A business accelerator for startups is a program that gives developing companies access to mentorship, investors, and other support that help them become stable, self-sufficient businesses. In addition, it assists in bringing together different groups of stakeholders within their program and arrange interactions between these stakeholders in an efficient manner.
In 2005, Paul Graham, an American investor, and entrepreneur created the first business accelerator for startups. He invested small amounts of money into a cohort of startups/entrepreneurs focused on the tech industry. This cohort was supported as a group to develop their ideas and businesses further. In addition, Paul Graham aimed to create a more efficient form of investing by following the same terms and offering the same support throughout the different startups in the cohort.
Two main kinds of business accelerators for startups:
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Seed programs last two to four months, and the main focus is less mature start-ups, building up their business fundamentals before allowing them to pitch their ideas to investors on startup Incubators Vs Accelerators.
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Second-stage programs last up to six months and focus on more mature start-ups, connecting them to the full range of support and opportunities.
Read the ten ways the Nexea startup accelerator 10X startup growth:
10 Ways the Nexea Business Accelerator for Startup10x Start-Up Growth
Our belief for the Accelerator Program - Why we started the NEXEA Accelerator. However, our methodology ensured these 'survivor' companies grew like crazy. 25X in under one year, to be exact. To put things in perspective, most decent Startups only grow 2-3X a year. Read More.
Pros of a Startup Accelerator
There are several advantages offered by business accelerator for startups some major benefits of Accelerators for Startups below mentioned a few:
1. A gateway to future customers
Accelerators include target audience members at demo days so they can come to hear about what you are doing as you share more about your project. This will be beneficial for your enterprise as it can create an early buzz about your startup. This advance publicity can also help you validate what you are doing.
2. Growth potential
The main focus of an accelerator program is to scale the business. Various skill development programs, dedicated work time, expert training, and investment opportunities allow your company to flourish.
3. Valuable feedback
The one-on-one meetings with program advisors are one more step towards your success. They have experience growing startups, gaining investors, and entering markets, and getting their feedback is indeed very helpful.
4. Networking opportunities
You get the opportunity to work alongside other startups in coworking spaces and workshops. And by doing so, you get unparalleled access to successful entrepreneurs through mentorships and the accelerator's alumni.
5. Skills development
By joining the business accelerator for startup program, you get the opportunity to learn the skills that are essential for running a business, including sales and marketing, communications, finance, and even some technical skills.
6. Risk management
Risk is like an uninvited guest who comes with the startups. And it is essential to take risks for you and your company's growth. The risk of failure is on the mind of every startup founder. These risks can be with the market you are entering, the product you are offering, and the concept that you are selling. It is impossible to avoid it, but accelerators help you identify those risks within your concept and help you minimize them. Also, those within the program can provide you with the direction in proactively taking on risk and managing it effectively.
7. Finding investors
Getting an investor is one of the most important and toughest jobs for a startup. Joining a business accelerator for startups makes the way more manageable for you, as during an accelerator’s “demo days,” many investors are invited to watch the presentations.
There is also time to meet and mingle with investors. This opportunity can open the door to additional funding offers, especially when the investors see that the accelerator program has helped you further develop your startup into something that shows the potential for return.
Cons Of Business Accelerators For Startups
1. Unsuitable Network
Do your research if you plan to join a business accelerator because some might not have the right network to add value to your business.
2. Equity Share
Most accelerators will provide you with their services in exchange for an equity share of around 5-10% in your businesses. This is a lot of company equity – so be sure and do your research because you will gain a lot of value by joining the accelerator.
3. Relocation
When attending an accelerator program, you may be asked for relocation. Sometimes it can be beneficial for your startup but not necessarily. So, do consider your market, networking in your current location before joining.
Read more Pros And Cons Of Accelerators For Startups:
The Pros And Cons Of Accelerators For Startups
Applying for an accelerator program is a significant decision for any company in its early years. Read More.
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Contributor: Jyotshana Rani
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