Startup Accelerator Programs
Startup accelerators, not to be confused with incubators or angel investors, play an important role in the development of global startups and can significantly impact the results of these startups while simultaneously benefiting the community as a whole. Startup accelerators support growth-driven organizations in the early stage through fixed-period financing, education, and mentorship. Says Susan Cohen, a University of Richmond professor of entrepreneurship, “Broadly speaking, [accelerators] help ventures define and build their initial products, identify promising customer segments, and secure resources, including capital and employees. More specifically, accelerator programs are programs of limited duration—lasting about three months—that help cohorts of startups with the new venture process.” Accelerators typically provide a little seed capital as well as working space and networking opportunities.
Why Choose a Startup Accelerator?
Though most of the programs devised to assist startups can provide some level of value, startup accelerators are so popular because of the intense and focused attention they offer and the practical education provided that helps founders learn what they need to in the shortest amount of time possible. This hands-on learning process tends to be particularly effective with regards to the scaling of ventures as years’ worth of learning is condensed into just a few months. It is, however, important to select an accelerator programs carefully as there is some evidence that only the best ones help startups reach critical milestones more quickly, while others may, in some cases, slow startups down. Overall, accelerators tend to positively impact regional entrepreneurial ecosystems and encourage the spill of early-stage entrepreneurial financing across both accelerated and non-accelerated companies.
What You Need to Know about Startup Accelerator Programs
For starters, it’s necessary to recognize that accelerator programs were created for startup founders eager to grow through collaboration, shared learning, and experience, along with other startups. Most of the organizations participating will have a prototype ready to go to market, or perhaps even have just launched a product. To be accepted into a top-level accelerator program, a startup will need a dynamic and hands-on team with an outstanding idea that’s aimed at a sizeable market. With the startup factors necessary to join an accelerator program in place, finding a program with the right fit requires some further evaluation.
Because not all programs are alike, and different programs will provide a better match for certain startups, time should be invested in evaluating the accelerators available. The people running a program, as well as the mentors involved, are a chief consideration because for a few months interaction with them will be near constant. Furthermore, individual programs focus on particular industries which can be highly valuable when correctly aligned. Not only will this provide the most relevant experience, but networking opportunities will be far greater than for those involved in a generic program.
The sizes of accelerator programs will usually be similar, supporting between half a dozen and a dozen startups at a time, but recognizing the pros and cons of smaller versus larger cohorts is necessary. While small groups will perhaps receive more attention than larger groups, there may be far greater networking and collaboration opportunities for the larger groups. Finally, the investment terms should be carefully considered; most startup accelerators follow a standard format, typically providing some seed funding for a fair amount of equity. With regards to financing, be sure you’re getting value for value.
A Final Word
The evidence of impact accelerators are having on startups isn’t yet sufficient to definitively promote their use, and it’s still going to be some time before the necessary research can be concluded. Nevertheless, initial investigations do see the potential for considerable benefits and programs that perform well are definitely helping at least the most promising startups more quickly achieve objectives. Significantly, accelerators help attract investment, a factor that alone makes such programs invaluable.
By Jennifer Klostermann