It takes guts to start your own company, and making that first step into the world of entrepreneurship is definitely a challenge, but making your business float and even grow is a bigger challenge still. However, you needn’t be alone in that – the new wave of startupers and entrepreneurs has a wide variety of programs, incubators and accelerators at their disposal, to help them learn, launch or accelerate – the trick to making the most out of that support system is knowing what you need and where to get it.
Accelerator? Incubator? What’s The Difference?
The idea of a business incubator dates back to the sixties, and it was pretty much the same as it is today – the incubators include mentorship, working space, and a working environment that facilitated networking and exchange of ideas. They usually take some sort of fee, or a small percent of equity, depending on their business model, and most of them don’t have a clearly structured program or a time line you have to adhere to.
The term “accelerator” became a part of the business jargon thanks to Paulom Grahm and the Y Combinator, whose program stood out from the usual “Incubator” model. Like most other accelerators, Y Combinator offers startups a seed (starting) investment, but the true value lies in the mentorship. Accelerators, at least the good ones, are chalk full of experienced mentors, who can make a real difference when the push comes to shove.
Acceleration program is much like an intensive startup course. The applications, although highly competitive, are open to everyone. Y Combinator and Techstars, for example, accept only 1-3% of all the applicants, so joining such a program is a milestone in its own right. The startups who are admitted start the course together, like a cohort and go through an intensive several months long programme. Instead of a graduation ceremony, startups get a Demo Day, where they get to show what they’ve accomplished by pitching to investors.
Startups who join an accelerator get some significant advantages. For starters, the cohorts receive intensive mentorship and know-how that is crucial in the make-it-or-break-it environment that is the startup environment. They have a unique opportunity to be in a place where they can learn from people who have made it in the world of entrepreneurship and know what challenges the new startups are going to face.
The members of the cohort are expected to interact and help one anther, share their experiences and knowledge horizontally. Together with the other accelerator alumni, they make a strong network and a support system that can help a new company establish itself and face the upcoming challenges.
Another advantage is funding -aside from the seed investment, accelerators connect their promising startups with investors who can ensure follow-up funding when the time comes.
Find The Right Fit
There isn’t a one size fits all accelerator program – some have a more widespread focus, and some are more specialized, but you should always look for the right fit. Some of the bigger names like the aforementioned Y Combinator have their advantages, like “Ivy League” of startup programs, but don’t underestimate the smaller accelerators either.
Take into account the alumni (How similar are they to you? How are they doing?), the mentors (how can they help you?), but also the business part. Accelerators usually take some equity in turn for their investment – of money, time and expertise. That equity is usually 5-10%, but can get up to 50%, which is the kind of offer you might want to think about twice. or ten times.
If you plan on joining an accelerator, make it an informed decision based on the profile of your startup and the fit of the accelerator program. Most startups don’t apply to a bunch of programs with their fingers crossed, but carefully choose the one that’s right for them.