the incubator starts to drop.

There is no universal algorithm for knowing if a project has outgrown the incubator level-usually it’s a story about how the founders feel. If you feel that the offered space is already too small for your growing company and mentors’ advice seems to be more and more banal, it is time to decide for the next step – to move to the first own office and to start free floating.

Then the Accelerator.

If, having made this very important step, the founder feels the need for further mentor support and assistance in further development and promotion, he should think about going through an acceleration program-study the local and international market and choose the most attractive options (as a rule these are either acceleration companies with a reputation, or narrowly focused acceleration companies offering very deep expertise in their industries).

Accelerator are programs that give the company individual mentorship and access to a network of partners during the course of the program. These programs typically last from 3 to 6 months and end with a demo day in which the projects pitch to investors, marking the beginning of a fundraising campaign.

Classic equity accelerator typically invest in selected companies at the beginning or during the program (usually amounts in the order of $50-100K) in exchange for a share (usually 3-10%). The exception is accelerator that work on the non-equity model – they do not give financing and do not take a share in the project, but startups have to pay for most of the programs (except for non-equity accelerator financed by the government and/or universities).

In fact, the main task of a accelerator is to help the project find the points of explosive growth and prepare it for institutional money: to find the right and scalable business model, to test the channels of attraction, to crystallize a plan for exponential growth.

The biggest and best-known accelerator are Y Combinator (among its outgrowths are Reddit, Airbnb (attracted more than $4.4 billion in investment), Dropbox (IPO at $9.2 billion) and 500 Startups (Twilio (IPO at $1.2 billion, valued above $18 billion as of July 2019), Behance (bought by Adobe for $150 million)). On their heels is Techstars (Rover.com (valued at $970 million), SendGrid (bought for $3 billion)).

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Purpose: Monitoring of new product competitive ability.

Essence: Reproduce the layout of the original pages, which look identical to the original. Spin up traffic and look at performance depending on what you want to test. If you conceived the product in the “red” ocean, it makes sense to reproduce the main competitor’s page in any of the services, look at the Facebook Ads Library latest UA creatives and purchase your CA on them, getting the approximate data of this part of the competitor’s funnel. This will help you get a foundation for analysis and comparison.

To correctly interpret the results on small amounts of traffic, it’s best to test one thing at a time. For example, if you’re testing creatives, the page that gets clicked on is the same for all creatives. Conversely, if the effective creatives are defined, you can test different pages.

If you’re entering the so-called “red ocean” but don’t know the market environment and aren’t sure if you can compete in it, you can make a copy of a competitor’s page and also spin off traffic. This will help clarify CPI, CTR and other important metrics and thus help you plan your budget and economic model for the product.

2. Pre-order in App Store and Pre-register in Play Market

Purpose: Checking ASO. Lead generation for soft launch.

Essence: You start quickly “sawing” a software product based on ready-made solutions + crutches/sticks. You do the minimum set of features to be allowed in the application store.

This is a fairly non-trivial way to test product hypotheses for mobile. The only drawback is that the fee for such a test = development + paid developer account + traffic. The main goal of development here is to get a visual review from the store, overcoming Apple/Google guidelines: you can achieve this through a dummy wrap – no one but the reviewer will see it. If the hypothesis is not confirmed – take it off the market.

The bonus is that you have a few months of real page existence in the relevant app store. And that’s a little organics, and the ability to drive traffic to the existing page (albeit without campaign optimization), and collect pre-orders that will turn into installs at release. The drawback is that analytics from Apple / Google deliver info with a delay, i.e. quickly experimenting with UA will not work.

3. Zero-code (no-code/low-code) tools.

Purpose: Very fast and cheap testing of the hypothesis. Getting the first clients, adjusting the strategy.

Essence: Creating a template software product in visual interface. Roll it out widely → take metrics → decide on further development or develop the product, if we are not restricted by the zero-code toolkit.

Zero-code “movement” is growing dynamically, new tools and services are constantly emerging. By 2020 there is already a wide set of tools available, not only for testing product hypotheses, but also for creating MVPs to help understand if it’s worth spending resources on full-fledged development. In some cases, it allows you to create and develop full-fledged products. The advantage of the approach is that a digital product can be created almost without programming knowledge.

It is important to have information about most popular tools on the market, to know their features and possibilities. By combining zero-code solutions, it is possible to test product hypotheses very quickly and cheaply. Here are examples of services to explore:
Product Hypothesis Testing Tools

Fake product launch (Product Hunt/ Kickstarter/Landing)

Purpose: To test the viability of a product hypothesis without development.

Essence: Testing is done by presenting a nonexistent product to your target audience (or investors): you can do this with public speeches, presentations, prototype demonstrations. With digital products is easier, the main emphasis should be made on the visual part and marketing: quality promo, logo, identity, branding, etc. The finale of this story should be a milestone, for example, getting “Product of the day” on Product Hunt or completing a fundraiser on Kickstarter.

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