Both incubation and acceleration programs play an important role in the development of early ventures. An accelerator is
A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo-day.
Such programs may be for-profit or non-profit, and may vary in the amount of stipend, the size of the equity stake taken, the length of the mentorship and educational program, the availability of co-working space and in industry vertical focus. Some are affiliated with venture capital firms or angel groups, some with corporations, and other with universities or local governments or non-governmental organizations (Cohen 2014).
In order to differentiate accelerators from incubators and other business programs Dempwolf et al. (2014) suggest that accelerators are private, for-profit organization with a clear business model:
Innovation accelerators are business entities that make seed-stage investments in promising companies in exchange for equity as part of a fixed term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo day.
Cohen 2014 (click to enlarge)
Incubation programs on the other hand have the aim to protect early and late ventures from market forces. They usually lack a fixed term, do not typically provide equity investment in return for cash, primarily focus on co-working space and shared office resources (internet, etc.), are not selective in admissions, and offer ad-hoc educational offerings and mentoring if at all (Cohen 2014).
Another perspective is categorizing programs according to the business model used (growth driven, fee driven or independent) and the stage in the entrepreneurial journey at which it best supports entrepreneurs.
Dee et al. 2015 (click to enlarge)