What is an Accelerator program, and Who Needs One?
Written by Princess Wilson
For many startups, getting accepted into an accelerator program is considered a major achievement. Since Y Combinator launched in 2005 as the first accelerator program, startup accelerators have grown significantly. They have become a go-to program for many startups, with some top companies, such as Stripe and Airbnb, starting their journeys with accelerator programs.
Additionally, about a third of companies that raise venture capital have reportedly gone through acceleration programs. This has created a significant buzz around the accelerators, making them the ideal choice for many. In this article, you will learn about accelerator programs, their benefits, and if your startup needs one and more.
What is an Accelerator program?
An accelerator is an intense educational business program designed to boost the growth of startups by providing skills, tools, and resources to help them scale. They are hands-on growth programs for early-stage impactful startups that offer support to ensure growth as quickly as possible using a holistic approach.
They help founders prepare their startups for the market and aid in securing investments. Startup accelerators are usually short-term, cohort-based, and mentorship-driven. They tend to involve a selection process and end with a demo day.
Examples of Accelerator programs
Some fantastic accelerator programs include Y Combinator, Accelerate at The Bulb, TechStars, Google Launchpad Accelerator, AngelPad, AlphaLab, 500 Startups, MassChallenge, Dreamit Ventures, BoomStartup, Plug and Play, DevX, etc.
Who Needs an Accelerator Program?
While the benefits are invaluable, accelerator programs are not needed by every startup. For example, some startups may prefer to grow slowly and may not need a funding round to get there. These kinds of startups may not benefit significantly from an accelerator program.
Instead, accelerator programs are needed by:
· Startups who are in their early stages and looking to grow fast.
· Startups with founders that can fully dedicate their time to building their companies, particularly with the schedule-packed days during the program.
· Those that need a small seed funding round rather than approaching angel investors.
· Startups that can excel in a high-intensity learning environment.
· Startups that ideally have multiple founders to help ease the workload.
· Startups that are willing to concede some control by taking in the inputs of mentors and veteran entrepreneurs.
Pros of a Startup Accelerator Program
1. Growth
Growth is easily the most common reason why many Startups join accelerator programs. These programs help startups scale quickly by providing expert training, focused work hours, mentorship, investment opportunities, and more.
2. Mentorship
Access to mentors is one of the many perks of being part of an accelerator program. For most programs, startup founders are provided with mentors whose support and advice continue even after the program ends. This helps take many startups from zero to scale.
3. Seed Investments
In most accelerator programs, participating startups who are innovative and impactful tend the get some seed funding from the creators of the program. Sometimes in exchange for equity, this investment helps many founders kick their businesses off the ground.
4. Funding
Seed investments aside, startups also stand a chance to get more funding from investors. Accelerator programs tend to feature a demo day where participants can pitch their ideas to investors and secure more funding for their businesses. The overall fundraising experience also gives founders insight into how money is raised.
5. Networking
Accelerator programs allow startup founders to network within themselves during workshops or while sharing coworking spaces. Additionally, it also enables founders to connect with potential investors, industry experts, and mentors, helping them build lasting connections.
6. Feedback
Constructive feedback from mentors, fellow founders, and industry experts offers startups learning opportunities to help them make the right business decisions and avoid mistakes often made by new startups. These constructive feedbacks are usually given in one-on-one meetings where veterans employ their experience in growing startups, entering markets, securing investors, and more.
7. Brand Image & Prestige
Getting accepted into an accelerator program is great for a startup’s brand image. It is seen as an endorsement of the startup’s ideas by investors and indicates that the founding team has the training and resources to succeed.
Cons of a Startup Accelerator Program
As mentioned earlier, startup accelerators are not for everyone, and there are a few disadvantages associated with them. Here are some cons of accelerator programs:
1. Loss of Equity
While this is not true for all startup accelerators, most take significant equity in exchange for the knowledge and funding gained during the program. This can be a major disadvantage for most as startups enrolled in these programs are still in the early stages, and it may not be ideal for giving up shares at that stage.
2. Location
This can be a major con for accelerator programs that require participants to be physically present. This is because not everyone will be comfortable moving to another location to learn.
3. Distractions
Many Accelerator programs are usually associated with lots of mandatory meetings and social events. This can hinder focus, making it difficult for founders to work on their startups.
4. Rapid Growth
Rapid growth is one of the key benefits of joining an accelerator program. However, some startups may prefer slow growth as a means to long-term success.
Conclusion
Accelerator programs are a great way for startup founders to grow their businesses while learning from top minds in the industry. Our Accelerator program, Accelerate at The Bulb, provides impact-driven African founders with the training, skills, and resources they need to grow and scale their businesses.
The next cohort of this fully virtual program will be kickstarted by January 2023 and will last for 8 weeks. Applications are now open, and founders with innovative ideas can visit the website to apply today!