Why You Should Apply to a Startup Accelerator

There are many benefits to being part of a startup accelerator. Still, one of the most exciting aspects of being in one is being surrounded by like-minded entrepreneurs working on similar projects and accessing the same resources as you do. This can make a big difference in productivity and creating your product or service, especially if you’re starting with little experience, connections, or capital. A startup accelerator may be precisely what you need to get your business off the ground.

What is a startup accelerator?

Startup accelerators offer startups access to training, resources, networks, and mentorship in exchange for equity. There are two broad types of accelerators: business incubators, which provide living space, equipment, and more so that companies can develop their products in a co-working area, and business accelerations programs, which often take an entrepreneurial candidate through all the stages of their idea’s lifecycle from ideation and validation to commercialization.

Who does it help?

Startup accelerators like Techstars, Y Combinator, and 500 Startups act as accelerators for businesses by providing them with funding and expert guidance in return for equity. They are designed to work with early-stage startups that can benefit from additional resources.
Startup accelerators act as catalysts – they develop your idea into a functioning business that is likely poised for success. Many programs are looking for talented entrepreneurs and creatives – why not apply? With that in mind, here are the four most common reasons why you should apply to one:
1) They will connect you with investors: One of the best ways for an entrepreneur to access investment capital is through company-specific startup accelerators.

How do accelerators benefit startups?

Startup accelerators provide seed capital, intensive mentorship, networking opportunities, and more. Entrepreneurs receive access to invaluable advice from experienced leaders and learn what it takes to launch a successful business. Most programs last between three months and two years, but some take as long as 18 months. It is common for accelerators to connect companies with investors once they enter the program. The most well-known startup accelerator in North America is Y Combinator. Started in 2005 by Paul Graham and Jessica Livingston, Y Combinator invests $120k in startups in exchange for 7% equity. A few of their famous alums include Dropbox, Reddit, Stripe, and Airbnb. They’ve invested in over 2,000 companies and have had only one company that’s failed – leaving them with an 11% success rate.

Their mentors (from Silicon Valley) provide founders with actionable feedback on their products and services, challenging them to think about things differently. For example, during the winter of 2016, our team was looking for feedback on our beta product when asked how often people use our product or service. We hadn’t thought about measuring this before, but now we know which questions need answers!
The list goes on…

What does it take to be accepted?

The specifics vary depending on the program, but typically you’ll need some form of traction with potential customers, an active social media presence, and more. Other than that, it’s about ensuring your company has at least one founder with technical skills that can offer value during an accelerator session.

The minimum requirements for acceptance will vary from program to program and are usually based on metrics such as traction with potential customers or an active social media presence. It’s important to note that if only one founder is working on the business, they must have technical skills that can offer value during a session to be considered. Some accelerators require up-front fees, so check their website before submitting your application. Also, make sure to use bullet points when describing your startup because these will help attract the attention of a panel member scanning through applications. Finally, get feedback from people willing to serve as mentors while applying, and they can provide invaluable insight into how well you’re framing your story and articulating your vision.

Each accelerator program will offer different benefits, including office space, access to experienced mentors and potential investors, and resources for making your company as successful as possible. In return, there are usually some investments from the accelerator program. Generally, this is around $10-25k that is given at the beginning of the term or after a particular milestone has been reached. Equity stakes can vary depending on your company’s stage when it enters an accelerator program – anywhere from 5% to 15%.

What’s in it for the investor?

Investors are highly interested in helping entrepreneurs scale their businesses. In return, the investors and entrepreneurs share equity stakes in the industry. Investors see startups as a way of diversifying their portfolios and taking risks on future technology, which could reap significant dividends if successful. Along with equity, investors can offer expert advice and guidance that will be crucial for companies starting from the ground up.

This is the most critical question you can ask, and it’s more complicated than you might think. The answer largely depends on what stage your business is in. If your business is entirely new or only an idea, an accelerator may not be the best fit. Do you want to talk about what it means to me?

Lauren says that entrepreneurs should ask themselves: What does my company do? Do I have any traction? Have I gone through YC? Am I too early-stage for accelerators but later-stage for investors? Or am I just at the wrong point in my business cycle entirely?

A successful startup accelerator program will provide invaluable resources to help grow your company. Still, funding from VCs will probably be a better option if you’re looking for just money without additional guidance.