Education Center
Q

Are startup accelerators and incubators venture capital firms?

A

Quite frequently, yes. Most accelerators and incubators will offer a modest amount of capital (e.g. $20,000-$150,000) in exchange for equity in the given company. This money typically comes from an in-house venture fund managed by the accelerator or incubator. However, because incubators and accelerators are typically investing at fairly low valuations (often in idea-stage teams with no product let alone users/customers), they will often back many more companies than a traditional VC firm might, which might have a higher bar for traction and growth than an incubator or accelerator (and be willing to invest at a higher valuation), and which therefore might have much more stringent requirements for funding. For example, FundersClub only funds a very small percent of companies admitted to incubators and accelerators every year.

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