Coworking Spaces vs. Incubators: What’s the Difference?

Coworking spaces and startups: they go together like peanut butter and jelly, like Charlotte and the Panthers, like…well, you get it. They’re a good match for many reasons, and rose in prominence somewhat concurrently.

So what defines a coworking space? They come in many forms, and each owner brings their own flourishes to the concept. In general, though, coworking spaces are defined by a few common factors. They are office spaces where multiple companies, entrepreneurs, and freelancers share resources, amenities, and a sense of community.

Coworking spaces offer varying levels of membership: the most common are hot desk, dedicated desk, and private office. In addition to your workspace afforded to you by membership, you will generally have access to a conference room, kitchen, and common areas to hang out in and collaborate.

Coworking spaces usually offer these memberships for flat rates, without the long-term lease required by traditional office rentals. The flexibility, predictable pricing, and built-in community of like-minded professionals make coworking spaces especially attractive to startups and entrepreneurs.

Incubators exist in the same vein as coworking spaces, and are often confused for one another. As a community manager, when I tell people what I do, I often receive this response: “Oh, so y’all are like one of those startup incubators?” Not quite- though many members find that belonging to a coworking space is a boon to their business regardless.

Some coworking spaces are incubators, and some incubators also offer coworking space. It’s important to understand the difference between a coworking space and an incubator, to be sure that you are positioning your startup in the correct environment for your needs.

Incubators are organizations that exist to guide startups into growth and success. Per Entrepreneur Magazine,

“Incubators support startups entering the beginning stages of building their company. The startups possess an idea to bring to the marketplace, but no business model and direction to transition from innovative idea to reality.”

Some physically provide an office environment, usually with the same modern, hip aesthetic common to many coworking spaces. Some incubators do not provide a daily office space, but instead provide education and resources in a more virtual environment.

There is as much diversity in startup incubators as in the coworking industry. It’s not uncommon for incubators to have an investment arm, either providing capital themselves or through connections to venture capital firms and angel investors.  

The most well-known startup incubator is Y-Combinator. Launched in 2005, Y-Combinator is famous for launching Dropbox, Airbnb, Zenefits, Stripe, and more. According to that same article, Survival rates for startups that have come out of incubators are reported as high as 92 percent.” That number might seem crazy-high, but it makes sense when you consider the benefits of working around other startups, with mentors and connections right at your fingertips.

Entry to incubators can be very competitive, and not all cities have them. Luckily, many of the benefits of belonging to an incubator can be found in coworking spaces. The other members of your space can be an incredible resource as you grow and scale your business.

If you come across an issue, maybe a more experienced business owner has dealt with the same problem; if you need to vent about the stress of startup life over a beer, you can bet another entrepreneur in your space will be ready to crack a cold one.

If your startup is not ready for an incubator, or there is not one in your area, try a coworking space, and get ready to level up.