Previously, we wrote about the IoT market and how to fit with a brand new idea there. Today, we would like to pop into Startup Accelerator and what to do to get into it.
An accelerator program can be a great way for fledgling businesses to learn critical skills, find contacts and boost their capital in a short amount of time.
In this guide, we will look at accelerators in more detail, highlight the best ones, and how to get accepted into the accelerator program of your choice.
- What is a startup accelerator?
- Is there a difference between an incubator and an accelerator?
- What are the benefits of an accelerator?
- How to submit your startup to an accelerator?
- What are the top accelerators?
- How to find the right accelerator program for your business?
- How to increase your odds of getting accepted into an accelerator program?
- In conclusion – which accelerator will you be applying to?
What is a startup accelerator?
A startup accelerator (sometimes known as a seed accelerator) is an intensive program that helps startups accelerate the growth of their business.
During the two to three months that an accelerator program takes place, businesses receive education and networking opportunities. The whole process usually culminates with a ‘demo day’. Startups showcase their product or service to the accelerator and investors to receive funding for the whole day.
If you want to find out more about the startup accelerator process and how it works, we recommend ‘Startup accelerators: A field guide’ by Richard Busulwa, Naomi Birdthistle, and Steve Dunn.
Difference between a startup incubator and a startup accelerator?
‘Incubator’ and ‘accelerator’ are often used interchangeably, but there are differences between the two.
Whilst an accelerator will help you grow your existing business idea. Incubators are entrepreneurs who want to generate new business ideas.
While accelerators only last for a couple of months, incubators are more flexible, working with startups until they have an idea to pitch.
You’d join an incubator to think of products and services. The next step would be to take part in an accelerator program to refine them and get investment.
What are the benefits of an accelerator?
- You will get to learn about running a successful business from people who have solid experience in entrepreneurship. Topics you can expect to learn about include how to pitch to potential investors, marketing and PR, as well as legal guidance.
- You will get an office and meeting space that will help you create and refine your product or service.
- There is an excellent opportunity to receive funding. Some accelerators provide automatic financing as part of the program. While others allow startups to showcase their product or service to potential investors at the end of the program. The average amount of funding offered can generally range from $20,000 to $50,000, depending on the accelerator and the industry.
- You will get to network with a wide range of different people. Accelerators are taken as ‘classes’, meaning that you will participate in the accelerator program alongside other startups. The accelerator program will also be able to put you in touch with providers, potential buyers, and investors.
- After the program has finished, you’ll be part of an ‘alumni network’. All these means that you will continue to be able to network and receive advice. Being a part of certain accelerator programs can be a significant benefit to your startup, giving you a solid reputation and a lot of good publicity.
- There may also be additional perks to the program, including free legal advice, networking events, and discounts on services.
While we mention the benefits, it is essential to talk about the disadvantages of accelerator programs too.
Disadvantages of Accelerator programs
As accelerators take place in a short amount of time, some entrepreneurs may find them tiring and overly intensive. In addition, a lot of accelerators will only accept one founder onto the program. So, only one person will be able to take advantage of what is being taught.
Other people may not be able to find the time to take part. Some accelerator programs require you to move to a different city or country for a few months (as part of the deal, they will give you money to relocate temporarily). But if you have a young family, a second job, or other commitments, moving away for up to three months may not be an option for you.
(Bear in mind though, that many accelerator programs have temporarily moved online with the pandemic. So, this case may make it easier for some people).
Accelerators will ask for a proportion of your startup’s equity for taking part. This is usually between 5% to 10%, but this can depend on your niche and the specific accelerator program. Accelerators that are in demand may ask for a higher amount. Alternatively, if the accelerator likes your business model, they may ask for less to get you on board.
What are the top startup accelerators?
If you’re looking to join an accelerator program, here are some of the best accelerators available.
- Y Combinator. Based in Silicon Valley, Y Combinator is one of the most well-known accelerator programs in the world. The company invests $125k twice a year in a large number of startups. They have already helped over 3,000 startups since 2005.
- 500 Startups. Also based in Silicon Valley, 500 Startups have backed over 2,500 businesses across 77 countries. This accelerator prides itself on speaking multiple languages and helping startups no matter where they are based
- Techstars. Located in Colorado, Techstars offers a wide range of different accelerator programs all across the world. They are specialising in specific niches like energy and technology. The accelerator helped over 1,500 companies, 1,000 of them has valued at over $8 billion!
- Plug and Play. Based in California, Plug and Play invest in over 260 startups a year. The accelerator has a wide range of programs focusing on niches including fintech, retail, health, and sustainability.
- Startupbootcamp. Based in London, Startupbootcamp has over 20 technology-focused accelerator programs all across the world. The company has invested in over 400 businesses with an average funding of $1.4 million.
- Startup Chile. This accelerator started in Chile by the government to create new businesses. It was so successful that it has now gone worldwide! Not only does the accelerator invest in up to 250 companies a year, but it also has a pre-acceleration program exclusively for female founders.
How to find the right accelerator program for your new business
There are a lot of startup accelerators out there, so it is crucial to find the one that is a good match for your business. But not all accelerator programs are the same. It may be that the perfect accelerator for one startup may not be right for another.
Here are our top tips:
- Find an accelerator that operates in your country or your specific niche. These ones will be better equipped to support your business. Plus, if you need to relocate, it won’t be as much of an inconvenience.
- Look at the accelerator program’s track record. Which businesses have the program helped? How did these businesses specifically benefit? Don’t be afraid to reach out to these businesses and ask them what their experience was like.
- See what you will get in exchange for giving away your equity. What will you learn, and what contacts will you make by taking part? Will you receive funding automatically as part of the process, or will you need to pitch for it?
- Don’t forget to research the advisors who are leading the program. What is their experience in the world of startups like, and how can they help your business to grow?
- Look closely at the support you will get. Most importantly, how will your accelerator support you after you leave? Is it the end of the working relationship, or will they continue to give you help and advice in the months and years to come?
How to submit your startup to an accelerator?
If you are considering applying to an accelerator program, here is a rough guide to what you can expect.
Bear in mind that the specific process will vary from accelerator to accelerator. We recommend visiting the website to check timescales and details.
- Submit your application online. You will be asked to submit information about your startup and the founders behind it. You may also be asked questions about how you would handle specific situations. Most accelerator programs won’t ask for any further information or documents (for example, a business plan) at this stage.
- If the accelerator likes what they see, they will invite you to an interview (either remotely or face-to-face) to find out more about you and ask questions about your startup. Expect multiple interviews as part of the process as you may need to talk to various people.
- If the interview process goes well and there are no other issues with your application, then you’re in!
What to do to increase your own odds and get into Accelerator?
You would need to work hard to get onto the accelerator program. The top accelerators like Y Combinator and Techstar only accept about one in fifty applications.
Here are some of the ways you can increase the chances of getting accepted.
- Apply as early as possible. This will give the accelerator more time to read your application.
- Show your growth. Startups with fast growth are more likely to get admitted onto a program.
- Keep your application simple. Steer clear of complicated concepts and marketing jargon.
- Have a minimum viable product (MVP) in place. This will show that you are dedicated to your business and already have something that the accelerator program can work with. Find out more about what an MVP is on our blog.
- A great point would be to submit a short video. This will give the accelerator more of an idea of who you are and what you do.
- Don’t be afraid to be courageous. Most accelerators want to hear from startups that want to be the next Google, Facebook, or Uber. Just be sure to substantiate any claims you make.
- Make sure you are ready to move if needs be. Most accelerators will ask you to relocate to their premises for the few months of the program. Although many accelerators can’t give you an exact date that the program will take place. But they can give you a rough indication (for example, summer or winter).
Finally, don’t worry if you are not accepted on the first try. Y Combinator advises that half of the companies end up applying multiple times before getting accepted.
Even Dropbox and Airbnb got rejected the first time that they applied!
In conclusion – which startup accelerator will you be applying to?
We hope that this guide has given you insight into the world of accelerator programs. And it is much more clear how they can move your startup idea forward.
Accelerators can be intensive and challenging work, and they aren’t for everyone. However, they can be a great way to pitch your product or service in front of the right people and potentially get solid investment to move you to the next level.
Choosing the right accelerator program is essential. Take the time to research the options and pick an accelerator that is in line with your business interests. Trust us; there is an accelerator for every different business niche.
- You would definitely need to work on your own PitchDeck and have DataDriven positioning. So, yes just an idea is not enough.
- For sure, you would need to have MVP ready or at least a Validated Idea. In 2004 just an idea and pitch deck were enough, but not nowadays. The more users and tracking data you have, the more chances there will be to get on board.
- You would need to present your idea, your team, and your passion for the idea. Shiny eyes are the key to success.
- And sure, be ready to work hard daily. During that couple of months, you would need to be on the top of your velocity to attract influencers after your startup and convert them into Investors.
- And remember, accelerators are not so about money, it is more about connections and experience.
If you’re in two minds about whether to apply, apply anyway. After all, you have nothing to lose by submitting an application!
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