Incubators are one of the trendiest topics in entrepreneurship, but they tend to leave the average person with a ton of questions. The first one is usually “What are they?”

Generally speaking, an incubator is an organization (in some cases, a for-profit venture) that offers crucial help to early-stage startups. Some incubators provide office space,
some provide consultation and business services, and some go so far as to provide working capital.

The idea is that helping entrepreneurs
in the formative stages of starting their companies will increase the likelihood that they’ll succeed.

The Most Common Types

Every new company is different, and that means they have different needs. While some are just looking for a desk and broadband service, others are hungry for working capital or mentorship.

As a result, different kinds of organizations have emerged with their own missions and skills. Incubators, accelerators, co-working spaces and sometimes even think tanks—all fall within the category of venture support.

Typically, they’re differentiated from one another through either their pricing model, funding source, time spent in the program or industry concentration. There is no formal definition for any of these programs, because like everything in business, it’s dynamic and constantly evolving.

The following list shows the differences between the various structures and their role within the community. This is by no means an exhaustive cheat sheet. For example, even my own incubator doesn’t fall into any of these categories and finds itself as hybrid of both an accelerator and incubator.

Business Incubators

• Cost: Usually free or extremely low. Some ask for equity in the ventures they help.
• Typical funding source: State or university funded
• Time spent in program: One to four years

Incubators are often devoted to a certain vertical, such as food or health care. Somewhere in the United States, there is an incubator for virtually every industry. They usually work with startups that were recently launched or are in a growth stage.

Incubators usually focus mostly on job creation for their region or city, so they emphasize finding startups with the highest likelihood of doing so. These programs tend to have fixed budgets; there are limits to how many people they can help at a time.

Startup Accelerators

• Cost: 5 to 12 percent, equity
• Typical funding source: Private investors
• Time spent in program: Three months

These entities are looking for the next rock-star founder—usually in a tech-related field, though new niches are emerging in everything from fitness to mobile health. Accelerators want to work with startups that have potential for high growth and scalable equity. (Think Dropbox or Reddit, both of which came out of accelerators.)

Accelerators are typically paid only when one of their startups is acquired by a larger company—which is a very rare occurrence. As a result, spaces in most accelerators are reserved for the best of the best. The most notable accelerators in the country tout an acceptance rate of less than 1 percent.

These programs seek out companies that are no more than two months away from launching or that are less than nine months past their launch.

Co-Working Spaces

• Cost: Depends, but usually billed on a per-seat basis.
• Typical funding source: Real estate investors
• Time spent in program:  As long as you choose to pay

This model is very simple. Instead of renting their own offices, startups can share a co-working space for a monthly fee.

Many of these operations offer other services—accounting or design work—on an a la carte basis. Co-working spaces also tend to attract entrepreneurs who serve other entrepreneurs, such as lawyers or Web designers. But there’s no formalized mentoring program like you might see in an incubator or an accelerator.

Getting into a co-working space mostly depends on its vacancy rate (which is usually high) and a startup’s ability to pay. Unlike
incubators and accelerators, co-working spaces don’t care where a startup is in its life cycle.

Why Join an Incubator?

YOU DON’T KNOW WHAT YOU DON’T KNOW These programs are essentially schools for companies. A school’s job is
to impart knowledge. To an entrepreneur, knowledge is power—and power is very useful. By joining an incubator (or something similar) you’re setting yourself up to become a learning machine.

IT’S A TURNKEY BOARD OF ADVISORS Most great entrepreneurs create a board of directors or advisers to augment their own abilities. Incubators and accelerators have experienced staff and relationships with successful mentors in an array of fields. By joining the right incubator, the chore of courting, curating and organizing a board of advisers is already done.

YOU WILL FINALLY BE SURROUNDED BY PEOPLE WHO FEEL YOUR PAIN Entrepreneurship is lonely, especially at the beginning. We spend countless hours in our garage or basement while we build out our vision, all for little-to-zero money at first. By joining an incubator, you’ll be joining an organization that surrounds you with people who actually share your plight. In many cases, they become your co-founders, suppliers, first customers and even friends.

Will getting into a business incubator make you successful? No, it won’t—only you can do that. Will it make it easier to become successful? Yes, very much so. Properly structured incubator programs create more than $1 billion a day in value for our country. Anyone who debates their merit isn’t paying attention.