The Benefits of Joining an Accelerator
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How an Accelerator Can Help Your Startup Grow
By Robin Anderson
How it started - you were sitting at your desk, looking out the window, daydreaming about having more control over the work you do, the decisions that were being made, your hard work contributing to something more than a ‘meets expectations’ on your next job performance review. That is when you made the leap to move ahead with your startup idea.
While there are many risks and challenges involved, the opportunity to venture out is exciting. For some, this new adventure is one that will take some time to become profitable. The pressure of time to make money, to be the first to offer a specific technological solution is great. Because of this pressure, for those that have a very strong background in technology, but lack some of the business acumen needed to help lay a solid foundation, or struggle to find the time or structure to define the fundamental business framework needed to succeed as a startup - look for an accelerator.
What is an accelerator?
Startup accelerators, also known as seed accelerators, are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day.
Accelerators consist of an ecosystem of investors, mentors, education, and the resources that startups need to lay the foundation they need for their startup and build their network to help get their foot in the door.
Some accelerators focus on first-time founders, others require the startup participating to be team-based. Some target startups that are still in the early stages of flushing out their idea, often referred to as an Incubator, while others look for those that already have some startup experience, have built a mvp, and have some traction.
Well-known accelerators are very selective as to whom they accept into a cohort which typically is scheduled to occur during a fixed period of time, often 3 months. Accelerators provide the curriculum or modules that help startups build their business foundation which can be very helpful, particularly for first-time founders. They look for those whom can demonstrate their commitment to participate and complete the program and have a unique way to solve a problem.
Here is a great visual from HubSpot for Startups that breaks out the differences between an Incubator and Accelerator:
There are numerous accelerator programs. Some are specifically designed for a specific industry, others are targeted toward an underrepresented segment, such as women-led. The entry into their program comes at an ownership cost.
“Startup accelerators generally take 5% to 10% of your equity.”
As a part of participating in an accelerator business tools are provided at a deep discount or are even free for a period of time to help startups kickstart their efforts. For example, a CRM tool for your investment and sales channels, a development platform to help build your MVP, or a business management platform for team communications.
Throughout the program process, you will build your business foundation, be able to define your target audience and the primary pain point that you are solving, you will refine your ‘elevator pitch’ so that it succinct, you’ll lay out your product roadmap, have a thorough understanding of the market opportunity, and build your MVP - all of which will be a part of promoting your company through your pitch deck when approaching investors.
Having laid the foundation of a business plan, a product roadmap, your sales and marketing strategy makes you more attractive to investors as you have evaluated and calculated what you need for success and therefore are a less risky investment. One of the best benefits of an accelerator is their access to investors and the opportunities they provide to help you connect with them, as well as simply build your overall network.
“You have to be very nimble and very open minded. Your success is going to be very dependent on how you adapt.”
Being a startup founder can be very lonely. Every team member looks to you to solve the big problems and find creative solutions. Participating in a cohort provides you with the support you need to persevere, pivot, or simply refine your focus. The community becomes part of your extended startup family that can benefit you in many ways following completion of the program.
The purpose of an accelerator is to help a startup succeed.
“Accelerators provide infrastructure, support and training that would otherwise be time-consuming for start-ups. Accelerators also provide access to an entire ecosystem that supports a start-up that may otherwise feel isolated.”
Top global accelerators:
What do they have in common? ~10% of the startups in their portfolio have had successful exits.
The building of connections through your cohort participants, the mentoring and access to investors can help put your startup on a path to scale quickly and succeed - with the help of an accelerator.
“Every worthwhile accomplishment, big or little, has its stages of drudgery and triumph: a beginning, a struggle and a victory.”
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Fun Fact Friday
Likely the most successful startup that went through an accelerator is AirBnB (Y Combinator 2008). The company started with a website that offered a place to stay with breakfast for a short-term stay in a market that had high demand and low supply. Their original name was AirBedandBreakfast.com but was shortened to AirBnB. They went public in 2020 and is valued at $8B.