The Startup Accelerator is a resource for startup founders or entrepreneurs with an idea and the vision to grow it into something huge.
The content of this post will cover everything you ought to know about startup accelerators and other helpful resources that you can use to take your company’s idea from concept to reality.
What is a startup accelerator?
Startup accelerators are a resource for startups with an idea and the vision to grow it into something huge. They provide these companies with mentors, investors, workshops, and networking opportunities all in one place.
Startup accelerators help turn fledgling ideas into thriving businesses by providing seed funding they need to take their company from concept to reality.
What is a startup accelerator program?
A startup accelerator program can be the ticket to becoming successful entrepreneurs. This resource provides you with the support, mentorship, and resources necessary to make your startup idea thrive.
Many founding teams of tech startups choose accelerated incubation as they spend three months or less at an upstart accelerator before moving on to build momentum elsewhere.
Others stay for six months as part of cohort building within an industry specialization.
Some choose online startup accelerator programs such as Vertical Liftoff that help an early-stage company get traction before speaking with an angel investor or seeking venture capital.
Is venture capital a startup accelerator?
Venture capital is not the same as a startup accelerator. A startup accelerator provides mentoring, workshops, and networking opportunities to the participating startups.
In contrast, venture capital firms provide essential funding that helps get these entrepreneurs off the ground.
What does a startup accelerator do?
As a startup, the process of developing your idea and getting it to market is long.
Most accelerators provide mentorship from experienced business leaders for you to have all the tools necessary before releasing an MVP(minimum viable product):
Mentorship allows startup communities to get feedback early on to make any adjustments needed while still being able at launch day with customers ready as well!
Startup accelerators offer a wide range of programs for startups. Some focus on specific industries, while others provide programming for any company.
Y Combinator, 500 Startups, and Techstars are three long-standing accelerator/incubators that have helped many companies in Silicon Valley find their footing. The focus at these seed accelerators is on the pitch deck and raising funding.
If you’re a freedom-oriented founder, however, you may be interested in an accelerator that skips investor funding so you can keep 100% control of your vision and company.
Who gets equity in a startup?
In the early stages of any company’s development, the founder retains 100% ownership. However, over timeshares are diluted as the founder gives away equity to investors who have put money into the project, while employees are handed stock deals.
Dilution of shares also means dilution of control. Startups are typically dragged into bureaucracy when having to run every decision and idea by each equity stakeholder.
How do startup accelerators make money?
There are two main ways: One is through obtaining equity from the startup while providing funding and other desired resources such as office spaces, mentorships, etc.
The second one is providing valuable services like consulting, which might include coaching sessions with an industry expert for each business that shares its expertise on various topics, including marketing strategies, accounting, agency services, at a fee.
Some accelerators do a hybrid model by charging a fee up-front as well as taking equity.
What do you learn in a startup accelerator?
Startup accelerator programs (also known as business accelerator programs) will teach you the ins and outs of fundraising for your early-stage startup. They also know what venture capitalists are looking for, so they’ll help prepare your pitch or reel to give them everything they want.
You can learn from other founding teams and share hiring strategies, marketing techniques, and other best practices that have worked for them before.
What happens after you finish a startup accelerator program?
After finishing a traditional startup accelerator program, you hope to leave with exponential growth in your network, unicorn status, and the chance to understand yourself better. Unicorn status usually does not happen for most, however, with traditional routes.
What’s more likely is the certainty of failure since 96% of startups that follow the traditional route end up dead on arrival. Often founders are left with heavy responsibility burdens owed to equity and debt holders, leading to bankruptcy and debt.
Instead of getting into debt, joining an accelerator program that builds an asset instead of focusing on seed capital could be a better route.
Accelerator programs such as Vertical Liftoff focus on getting traction first (which is an asset), so you’re left with an investment you can leverage into several businesses and products instead of a heavy burden from investors seeking ROI.
How do accelerators help startups?
Accelerator programs provide a unique opportunity in which entrepreneurs can grow their ideas before venturing into uncharted territory.
They help cut costs by up about half alongside offering expert advice from a mentor who has years of experience launching successful businesses and access to an industry expert who may be difficult or expensive for novice business owners.
To get accepted into an accelerator
It’s beneficial to have a strong business idea and at least one viable product. Also, network with the right people in advance of their application interview and make sure they’re honest about themselves both during this process and afterward once inside the program.
Bring together people with diverse talents who will make their ideas come alive, so they have the best chance at success when pitching them later down the line during interviews or pitch days.
Use every connection available- whether personal or professional-to network and gain exposure for yourselves; use social media platforms like LinkedIn, Twitter, etc., events where successful entrepreneurs and angel investors gather around, whatever works.
Then nail those interviews by practicing in a startup community because not everyone gets accepted initially, and not every company is a perfect fit for everyone.
How do you join a startup incubator?
Each incubation program has its own joining requirements.
Some such as Y-Combinator may require the need to have innovative business ideas and be prepared to go into this experience together in one central workspace shared among a startup ecosystem.
Programs such as VLO have a founder-first approach and can help founders build a business aligned with their core identity, so not having an MVP or an idea is totally okay.
How do you apply to an accelerator?
Although the application process varies by the accelerator, you can expect a question series to evaluate your business ideas and intellectual property agreements.
The requirements for getting accepted vary significantly on the characteristics of the founder and founding team, what stage the company is in, how much funding it has already raised, and whether or not any previous investors are involved.
There will also be an interview if they’re interested in investing money into your project in return for valuable equity.
Who are startup accelerators looking for?
Startup accelerators like 500 Startups are looking for early-stage companies with disruptive ideas in a diverse range of industries and stages.
Accelerators such as Vertical Liftoff look for freedom-oriented founders who want to keep their equity, build a business that doesn’t turn into a job, and focus on creating impact first (over shareholder value).
Accelerators can also help with early-stage development by lending access to offices, equipment, web-hosting services, office space, and more.
The goal is to give as much support as possible so that entrepreneurs can try out their idea and see if they have something worth pursuing further before risking too many resources on it themselves.
Accelerator programs also provide participants with advice on building a team, developing a business plan, and securing funding for future growth phases.
Industry experts can work alongside the startups through mentorship to offer their expertise.
Most accelerator programs look for innovative ideas to create new jobs and be a “game-changer” in their industry.
Do I need a prototype or MVP?
Absolutely not. With programs such as Vertical Liftoff, it’s better if you don’t have a product developed yet.
The Vertical Method starts with the customer first, creates a community, asks the community what to build, so establishing product-market fit takes place before wasting money on development.
Prototype or MVPs for your company is essential for acceptance into a traditional accelerator program, however. Traditional accelerator programs are focused on making the investor happy.
Founder-first startup accelerators are a bit unconventional and are better suited for natural-born entrepreneurs that could be successful with any product or idea (and do not require an MVP).
Startups can find a mentor from an established entrepreneur or work with other startups in their cohort for advice and connections.
The idea is that by the end of the program, they’ll have a refined business plan and increased skillset to make them more attractive hires if they decide not to go into entrepreneurship.
Are startup accelerators worth it?
Startup Accelerators are worth it, but only if you’re going in with the right mindset and pick the one that is closest to your values.
Accelerators can provide potential founders with advice on crafting an entrepreneurial pitch to investors, access to mentors and coaches’ networks, and seed money upfront, so they don’t need high levels of investment or validation before building out their product.
What are the perks of joining an accelerator program?
- A formalized mentorship process and feedback loop.
- Exposure to potential investors, customers, or partners.
- Introductions to investors who can fund your project as well as other startups in the network.
How long do startup accelerators usually take?
Startup accelerators help take a company from infancy and help accelerate growth by collapsing time. Typically, they work with early-stage businesses for three to six months before looking at their success or failure results.
Business incubators tend toward longer timelines to nurture an idea until it’s sustainable enough on its merit that you can call it successful. This process usually takes a one-year minimum but may last up to two years.
How do startup accelerators make money?
Startup accelerator indeed provides a lot of benefits to startups at little or no cost – from mentoring and networking with an investor(s) for successful exits to free office space – but they are not charities run on enthusiasm alone:
Startup accelerators make their money by providing training and consultancy services to startups in exchange for either cash or equity.
A startup accelerator uses venture capital to make smaller investments in startups with less risk.
How much equity do startup incubators take?
Accelerators may offer help in return for a stake in the company.
The answer depends on the culture and mission of that particular startup incubator. The percentage of equity taken by accelerators varies, but most will ask for between 7% and 10%.
Incubator vs. Accelerator
An incubator is a nurturing environment for entrepreneurs who are still developing their ideas. In contrast, an accelerator provides support and connections to established businesses that need help scaling up quickly.
There’s an accelerator for everyone, as with an early-stage startup, angel investors can help. You may think your industry or product doesn’t fit any of the programs, but you would be wrong. Instead, fit in with other entrepreneurs by checking out these tips to find the right program just waiting for you.