Incubators and Accelerators

How do Startup Accelerators Work

Sunny Samanta

30th Aug'22
How do Startup Accelerators Work | OpenGrowth

Are you an entrepreneur or the founder of a startup? Have you heard about startup accelerators? What about the Disney Startup Accelerator Program Powered by Techstars? Do you know that startup accelerator programs can provide startup founders with capital and mentorship? Furthermore, can an entrepreneur take an early-stage business or nonprofit to the next level with the program?

So many questions, right? But they are all valid ones. Startup accelerators are lucrative and beneficial to the company and business. Besides, it enables the startup founders and co-founders to engage with each inside one set workspace. And while companies may look to make hay when the sun shines, it is critically important to understand how it works. But before that, let's understand what a startup accelerator is.

 

Startup Accelerator Program

 

What is a Startup Accelerator?

A startup accelerator is a funding program for early-stage startup businesses. A startup accelerator program aims to accelerate the growth of existing businesses. Startup accelerators can offer valuable resources such as mentoring, free office, or coworking spaces. It also has legal services to assist with intellectual property protection, a collaborative work ecosystem, and access to industry influencers and potential investors. It is also known as a seed accelerator.

 

Startup Accelerator Program

 

Working on a Startup Accelerator

The primary function of startup accelerators is working with successful startups or businesses with a solid foundation to build on. It enables accelerators to rapidly scale up business ventures through focused guidance and required resources. Furthermore, startup accelerators can frequently work as seed funding investors. It funds ventures in exchange for an equity stake in the companies. It can even receive funding from both private and public sources. Despite this, the startup accelerators remain a private organization.

 

Tenure of a Startup Accelerator Program

The ideal tenure of a startup accelerator program lasts from three months to six months. However, the duration can be exceeded beyond six months if required. Startup accelerators specialize in specific niches, such as tech startups and other cohort forms of similar businesses. Overall, it is an efficient way for startup accelerators to attract more innovators under a specific niche and bring growth to a company.

 

Startup Accelerators versus Business Incubators

Business Incubators are similar to startup accelerators. Like the latter, business incubators help entrepreneurs and early-stage startups fund to develop their businesses rapidly. It is an organization with supplied workspaces. The workspace contains specific and essential startup-related resources. Here the business owners can access it all and even engage with their peers in the process. However, despite the massive similarities between a business incubator and a startup accelerator, both have specific differences. Ideally, both the incubator vs accelerator differ in the way they operate, and it can be seen down below:

 

Stage of the Venture

The primary distinction between accelerators and business incubators is the stage of the venture on which they focus. Incubators specialize in early-stage startups still in product development and do not yet have a business model. Accelerators are designed to accelerate the growth of existing businesses with a minimum viable product (MVP) and a proven product-market fit to start building.

 

Seed Funding

Business incubators typically do not invest capital in ventures. Instead, they seek an equity stake in return for the valuable resources they provide. On the other hand, startup accelerators take an equity stake in the company in exchange for seed investment.

 

Perks

Business incubators provide valuable resources to startups. It offers much, from mentorship to free office space, important equipment, and a collaborative community. Besides, it also provides opportunities to network with potential funding sources such as venture capitalists or venture capital firms. Meanwhile, startup accelerators provide all of the same benefits as an incubator. However, it offers more perks regarding cohorts, seed-stage funding, and seminars.

 

Time Frame

Typically, startup accelerators work with early-stage businesses. Here they offer three to six months to show growth and progress in the company. Business incubators completely differentiate themselves from startup accelerators regarding the timeframe. They develop their ventures over a longer period. The incubator organization works to incubate a business idea for as long as it takes to build a successful company. However, ideally, the incubation period successfully reflects its effectiveness within one to two years.

 

Apply for a Startup Accelerator Program

Every year out of the thousands of applicants, only one to three percent of entrepreneurs or startups get accepted into the startup accelerator program. Therefore, the challenge is distinguishing your application by being exceptionally clear and concise. For example, whatever you say, ensure it is valuable to the company. Do not take "Google Search" as a reference to say things about your company; Instead, offer a more compelling benefit. For example, tell them how Google organizes the world's information to provide instant access to whatever knowledge you require.

 

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A lone wolf by definition, a writer by heart, and a lost star with ambitions to light up the dark both inside and around me, sometimes by immersing myself into books or video games or traveling with a backpack to an uncertain destination believing that life is all about the choices we make and we don't.

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