Business owners often look to startup accelerators to help them achieve growth, stability, or even gain external validation of their ideas. The startup accelerator model is based on a 10-16 week program where a handful of startups are selected from a large group of applicants, who form a cohort of companies. A cohort is like a graduating class, and the accelerator itself like a master’s program in how to grow a startup.
In exchange for a small seed investment and equity, the accelerator’s management team executes a fast-paced mentorship program for each cohort, which ends with each participating company presenting a formal pitch to a large group of potential investors.
Though this is the typical model of startup accelerators, not all are created equal. Some companies will do well in these programs, and others will not. If you’re considering applying, here’s what you should consider.
The Focus Of The Startup Accelerator
With accelerators focused on everything from social impact to consumer packaged goods, a quick Google search can find one that fits your business segment and goals. Be sure to find programs that have folks experienced in the industry you’re entering, or with the problems you’re looking to solve.
As you interview for startup accelerators, look at the leadership and find three people who have the experience your team lacks. You and your company will need to spend a lot of time with the leaders of the program, mentors they introduce you to, and even the other companies in the cohort. Because startup accelerators have a stake in your business, their fast-paced programs will end when your cohort graduates, but you’ll likely spend time with them for years to come. If you’re not set up to learn (a lot) from these people, the time you spend in the accelerator will not be worth it.
The network surrounding the startup accelerators will change depending on which accelerator you choose. Each one will provide different networking opportunities with venture capital firms and larger companies you can partner with. The startup accelerator that matches your business will also help you determine which metrics you should be tracking and how you should benchmark your company against competitors or other businesses of your size.
Your Cohort Makes A Difference
Depending on the size of your startup accelerator you may be surrounded by as many as fifteen other companies. You can expect these companies to be in the same overarching business sectors (tech, consumer packaged goods, etc) but you won’t compete directly with each other—remember, the accelerator usually takes a stake in your business so they won’t want you to be in direct competition.
In fact, your fellow cohort members may have a large impact on what you gain from your accelerator experience. Being surrounded by businesses in similar stages means you’re able to bounce ideas off of fellow founders and watch each other face similar challenges.
Companies who are successful in startup accelerators use the time with their cohort to figure out where they need to improve, focus, or get mentorship. If you can handle the pressure of the accelerator while learning to ask questions and look for guidance your team will gain more than experience, you’ll learn the confidence to tackle problems in the future.
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First and foremost, you’ll probably give up equity in your company to join an accelerator program. Make sure you know how much you’re willing to give up before applying so that you’ll be prepared when investors (hopefully) express real interest at the end of your program.
On top of the literal costs, this very intensive program outline can sometimes be too hard for companies who aren’t ready for the feedback that investors, mentors, and even other companies will give. Make sure your company—and ego—are ready to take it.
To be successful in your startup accelerator you also need to be there to put your focus on networking, fundraising, and fast-growth. Many accelerators will also host events throughout your time to encourage even more networking. In the early stages of your company, this can be a big ask but also a big risk. Be cautious of spending too much time networking and not enough time building your company.
Think You Can Do It?
Graduating from certain accelerators will give your brand added recognition and legitimacy from both consumers and investors alike. As consumers look to engage with your offering, the graduation of a startup accelerator will help prove you can deliver what you’re selling. Venture capitalists will look at you in a similar light: you are committed to your company, your customers, and your growth.
Your experience with a startup accelerator will also plug you into a network of founders and ex-founders who can help you navigate the roller coaster of starting your own company. Being a founder can be a lonely role, and the most successful ones learn to lean on each other.
Want to learn more about navigating the waters of building a startup? Check out our blog for more helpful content