Unleash your startup’s potential—use these tips to find your perfect accelerator.
As an entrepreneur, one of the critical decisions you must make for your business is finding a startup accelerator program to enroll in. In a world with over 3,000 accelerator programs, finding the right one to support your startup’s growth can be challenging.
Making the right choice is imperative as startup accelerator graduates are more successful at raising funding than their peers. Whether you are looking for mentorship, networking opportunities or access to funding, we’ve got you covered! Here is a guide to the different kinds of accelerator programs and the key factors you need to consider when choosing one for your startup.
Types of startup accelerators
Stage of the startup
The first thing to consider when picking a startup accelerator is the stage of your startup. Based on this, the three basic types of startups are—
- pre-seed accelerators (for startups yet to raise any funds)
- seed accelerators (for those that have raised initial capital)
- pro-seed accelerators (for those that have already raised Series A funding)
Of these, pre-seed startup accelerators are the easiest to get into but provide the least amount of funding, and post-seed ones are the most competitive but provide the most resources and funding.
Goals of the accelerator
Another feature that differentiates startup accelerator programs is the source of their funds. This determines their mission statement and goals with the startups they recruit. Based on this, there are—
- Venture capital accelerators: These look to invest in projects that give them significant returns for three to five years. They have an extensive network of investors and are a great pick if funding is your priority.
- Government-backed accelerators: These programs support startups that improve technological innovation in the country, provide jobs and nurture entrepreneurship. They are a great pick if you are looking for more resources at the national level.
- Corporate accelerators: These programs are run by large corporations, and they typically end with the startup pitching their product/service to the corporation for further funding. Corporate accelerator programs are meant to bring innovation in-house. If you want to work as a subsidiary of a mega-corporation, this might be the way to go.
Mentors
Once you have the type of accelerator figured out, the next thing to consider is the kind of mentorship the program provides. This is particularly important if you don’t know too much about the industry your company caters to. Having mentors from your specific industry will help you gain real-life experience that you can use to make better business decisions. So, if you want to establish a food-related startup, food entrepreneurs like Mario Batali and Dave Chang (both with multiple food businesses under their belt) would be good picks as mentors.
The share of equity you have to part with
Another important factor is that most accelerators aren’t free. They will ask you for a certain percentage of equity in return for investing in your business. This percentage is typically between 5-10%, which is way higher than the amount of investment they might put in. Thus, before you sign on with an accelerator, you should consider whether you want to dilute your equity early on in the business.
Program structure
Different accelerator programs require different amounts of commitment. Some offer extremely hands-on training and mentorship, whereas others are laxer, allowing entrepreneurs to work independently. You should pick one that best fits your and your team’s working styles. The program’s timetable should also fit in with your work schedule so that you don’t end up relinquishing your equity without even making the most of the program.
The success rate of the accelerator
The final thing to consider is how the accelerator program’s alumni are faring. You can even speak to a few of them to see whether they would do it again and make a decision based on that. Let’s say you run a fashion-tech business, but the accelerator you are looking at doesn’t have a track record of helping fashion-tech companies generate funding. In that case, it might not be the right accelerator for you.
An accelerator is a long-term commitment that can provide you with a lifelong network of contacts in your industry. So, make sure to choose wisely. Research the available accelerators, assess their strengths and talk to past and current participants.
If you follow all these tips, you should be able to find an accelerator that is best suited for your business. That said, you should avoid joining an accelerator solely to follow what others in your industry are doing. Think about whether your startup is even ready to join an accelerator. If you are struggling to define your startup’s challenges or pitch to investors, you should probably hold off for the time being and prepare so that you can make the most of what the accelerator has to offer.
Also read:
- Top 5 Accelerators to Consider Enrolling in 2023
- Why Joining an Accelerator Is a Smart Move for Your Business
- Accelerator vs Incubator: What Should Your Startup Choose?
Header image courtesy of Envato.
