For young startups just trying to get off the ground, finding your “big break” can feel far off and elusive. Fortunately, accelerator programs are designed to help with just that.
Some may be dissuaded by the time commitment required or are hesitant to part with company equity – which is fair, accelerators are not for everyone. However, if you’re a founder on the fence about whether or not an accelerator program is the right move for your startup, here are some potential benefits to consider.
How do startup accelerators work?
A startup accelerator is an application-based, intensive, cohort-based program designed to support the growth of early-stage companies via mentorship, education, and funding (in exchange for equity). Most programs range from three to four months in length and typically will culminate with a competitive Demo Day or pitch event. The process is meant to be an intense and immersive experience for young companies, with the goal being accelerating the growth process through condensed education.
If you want to learn more about how accelerators differ from incubators, check out our blog covering that topic. Generally, incubators are longer, therefore less intensive, and require less or little equity.
How can an accelerator benefit your startup?
Accelerators are intended to help startups grow faster. “Growth” is subjective – it can mean a lot of different things for a startup. Accelerators offer growth-boosting resources through the following avenues:
One of the biggest selling points for accelerators is funding. Typically, accelerator programs will invest in the companies accepted into the program in exchange for a percentage of equity in the company. Not only can this offer an early-stage startup a few months of runway, but future potential investors may view an early accelerator investment favorably.
In addition to the support of mentors, many accelerator programs offer access to legal help, regulatory experts, industry experts, financial experts, etc. For a young company, this access can be game changing. Startups can also learn from and find support within their accelerator cohort. Some accelerators are industry-specific, which gives founders an opportunity to connect with other founding teams who could be faced with similar challenges.
For founders, networking is huge – you never know who could help you out down the line, and vise-versa. Accelerators provide a chance to network with industry experts, other cohort members, and investors. If you take full advantage of the access these programs can provide, you could be laying the groundwork for future potential sales, partnerships, or possible investments.
From a marketing perspective, being a part of an accelerator is a great way to get your startup’s name out there. Should you join an accelerator, your brand will likely be included in their marketing efforts, including press. Conversely, you can talk about the accelerator program in your own marketing efforts, which can drive recognition and lend credibility to you as a business. Overall, attaching your brand name to a credible accelerator can be an excellent way to garner more attention.
Think of having a well-known accelerator on your startup’s resume like having a degree from a well-respected university. It serves as third-party validation, which can help you get your foot in the door with potential investors, customers, and hires later on. It can lend legitimacy and credibility to your business and show that someone else has already been willing to back you. While it doesn’t guarantee you’ll have a stream of investors lined up, it’s another chip in your favor.
The point of accelerators is to help grow startups in size and value as quickly as possible.
Completing an accelerator program isn’t a guarantee of success; however, it can help your startup get to a place where it’s ready and able to raise more capital. Accelerators do have a lot to offer in terms of resources, but those come at a cost. Namely, your time and equity. For some founders, the structured time commitment isn’t feasible. Others may not be comfortable with the idea of parting with equity so soon.
Before you decide to apply to an accelerator program, consider what of the resources they offer does your startup need the most. Is it capital, mentorship, or something else? If it’s multiple things, an accelerator is likely a good option for you. If it’s just one thing, like funding, you may be better off seeking help from an expert or advisor who can help you raise funds.
If joining an accelerator program seems like it could be the right move for your startup, check out our blog on picking the right accelerator.