The awareness of accelerator programs has grown in recent years as startups such as Dropbox, Airbnb, Stripe, GitLab, Coinbase and more record outstanding performances after going through this program.
Accelerator accepts applications from early-stage businesses in exchange for a stake of the equity in the company, mentorship, connections and guidance. So startup accelerator programs from Y combinator, 500 Startups, AngelPad, among others, can have a transformative effect on your business.
The article will review how you stand to benefit from an accelerator program to determine whether it is really worth joining one.
Attributes of a Startup Accelerator
Basically, an accelerator is a company that offers a support program to early-stage startups. So founders are taken through a fixed-term education program of between 3 to 6 months or longer.
Most accelerator programs are extremely competitive and may have as low as a 1% acceptance rate.
Upon graduation, the startup founders join its alumni network, which gives them access to huge support and connection to seasoned entrepreneurs, partners, investors and more.
You have a one-on-one interaction with your mentors, an opportunity to attend networking events and seminars.
Reasons Why Startups Join Accelerator Programs
To Join an Ecosystem of Support
The accelerator program offers you an additional support system that you need at the early stage, such as patent attorneys, law firms, CFO services and regulatory experts. It’s advisable to join an accelerator focusing on your industry because it makes it easy to connect with key industry advisors and experts willing to work with your startup.
Founders are able to interact and learn from other entrepreneurs in the cohort, and through mentors or participants, you can land your first customer for your product.
Further, accelerators provide you with infrastructures such as workspace, internet and training. This helps you not to feel isolated like you do when working alone.
The main objective of an accelerator program is to grow the skills necessary for running your business like communications, finance, sales and marketing, as well as technical skills. Also, some accelerator programs are powered by certain universities or in partnership with corporate partners is a huge benefit to the founders and their founding teams.
Validation of Your Product
A group of experienced entrepreneurs reviews your business idea and model, thus giving you a good early start. It also enhances your business credibility with potential clients, investors and media.
Further, being selected to join an accelerator program is a rigorous process, and the fact that your startup was picked shows it’s a promising business.
Access to Funding by Angel Investors and Venture Capitalists
Going through an accelerator program can help you access a wide network of venture capital firms and angel investors because, at the end of the training, you will need to raise money in order to grow your business.
Get Potential Customers
Aside from investors, the target audience is invited at demo days to hear about your business idea, product or service. This helps build recognition for your brand at an early stage and validate if there is any product-market fit and begin to tackle any issue early on.
The early customers you attract while working with an accelerator can become your future buyers once you launch the product.
Boost Your Morale and Motivation
While it’s possible to meet like-minded people in entrepreneurial and tech hotspots, the entrepreneurs you work with in your cohort can be a great motivation to you and your team. The bond you get during the program can also lead to new opportunities in the future.
When Joining an Accelerator is a Bad Idea
There are many accelerators out there, but there are many reasons why joining their program can be frustrating and a wastage of energy, time and money.
To Get Money
Y Combinator can give you up to $120,000, but with a workable business idea, you should look for money elsewhere because the money-for-equity equation doesn’t make sense. So instead of parting with a sizable stake of your new company to gain accelerator’s funding, you should join for other benefits.
Companies that join an accelerator program have a higher chance of succeeding in their first year than those that don’t. So join an accelerator for its connection, support, guidance and mentorship but not money.
Instant Growth and Recognition
Great businesses backed by accelerators didn’t become successful just because of joining the program but because of having dedicated founders who worked hard and made the right decisions.
Actually, successful companies make accelerators famous for instance, Dropbox, Airbnb, SendGrid, Stripe, Twitch and Softlayer are the startups that made Y Combinator and Techstars popular.
Also, not all accelerators provide value or produce happy graduates; some are labelled “buyer beware.” So speak to its alumni to learn about their experience. Such accelerators will not give you the fame you are craving for, but instead, they will affect your Series A level funding from VC.
Don’t join an accelerator program if you think your idea is perfect and can’t tolerate criticism. As stated, your idea will be reviewed by experienced entrepreneurs or experts and then offer mentorship, guidance and support. But if you think your idea is just perfect, then stay home.
As much as accelerators are for success, they are also for failure. They help you to identify basic, critical flaws early enough and in a controlled way rather than allow you to build an empire on the sand.
Not a Startup
Don’t look for an accelerator if you’re not a startup. Startups are businesses working on new ideas and technologies that haven’t been tried before and need support to scale quickly to survive.
So if you don’t have a hyper-growth product, then you shouldn’t apply to join an accelerator’s program.
An accelerator provides support, guidance and mentorship needed to grow your business. However, before joining an accelerator program, do your research and evaluate why you want to join one. You might realize that it is really not worth joining a startup accelerator.