An accelerator refers to a program that promotes the growth of a business in its early stages. They do so by providing mentorship, funds, and educating the employees. Some accelerators demand equity in exchange for the funds. Other accelerators only require startups to finish the entire program to get the funds. The startup owners also get an opportunity to network with established businesses.
The startups join the accelerators for a specified duration. In most cases, it is a period of two or three months. They help businesses face the challenges that they face individually as startups. Accelerators have a competitive nature and are therefore not meant for every business. This article will shed some light on whether your business should join one and the kinds that are best for your startup.
How do accelerators work?
Though the accelerators differ, they all run similarly. Below is the process all startups follow to be members of various accelerators:
The startup selects a suitable accelerator.
Some programs work best for specific industries. You need to know if it is flexible enough to cater to the needs of your business. If the startup is in a location far from where your business is, would you be willing to move to participate in the program? If the expenses outweigh the benefits you can reap, it would be best to look for one close to you.
The startup makes an application to the program.
The programs are usually very competitive and therefore ensure your startup meets all the expectations of the specific accelerator. You can increase your chances of joining by ensuring your business has something that makes it stand out. An existing network, reliable team, desire to learn, and a viable product come in handy at this point.
Presentation of the business model.
The demonstration day, also known as the demo day, is when the participants of the program show the end product of all they learned in the program. The presentation makes it possible to get funds where investors see opportunities.
Three Top Reasons Why You Need to Apply for an Accelerator
Accelerators increase the chances of success of the startups. The reasons why that is the case include:
The availability of mentors.
Most of the people in startups have minimal experience in the business. The mentors are, therefore, able to provide advice because they have a lot of experience. You can, therefore, avoid some of the mistakes entrepreneurs make in the beginning. The excitement of taking part in something new may prevent you from seeing some of the apparent errors. In that case, the mentor will be in a position to ask you if the activities of the business can meet the objectives and if you are open to increasing the scope of the company for its growth.
The vast opportunities to network.
As an entrepreneur, networking will improve your sales and communication skills. Networking will build your confidence levels, which is essential when it comes to launching your startup. You will come across other businesses doing the same thing or similar to what your startup is doing. They will show you what works and what is likely to make your business fail. There is a possibility of getting clients through networking. Most customers trust the products of people they know.
Availability of funds.
Raising funds is not an easy task, especially for a startup. Some of the expenses the funds cater to include inventory, licenses, equipment, insurance, employee payments, and marketing. There are times when customers take longer to pay for their products. The funds from the accelerator will help to ensure that the employees get their salaries and that the business always has inventory.
The startups fill in application forms and submit them to the accelerators. The startups that are selected join in batches. There are a few requirements that a startup has to meet to apply to the accelerators. They include having a viable product, a market that is active and well known, and a somewhat permanent team.
Though the startup accelerators increase the chances of success, it is not apparent whether a particular accelerator is the best for your business. You may need to consider the following. Does the accelerator help you meet the objectives of your startup? Do you have an open mind when it comes to mentorship? Are you willing to relocate where the accelerators require physical attendance?
Some accelerators require most of the equity, and that may prevent growth in the future. You need to look at the success stories of the accelerator to guarantee success for the startup. The path to getting to our goals should be clear. If the accelerator is not clear on how it intends to make your business a success, it is best to do away with it.
Accelerator Vs. Incubators
Incubators and accelerators all have one thing in common: they help businesses grow. Their differences will help you make the right decision in terms of spearheading the growth of your business. For example, if you still want more employees, the incubator may be the best choice.Where you need immediate funding, accelerators are the best fit.
Incubators help companies that are yet to start. That means that the founders have an idea that they need to undergo validation. They encourage innovation. The candidates come up with business plans and find out the market gaps to know if the product they have in mind is viable. They do not require equity from the business and lack a time limit.
Accelerators help businesses in motion. They provide mentorship, networking as well as funding. The number of startups they select has a limitation, as well as the duration of the program. Most of them require equity from the businesses they invest their resources in. The competitiveness of the accelerators prevents them from selecting many startups. The startups have to stand out.
At the end of the day, the startup is like your child, even with the accelerator chipping in, you have to understand how to take care of it on your own. Exploit all the resources brought to you by the accelerator. After all, the accelerator desires to see your business thriving. Have an open mind when the mentors criticize your work and heed the advice they give you. Ensure that you implement only the information that meets your goals and objectives.