A startup accelerator is a company or a programme that helps early-stage companies grow into self-sustaining enterprises or businesses that can raise more money. Many accelerator programmes have a fixed time limit, ranging from three to twelve months, and a curriculum to follow in order to complete the programme.
Startup accelerator programmes are often intended for firms that have previously achieved a number of important milestones and are ready to scale swiftly. Some accelerator programmes will provide financing in exchange for an equity stake in the firm to attain growth. This is where the benefits and drawbacks of joining an incubator or accelerator must be carefully weighed.
What Is A Startup Accelerator
A startup accelerator is a short-term growth programme providing education, guidance, and funding to early-stage, growth-oriented businesses that run on a set amount of time and as a part of a cohort.
The accelerator experience is a method of intensive, quick, and immersive education focusing on shortening the life cycle of budding businesses by compressing years of learning-by-doing into a few months, usually three to twelve months. Startup accelerators are often used by startups that have progressed past the early stages of development.
These companies can stand on their own feet but require instructions and peer support to mature. In addition, a startup accelerator provides emerging enterprises with logistical and technical resources, connections with peer networks they can learn from as well as shared office space.
Below is a video that summarises the need for a startup accelerator as well as an experts opinion on their relativity and validity today
Features of A Startup Accelerator
Startup accelerators are just one type of support available to entrepreneurs. Incubators, angel networks and entrepreneurship classes all have some similarities in terms of characteristics that can easily cause confusion. Accelerators however are distinguishable by a few features:
Application Process. Anyone can apply for accelerators, but the procedure is very competitive as many apply but only a few are accepted.
Seed Investments. In most cases, seed investments in firms are provided in exchange for equity.
Focus. Small teams, not individual entrepreneurs, are the focus. In general, accelerators believe that one person is insufficient to handle all aspect of a startup.
Process. The startups must 'graduate' within a certain time frame, usually three months. They will receive extensive coaching and training during this time, and they will be required to iterate quickly. Almost every accelerator programme concludes with a "Demo Day," during which the startups present to investors.
Cohort Based. The accelerator accepts and supports startups in cohort batches or classes. The peer support and feedback provided by the classes is a significant benefit. The teams will meet on a regular basis if the accelerator does not provide a common workspace.
How Do Startup Accelerators Work
Application to a startup accelerator programme will require extensive research and planning. Companies frequently hear back soon, with some programmes making decisions just a few hours after the interview. Each accelerator programme has its own set of criteria for evaluation but generally will follow these steps. Please do note that this is a general guideline only and steps and procedures will vary for each accelerator programme based on location:
Application Process. To begin, the accepted application is assessed by the internal team as well as external partners such as mentors, investors, partners, and alumni to create a short list of promising applicants.
Interview. The next step is an interview with the selection committee, which will determine the final list of startups. The focus of all business accelerators' selection process is based on the venture team and team diversity. The accelerators mostly describe factors pertaining to the team's attributes. Management talents, technical skills, past working experience, and knowledge are among the team members' personal attributes. As a result, accelerators stress team requirement as a good indicator of a company's success.
Funding. Amongst others, one of the main reason founders and entrepreneurs choose accelerator programmes is for funding. Typically, seed money is exchanged for shares in the company by accelerators.
Focus. One of the major benefits of this system is the emphasis it places on entrepreneurs. They are enrolled into a process that usually lasts three to six months. This will usually take place in a provided co-workspace. During this time, participants are put in a position where they are required to focus and progress.
Learning Process. Seminars, workshops, and mentorship opportunities are part of the learning process of this programme. While this can cover a wide range of issues related to starting a business, the legal aspect and the practice of pitching are often the most useful.
Networking. Entrepreneurs will have lots of opportunities to network with their peers, other industry support providers, and potential investors during this acceleration period. These connections can be extremely beneficial especially for future fundraising attempts.
Demo Day. Accelerators end with a graduation ceremony. Typically, a "Demo Day" is held, during which each startup in the cohort gives a presentation and pitches. Demo days are often held in front of a large group of active investors, often numbering in the hundreds. This is when the value of experience and time invested is tested. Each entreprenuer will often prepare 15 to 20 slides to include in their pitch decks as part of their presentation.
Who Are Startup Accelerators Looking For?
Accelerator programmes are focused on a specific topic. They seek out small, newly created businesses with few investors and the possibility for rapid expansion. Some investors are looking for businesses in certain industries, such as EdTech or AgTech. Some of the most typical needs are as follows:
A functioning business plan
Minimum viable product (MVP)
Strong teamwork abilities
Entrepreneurial spirit and drive
You have some room for growth before you're ready for an accelerator if you're an entrepreneur with a wonderful idea. Take your company from concept to completion. To be able to present yourself to investors throughout the accelerator, get the vital training you need to thrive as a startup founder.
Creating a business plan entails the following steps. Workshops and coworking time allow you to turn your concept into a viable company plan.
Prepare a prototype. Most accelerators expect you to have a minimal viable product.
Get to know your co-founder. You'll meet other prospective entrepreneurs at a pre-accelerator. You can share ideas with each other and perhaps start forming a team.
Learn from successful entrepreneurs. The trainers are also successful entrepreneurs. They'll put your company plan through its paces and share the lessons they learned along the way.
Get into the mindset of an entrepreneur. Obtain courses that will teach you how to think like a successful entrepreneur and how to think like a successful entrepreneur.
Benefits of Startup Accelerators
The popularity of startup accelerator programs has soared in recent years. Typically startup accelerators choose a group of companies on a regular basis, usually at the same stage of their development. They provide guidance, investor contacts, and mentorship in exchange for a small percentage of equity.
All Rounded Support System. Accelerator provides mentors and sponsors to help the company succeed. They can also provide direction, expertise, and information in addition to emotional support. The companies also have the backing of other participants of the accelerator programme.
Full Calendar of Events. While accelerator programmes may be brief in duration, it is packed with activities that assist the firms to enrich their knowledge. Some of the events include mentor meetings, feedback sessions, "Demo Day" presentations, networking and social activities.
Access to Investors. Accelerator programmes provide a platform for startups to be connected with investors who are interested and create a network with them to build relationships. During "Demo Day" presentations, investors are invited to watch the companies present their ideas and products.
Developing Skills of Entrepreneur. Accelerator programme teaches entrepreneurs the abilities needed to manage a business, such as sales and marketing, communications, finance and some technological knowledge. Entrepreneurs are also able to obtain exposure to unique views of approaches by other partners in the same programme cohort.
Mentorship. As a startup, making mistakes is a part of the process. Accelerator Programmes are created to reduce these mistakes through a combination of mentorship and open-mindedness. Accelerators bring together the finest and brightest in any particular industry to assist the next generation in replicating their achievement. This allows them to learn from entrepreneurs that have been in similar situations and assist in navigating a difficult industry.
Startup Accelerators vs. Business Incubators
Startup accelerators and business incubators, though often used interchangeably, have a slight distinction between them. The goal of startup accelerators is to "accelerate" the growth of new firms.
Business incubators, however, foster "innovation" and disruptive technologies. Their differences can be seen in the table below:
Companies that are currently in the discovery stage and would require assistance in building a foundation and developing their idea
Companies that are in the execution stage and would require mentorship to help accelerate the growth of their company
Usually are dedicated to a startup for a longer amount of time, normally until the startup can achieve their goals and benchmarks
Will generally run for a period of 3 to 4 months with a strict schedule
The application is open to specific audiences. They accept many applicants making it less competitive
Anyone is able to apply but only a few of the applicants are accepted making it very competitive
Are not structured around cohorts, but startups will be sharing office space with a number of like-minded entrepreneurs
Cohort-based structure and has a set graduation date or "Demo Day" where startups can present to investors
Startup Accelerator vs. Business Incubator
Startup accelerators are able to provide great value to their participants. As there are various programmes available, it is advisable to research each of them and select the most suitable programme. Accelerators are a good option for companies that have been successfully established but need help to expand and grow.
Seed funding, an instant network of contacts, access to mentors, educational programming, and better probabilities of success are all advantages of being accepted into an accelerator. However, after completing the programme, success is not guaranteed if whatever is taught and learnt is not applied and practiced. Accelerators are also becoming increasingly popular, emphasising the importance of standing out both during and after the process.