It’s common for startups to enter accelerators in hopes of walking away with funding from investors. Some programs guarantee some sort of funding in exchange for an equity stake. Other programs give away limited amounts of funding for nothing in exchange (besides successful completion of the program).
In terms of preparing for accelerators, startups don’t typically need to have any funding beforehand. Although, it can be assumed that some money is needed (whether through funding or bootstrapping) to develop a product, team, and customers — and therefore qualify to apply.
From nearly zero programs in 2005 to almost 200 in 2015 (and even more in the last few years), the number of startup accelerators in the U.S. has risen substantially in the past couple of decades. This has allowed even more startups to learn, improve, and grow. In fact, these accelerators have invested nearly $20 billion in over 5,000 startups — and that’s just in the U.S. alone.
Startup accelerators benefit all parties involved — investors, companies, customers, and the economy. But they’re not the only business development program available for startups. Often times accelerators are confused with incubators and other intensive programs.
Let’s discuss the differences and what makes accelerators stand out.
While accelerators are for established businesses, incubators are for entrepreneurs who need help developing their ideas into full-blown businesses. In theory, you’d apply to and attend a business incubator prior to a startup accelerator.
The table below breaks down the main differences between an incubator and accelerator.
|Pre-requisites||Business idea or business plan||Established business model and MVP|
|Application||Competitive process; restricted based on community or industry||Extremely competitive; open to all|
|Timeline||Up to 2 years; flexible||3-6 months; rigorous|
|Purpose||To build the foundation for new startups||To accelerate the growth of established startups|
|Support||Office space, administrative and legal support, business planning, prototyping, and product development||Seed funding, mentorship from industry experts, and networking|
|Funding||Often from universities or economic development organizations||Private funds; often take equity in exchange for capital|
Is an accelerator right for you? If you’re thinking about applying for a startup accelerator, ask yourself the following questions to see if your business is ready.
Note: Curious about what an accelerator entails? We walk through how startup accelerators work in detail in the next section.
- Are you growing quickly? If your company is collecting customers (and employees!) at an almost overwhelming rate, you’re likely ready to enter an accelerator to take your business to the next level.
- Are you ready for expert mentorship? Can you articulate your challenges? If you have distinct, unanswered questions and curiosities that only experts can answer, it’s time for an accelerator.
- Do you have a minimum viable product (MVP)? Accelerators are only for businesses who’ve defined and sold an MVP.
- Do you have customers and an established customer profile? Accelerators benefit businesses who know who they’re selling to and are willing to conduct extensive research to deepen those customer profiles.
- Would you be willing to relocate? Many accelerators require physical relocation to take full advantage of their resources and offerings — an arguably small sacrifice for the greater reward of growing your business.
- Can you afford it? While accelerators provide some funding, they don’t necessarily pay your way through the program. Be sure your team and business can afford to set aside a few intensive months as you focus on growth.
How Startup Accelerators Work
- Choose your accelerator
- Submit an application to be accepted
- Focus, learn, and grow
- Present to investors and (potentially) receive funding
Not every accelerator operates in the same way, but most follow a similar process. Complete the following steps from start to finish if you’re looking to join a startup accelerator.
1. Choose your accelerator
There are hundreds of startup accelerator programs in dozens of cities. These programs vary based on location, industry, expert involvement, funding opportunities, and the kind of network they connect you to.
In the U.S., most of these programs are in bigger cities like San Francisco, New York, and Boston. You can also find notable accelerators in Canada, the UK, Russia, and Chile — practically all around the world. Comprehensive databases like Seed-DB are a great place to start.
What to look for in an accelerator
Before you apply, do extensive research on the accelerators that’d be a good fit for your business. (Don't worry if you’re a good fit for them … yet.) Here’s what to look for:
- Social proof. Which startups have “graduated” from each accelerator, and how much funding did they receive? Make sure those businesses are successful today. Similar to formal education, names and prestige are just as important in the entrepreneurial world. Being associated with a well-regarded accelerator can help your business grow long after graduation.
- Relationships and networking. What kind of community and network can each accelerator offer you? Also, what kinds of experts and educators do each accelerator provide … and are they relevant to your business? The network you gain from your time in an accelerator is another factor that outlasts graduation.
- Industry. Some accelerators work with marketing technology companies, while others specialize in finance technology. Others focus on cybersecurity, retail food-tech, or big data. Look for a program that aligns with your product and business as the education and mentorship resources will follow suit.
- Location. As we mentioned above, there are accelerators around the world. You’ll likely be required to relocate to physically attend the accelerator programs. If you can’t move too far away, look for programs that are close to home. Alternatively, if you’re looking for a change of scenery, check out programs across the globe.
2. Apply to the accelerator
Startup accelerators are notoriously difficult to get into to. The most famous accelerator programs, such Y Combinator and Techstars, only accept 1% to 3% of their almost 6,000 applications — the very best of the best.
To gain ranking among the elite, take the accelerator application process seriously. You’ll likely have an extensive written application as well as multiple live interviews.
What accelerators look for in applicants
While all accelerators vary, most look for the same factors and features in those who apply. Here are a few things to be sure your application reflects:
- Coachability. If the experts who lead the accelerator choose to mentor and educate you, will you accept it? Will you choose to apply their suggestions and listen to their expert opinions about your business, product, and growth? Humility and coachability go a long way in accelerator applications.
- A minimum viable product (MVP) and real customers. Without a viable product and customer profile, accelerators won’t take a second look at your application.
- A concise competitive advantage. What sets your budding business apart? More importantly, can you communicate your competitive advantage and value proposition in one to two sentences — with real data included? Accelerators look at a lot of applications. Boil your story down to an elevator pitch to have a greater chance of being seen (and remembered). Remember, accelerators are looking to benefit from your business success, too.
- A strong team. Who will lead your business to success? Accelerators are not only looking for a strong product; they’re also looking for a strong, capable team. If the team’s skills match the business needs and show cohesive dynamics, there’s a good chance the business will succeed past the accelerator.
- Network and community. Does your application show that you’ve networked and developed relationships with others in your industry before leaning on an accelerator to do the work for you? While name-dropping can’t promise a spot, displaying a well-connected network can reflect that you’re willing to put in the work to expand it.
Also, check out this blog post by Paul Graham of Y Combinator on how they choose between applicants.
3. Focus, learn, and grow
Applying to an accelerator is tough, but once you’re accepted, expect the real work to begin. Be ready to travel to the accelerator location, set up with your team, and get started.
Here’s what you can expect when attending an accelerator:
- Dedicated co-working space where your team can focus on the accelerator and educational opportunities
- Educational seminars and workshops on a variety of topics, such as legal counsel, pitching practice, product development, and more
- Group and individual mentorship opportunities from industry experts, investors, and other founders
- One-on-one check-ins with accelerator leadership (e.g. investors, alumni founders, etc.)
- Networking events with industry leaders, investors, and other startups, which can help with future fundraising and recruiting
4. Present your business model and receive funding
What sets accelerators apart from other intensive business programs is how startups exit the program. When it comes time to wrap up an accelerator, founders participate in a “demo day” during which they present their business model. This process happens for two reasons: to share everything the company learned and worked on during the accelerator and to potentially receive funding.
Founders are responsible for building a comprehensive slide deck and pitching directly to investors — sometimes hundreds, depending on the accelerator. (Here’s an example deck from PayPal co-founder Peter Thiel.) If startups receive an offer for funding, it’s typically in exchange for equity.
Accelerator “graduates” also receive direct and indirect support after exiting the program. This support includes:
- Professional connections and networking
- HR/recruitment support
- Board participation
- Office space
- Future VC support
- A strong alumni network and lifetime relationships
Interested in joining an accelerator? Time to dive into some research and figure out which accelerator is best for you.
With hundreds of accelerators available around the world, it’s impossible to list them all here. Instead, we’ve pulled together some of the most popular as well as some niche accelerators that may interest you.
Popular Startup Accelerators
Y Combinator, Mountain View, CA
Y Combinator is one of the most popular — and most competitive — startup accelerators. The program has produced almost 2,000 investments and 200 exits (which are sales to larger companies, meaning a return on investment for investors). Y Combinator has worked with the likes of Airbnb, Dropbox, Stripe, Reddit, Twitch, Coinbase, and Weebly.
500 Startups, Mountain View, CA
500 Startups has made just over 1,600 investments (in companies in over 60 countries) and has produced 162 exits. Notable alumni include companies like Udemy and Credit Karma, as well as others that’ve been sold to Google and Rakuten.
Techstars, Boulder, CO
Techstars, another highly competitive accelerator, has produced over 1,500 companies and 132 exits. Companies like Bench.co, ClassPass, and Pill Pack have worked with Techstars. It’s also the name behind Startup Week and Startup Weekend.
MassChallenge, Boston, MA
MassChallenge has worked with over 1,300 companies, produced almost 40 exits, and indirectly produced over 80,000 jobs. The program also has locations in Israel, the UK, Mexico, and Switzerland.
International Startup Accelerators
Startupbootcamp, London, UK
Startupbootcamp is based in London (InsurTech) but runs a variety of programs in Mexico City (FinTech), Milan (FashionTech), Cape Town (AfriTech), Rome (FoodTech), and more. The program has made over 420 investments and produced 21 exits. Notable alumni include Bellabeat, Joyride, and Zenith. Overall, the program has raised over €1.1M.
Start-up Chile, Santiago, Chile
Start-up Chile, unlike other accelerators, was launched by the Chilean government to boost entrepreneurship and encourage economic investment. The program has made over 830 investments and produced 16 exits. Start-up Chile also offers a “pre-acceleration program” called The S Factory just for female founders.
Internet Initiatives Development Fund (IIDF), Moscow, Russia
IIDF focuses on companies in cybersecurity, adtech, big data, IOT, and more. The program has made over 330 investments and seen over 20 exits. IIDF also organizes events and hackathons, which attracts over 20,000 investments.
Minority Startup Accelerators
MergeLane, Boulder, CO
MergeLane only invests in startups that have at least one female leader. It offers a variety of funding and accelerator programs, and has invested in over 40 companies to-date.
DigitalUndivided, Atlanta, GA
DigitalUndivided works exclusively with Black and Latina women. The program has funded 52 companies, worked with over 2,000 founders, and raised over $25M in funding.
Accelerate Your Startup Today
No two startup accelerators are alike, but they all share the same vision: seeing entrepreneurs of all kinds scale their business success and impact. Regardless of what industry you operate in or what kind of product you sell, there’s a startup accelerator for you.
Follow these tips to find the right program, prepare your application, and get the most out of your accelerator experience.
Originally published Jul 25, 2019 7:30:00 AM, updated July 25 2019