A startup is like a sapling. Just like a young tree needs extra nourishment and care, a new venture also requires a solid ecosystem of support to thrive and grow. Startup accelerators can provide just such an opportunity. Accelerator programs are organizations that boost new businesses with invaluable guidance, training, networking, resources, and access to investors.
The concept was established for the first time in 2005 and the current state of startup accelerator industry continues to show incredible growth. Year on year the number of applications to accelerator programs is increasing as the benefits of the programs are more widely understood. As stated in the international accelerator report published by Gust, 579 accelerators injected $207 billion in 11,000+ startups in 2016. This demonstrates a considerable increase on 2015, when the figures were $192 billion by 387 accelerators in 8,836 startups.
The advantages of gaining access to an accelerator program cannot be overstated with big corporations starting to take notice and participate, but the application process can be off-putting for some. Here’s a breakdown of the most important ways in which an accelerator might be able to help your business grow:
1. Extensive range of support
It’s a great feeling to be your own boss, but to manage an entire startup alone is a different ball game altogether. This is especially true for first-time entrepreneurs starting a business from scratch without any prior experience of leading a venture. An accelerator program will be your most significant pillar of support here.
These programs provide access to mentors who can support you with the required knowledge, experience, and direction specific to your business. These mentors have typically led or are leading successful businesses. The accelerator program allows you to leverage their experience by gaining insights it would ordinarily take years to learn. The structured support offered can be immensely helpful in the growth of your startup.
Accelerators also offer legal aid and connections with law firms, regulatory experts, patent attorneys, and CFO services. Providing resources to ensure complete regulatory and legal compliance for a startup is critical, as paying for these services independently is costly and legal compliance is a field not commonly understood. Having access to this resource puts the startup in a more attractive position in the eyes of investors, as preference is given to a startup that meets compliance standards.
Additionally, through the accelerator program, you will meet other entrepreneurs, an opportunity for a healthy exchange of ideas and support between the new founders.
2. Expert training for business development
This is certainly one of the most crucial reasons for your startup to join an accelerator program.
An acceleration program is key in order to learn the various skills associated with running and growing a business. Accelerators train new business entrepreneurs on the core skills related to communication, marketing, sales, and financial management, in addition to the technical skills specific to your particular business. Participants learn to develop sales and marketing strategies, construct a professional business plan and sales pitch and acquire potential customers. A technology roadmap and financial forecast for the coming 5 years will also be developed under the tutelage of the accelerator.
Accelerator programs commonly last 3-4 months maximum and are very intensive due to the wide range of critical skills being taught. Accelerators follow a strict schedule to allow for maximum value to be gained for the entrepreneur.
3. Easy access to investors
Investor support is significant for any startup. New businesses are usually short on capital and constantly searching for external funding from investors. It can be a challenge to find the right investor and even trickier to convince of your potential. As such an accelerator programs network of investors is a huge benefit for your business.
Accelerator programs are frequented by global or local investors seeking new creative business ideas to invest in. Almost every accelerator program hosts a ‘demo day’ at which participant startups pitch their business to a group of attending investors. Participants are trained on how to prepare an attractive pitch for investors and providing you make a convincing pitch, you can seal an investment on the spot.
4. Creating a buzz
A recent trend in accelerator programs is the extension of an invitation to members of a startups target audience on demo days. This offers the unique opportunity to create a buzz about your business within a target segment of customers.
This constitutes a form of word of mouth marketing for a startup, essentially creating brand ambassadors among the target audience. The demo day acts as a platform to launch a branding campaign at the most initial stage of your business. The advanced publicity aids in future marketing efforts and promotional campaigns, and contributes significantly to customer acquisition figures.
5. Fund support
There are two major kinds of startup accelerator programs: private and corporate. Private accelerators provide startups $20,000-120,000 in fund support in return for 5-10% of the startup’s equity. Private acceleration programs are excellent for early-stage startups that are unable to gain traction for their product or service.
Corporate accelerators are units of large corporations and have a for-profit organizational model. Corporate accelerator programs offer greater capital support, having the greater financial muscle to back them up, and in general, a corporate sponsor is vital for many startups. Corporate accelerators are extremely selective and typically select dynamic startups with talented teams with a focus on co-innovation and co-creation. These programs facilitate business growth with extended networking, branding, co-branding, hiring, and powerful business insight.
6. Reduce risks for investors
Investors are skeptical about investing in inexperienced entrepreneurs and must be convinced that a business concept is viable. Participation in accelerator programs offers a level of assurance to investors that the risk of failure is minimized.
Accelerator programs imply a level of credibility to investors. The guidance, training, and support given arm a startup with the tools to realize their potential and achieve their goals effectively.
7. Help with risk management
No business has ever succeeded without taking risks, but entrepreneurs are often reluctant to taking risk given the high chance of failure that plagues the startup scene. These anxieties can be alleviated a methodological approach to risk management – something most first-time entrepreneurs are unfamiliar with.
Accelerator programs offer training in efficient and proven risk management and the mentors of the program can aid in locating common risks associated with your business. Using measures based upon data, they can provide counter-strategies to reduce or eliminate risks in a business plan.
8. Motivation boosting
Accelerators operate in a collaborative and collective environment designed to uplift the morale of participants. Dynamic and passionate mentors head programs for accelerators and their zeal is often as inspiring as their guidance is valuable. The positive influence of learning about their achievements in business can motivate participants and instill in them the same passion to scale a business in ways that were thought previously unattainable.
The accelerator will connect participants to other business founders within the program. Meeting entrepreneurs that share the same challenges, doubts, and pressures as you create a sense of community. Participants within the accelerator form a healthy support group for members to motivate each other in times of crisis.
9. Continued support
As previously stated, accelerator programs run for 3-4 months, but the program support is not limited to your training tenure. Reliable startup accelerators assure extended support to participants after the end of the program, and the mentors at these programs are open to developing a long-standing rapport. Remember, they want you to succeed, and you can refer to them for guidance even after you complete the program.
Accelerator programs also have their own alumni network. You can consult the network anytime to seek investors, gain advice, get feedback, advance your networking and so on.
Though this article has offered only a brief description of the benefits of accelerator programs, the advantages of gaining access to these programs are both invaluable and too numerous to mention. A passing glance at the alumni list of some of the biggest accelerators can give insight into the value they provide.
While some startup accelerators are generalized, others are industry-specific. When selecting which program to apply for, choose those that best align to your particular business goals. It’s also important to remember that the program that is best for you is highly individual, and depends as much on your beliefs and attitudes as it does the shape of your business.
(Co-founded 5 startups. Currently the CMO of a venture backed Ai company Valuer.ai. Published a few marketing e-books. Consulted on SEO/SEM for 3+ years in the Washington, DC area Grew up in Washington, DC but have been living in Copenhagen, Denmark for the past 3 years. Mentor, startup junkie, technical marketer, and growth hacker)