When Xcellerate announced Tommy Wald as CEO today, it set the stage for Xcellerate to expand its MSP accelerator services across North America. But what exactly is an accelerator, and how does it compare to an incubator?
Here are some simple definitions that often apply to technology startups:
- Accelerators typically work with tech startups for several months while also investing a sum -- perhaps $50,000 or less -- in the company in exchange for capital and guidance. An example accelerator is Techstars.
- Incubators typically offer shared office space at reduced costs and mentoring services. Some incubators invest in the startups they nurture, others don't. Incubators typically work with very early stage companies.
This infographic provides deeper details about the Incubator vs. Accelerator model, care of ExtremeTech:
So What Is Xcellerate?
Take a closer look at those definitions and I don't think Xcellerate fits the classic definition of an incubator or an accelerator.
I'll double check but I don't think Xcellerate actually invests in the MSPs that it mentors. Instead, MSPs pay the accelerator a monthly fee for end-to-end business assistance services. The services cover everything from strategic guidance to HR, sales and marketing assistance.
Generally speaking it's difficult to find accelerators and incubators that work with MSPs. The reason? Most tech investors only work with startups that have intellectual property. An exception includes private equity firms which often invest in later-stage, large MSPs to fund rollups and other M&A activities.