Trying to keep your business moving in the right direction but don't know where to turn? Accelerators can help get you on the right path. Learn what an accelerator is and how it can help your startup.
As an early-stage company, you aren’t trying to avoid losing, you are trying to win. That rarely happens on your own. Thankfully, there are several people and organizations that can help you on your journey. Accelerator programs are one of the more common methods of receiving help. If you are an up-and-coming tech startup you have probably heard about accelerators, incubators and startup studios, but what are they? How do they work with companies? Do they work at all?
Let's dive into the different terminology and explain the benefits of using these options.
An incubator is an organization that offers startups space to work. This helps distributed teams meet face-to-face and collaborate at a faster pace. Incubators can offer lightweight mentoring options and sometimes will have a startup curriculum. They usually do not invest in startups and will ask for something in exchange for their value such as cash or small amounts of equity.
Accelerators take the concept of the incubator – providing space to startups – to a whole new level. Accelerators have a rigorous curriculum, a dedicated mentor pool and provide some early-stage financing, normally around $50,000-100,000. Top companies have launched through Techstars, YCombinator and 500 Startups. The top accelerators in the country are very competitive and accept fewer than 1 percent of applicants.
A relatively newer concept in the startup scene, startup studios take ideas and turn them into businesses. They have staff on hand to ideate and create products, while also validating the product market fit. They then find founders to transition these studio startups into real companies. Startup studios will retain equity in the ventures they create, but provide an out-of-the-box minimum viable product and team around the business in exchange for the equity.
What’s right for you?
If you are an established founder looking for that next great idea, a startup studio makes good sense. If you have just launched your business and need a place to meet up as well as a way to get more involved in your local startup community, then an incubator could be a good fit. If you have an established team and are working in a high-value space, an accelerator might be the best way to go.
Making the most of an accelerator
It can often feel like your business is taking two steps back when signing up for a program. How are you supposed to move forward if you aren’t spending all of your time working directly on the business? Sometimes you need to slow down to speed up. Part of the magic in an accelerator is pulling in mentors to give you feedback on your business. This process takes time to fully appreciate, but if it's done correctly, it can help you refine and revise your approach.
If you tell everyone that your business is nothing but rainbows and sunshine, they will never rain on your parade. You will hear a bunch of comments like, “Nice Job!” On the other hand, if you decide to share the hard truths you’re facing, you can get quality feedback on issues that can actually move your business forward. Being open and vulnerable takes practice, but ultimately if you can demonstrate those qualities, it will help you build trust with your mentors and team.
If done correctly, any one of these avenues can act as a springboard for you and your business, but it won’t happen overnight. Make the most of the opportunity and you will get out exactly what you have put into the process.