Accelerators are a great resource for startups because they give startups an opportunity to get their ideas out to the world and to learn from experienced entrepreneurs and mentors. However, accelerators aren’t for everyone. Let’s see what accelerators are exactly and whether you should participate in them or not.
What is an accelerator?
Startup accelerators are community-driven networks for entrepreneurs, developers, and entrepreneurs-in-training. Accelerators use a variety of educational methods to equip and support their members in their entrepreneurial endeavors. In exchange for their coaching, introductions, mentoring, and resources, entrepreneurs in accelerators receive equity in their ventures as well as participation in the program’s valuation round and exit strategy. Think of accelerators as investment programs, and they vary in terms of their design. In an earlier era, they were semi-structured incubators where startups would receive funding and resources until they became profitable.
How do accelerators help startups?
Most startups will have to build an initial product, gain customers, and attract investors. These processes take time and effort, and they usually require a lot of work. If a startup can’t achieve these three things quickly, it’s unlikely to have a successful product or be successful at raising money. This is why startups usually want to build a better product faster. An accelerator can help a startup solve these problems and encourage the team to do the work faster and better. Once a startup has built a great product, it must attract customers. Companies with early customers are more likely to attract more customers. And, most importantly, if customers sign up, companies have to pay them.
What are the pros and cons?
- Every one-on-one interaction is personal and designed for your specific needs.
- Your ideas are never ignored.
- You’re there to learn and to get feedback.
- It’s all part of your long-term growth plan.
- Most accelerators provide resources to help a startup grow, and in return they get equity in the company.
- Accelerators provide a ready-made team of people who share a common vision with the startup.
- Accelerators can help a startup’s market value grow at a faster rate than it would if it began alone.
- They provide cash and connections.
- They provide workspace, office, and meeting rooms.
- You get access to mentors and prospective employees.
- They provide a location for your product to be tested and refined.
- You get access to a network of entrepreneurs, investors and mentors.
- It teaches you how to use the tools startups use.
- It gives you the confidence to take the next step.
- You get a chance to explore all sorts of things.
- You may spend all your time with people who don’t share your vision.
- It can be like being on a dating site without any actual dating.
- Every other minute there’s a meeting or an event with a sponsor.
- It can be too overwhelming for early-stage startups.
- If you aren’t quite sure how to make your business a success, you’ll end up signing on to many different deals.
- Accelerators take away a lot of the choice from the startup founders.
- Accelerators don’t always work out.
- Accelerators can cost $10,000 to $100,000 to participate in.
- You may not be ready for an accelerator.
- Accelerators may take a lot of your time.
- They can be misleading.
- Accelerators can make you feel pressured to work on a certain product.
- Accelerators can be a distraction.
Should you even do it?
My answer is probably not. I’m not a fan of pursuing millions of dollars in funding without having a clear idea of how to make your business profitable and giving the power of decision making to someone else. But in some cases accelerators are a great help. So, it’s totally up to you and your priorities!