Updated: 17/1/2023
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.
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.
A few examples of startup accelerator programmes include:
Below is a video that summarises the need for a startup accelerator as well as an experts opinion on their relativity and validity today
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 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:
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:
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.
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.
However, despite the trend, many early-stage entrepreneurs are still unaware of the advantages of using accelerators. So, here's to name a few:
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:
| INCUBATOR | ACCELERATOR |
| 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 |
Being declined from an accelerator program does not mean the end for your business plans. There are other ways to secure funding for your business, such as early seed funding from personal savings and family and friends, venture capital, partner financing, angel investing, and government grants.
Type of funding comes from personal savings, home equity, and family and friends who believe in the idea and the abilities of the entrepreneur. This type of funding can be relatively easy to obtain, as the entrepreneur already has a personal relationship with the investors.
Type of financing provided by investors who are looking for high-growth potential startups in which to invest. VCs exchange equity in the company for capital, with the equity percentage being negotiable and typically based on the company's valuation. If a startup can demonstrate high growth potential, VCs may be more likely to invest, and being part of an accelerator can make the startup more attractive to VCs.
A way for startups and early-stage businesses to secure funding from a strategic industry partner. In exchange for funding, the partner may be granted special access to the startup's product, staff, distribution rights, or a combination of those items. This type of financing is similar to venture capital in that a percentage of the startup's equity is usually transferred to the partner, but it can also be structured as a royalty-based agreement, in which the partner receives a percentage of every product sale. Partner financing can be beneficial for startups as it can provide access to the partner's expertise, distribution network and customer base.
An individual who provides capital to startup or early-stage businesses that may not yet have the demonstrated growth that venture capitalists are looking for. Angel investors typically invest their own money, rather than money from a fund. They are usually high net worth individuals who are looking for high-return investment opportunities. They invest in a wide range of industries and typically provide not just capital but also mentorship, advice, and valuable industry connections to the startups they invest in. Angel investors may also invest in a startup at an earlier stage than venture capitalists and may be more willing to invest in a startup with a higher level of risk.
A form of funding that is provided by government agencies to support specific projects or research. Depending on the nature of the product or business, grants may be available, particularly in fields such as life sciences, technology, and renewable energy. Grants can be difficult to obtain and are highly competitive. The application process can be complicated, and recipients are typically required to meet specific research and development goals and have a high potential for commercialization. In addition, government grants are typically non-dilutive, meaning the entrepreneur does not have to give away equity in the company in exchange for the funding. However, government grants may also come with certain restrictions or obligations that the company must fulfill.
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.
Benefits of Startup Accelerators
How Do Startup Accelerators Work
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