What’s the Difference Between a Coworking Space and an Incubator?
We’re in a day and age where the popularity of coworking spaces and business incubators are increasing. Understandably, we’re frequently asked whether Neoware Studios is an incubator.
Short answer: “No.”
Long answer: “No-o-o-o-o-o-o-o-o.”
That’s because incubators and coworking spaces both perform very specific functions for different types of entrepreneurs and startups. One is not better than the other, but they each serve a specific function in an entrepreneurial community.
Difference #1: The sole purpose of an incubator is to guide startups to success.
A coworking space is just a place to work; it’s not made to grow your business. Oh sure, a lot of coworking spaces can help you grow, but you didn’t join the coworking space specifically for that assistance.
You can often find people who are specialists in their own field who can help you — bookkeepers, marketers, graphic designers, etc. — but a coworking space will leave you alone to do your own thing until you ask for help. The incubator has those kinds of people available to help you out.
Difference #2: You have to be approved to join an incubator. It’s pretty competitive to join an incubator, and you may not get in — some of them only have a 2% acceptance rate. So if you have a company that was relying on an incubator to help you get your business off the ground, that can make things more difficult.
A coworking space is easy to join. Many of them offer month-to-month contracts, and you can come and go as you please.
Difference #3: Coworking spaces are very hands-off. Incubators often have timelines, schedules of milestones, and a number of teaching and coaching sessions. Some even have a timeline for when you’re expected to leave the nest and fly on your own.
Coworking spaces leave you alone and let you do your own thing. You’re not expected to show up at a certain time or attend any classes, or to be coached in any way. Several coworking spaces offer that, but it’s totally voluntary on your part.
Difference #4: Incubators are suitable for baby startups, coworking is for anyone.
The whole point of a real incubator is to keep eggs warm until the birds are ready to hatch and live on their own. So the metaphor of a business incubator is appropriate: You keep warm and develop until your business is ready to hatch and live in the real world on its own.
Coworking spaces are for businesses of any age. You could be a baby startup, you could be a five-year-old company, or you could be a 25-year freelancer who just wants to get out of the house for a while.
Difference #5: Incubators are made for startup companies
The point of an incubator is to help a company grow and thrive, not individuals who are venturing into their own practice, like a bookkeeper, freelancer writer, or digital marketer. It can be for single founders who are building something, but generally, it’s about startup businesses, not individuals.
You don’t have to own your own business to be in a coworking space. You can be a solo entrepreneur, an independent consultant, a creative professional, or even a remote worker in a large corporation. There are no real rules about how you can work in a coworking space, but an incubator may have very specific rules and criteria about who can join.
Difference #6: Incubators lead to investors
One of the strongest arguments for joining an incubator is so that you can build a company that will attract investors, or they have a network of investors they can introduce you to. Some companies will ask for equity in your company just for letting you be a part of their system. And some investors even host their own incubators for the companies they invest in. (My Branding Yourself co-author, Kyle Lacy, at one time worked for a venture capitalist that had a virtual incubator for its investees.)
In a coworking space, you’re always free to pursue investors and venture capitalists, but it’s not an expectation or a requirement. But some of the members or the owners may have a network of investors they can introduce you to. That’s just a matter of chance.
Bottom line: Now, we’re not trying to say coworking spaces are better than incubators (but they are). Instead, we’re showing that there are important differences between the two and they may mean the difference about whether you’d rather join one or the other.
An incubator gives you rigorous, structured guidance to help your startup grow. A coworking space is very hands-off and you get the freedom to do whatever you want for your business, and some of them will offer advice and resources.
Choosing between a coworking space and an incubator is often more about what kind of company you have than it is the kind of work you do.
Photo credit: Conger Designs (Pixnio, Creative Commons 0)