Everything you wanted to know about accelerators and did not know who to ask.
N. Segre (A quick guide with a suggested playlist)
Imagine a situation, you are sitting in your home office / co-working space / garage / park bench or anywhere else after a long day of work with your new startup, your new baby. You are working hard on your product, putting the team together, working out all the details and navigating this new world. It might have been a smooth start or a rocky adventure, but you and your co-founders have concluded that you are ready for the next step. And now what? You have heard so many stories in your network about accelerators, incubators, and open innovation projects. But what does it all really mean? What do they offer and how should you choose the right direction for you? How can you know what is the right path for you?
Look no further, we are here for you.
Step One: Definitions;
Complicated (Avril Levin)
Over the years and with the development of innovative ecosystems around the world, the terms accelerators and incubators have taken on different shapes and forms. Some meant one thing in one country while they meant the exact opposite in another. Adding to that, these models have also changed over the years (spoiler alert: they might continue to change…). So, to make things a little clearer, let us start with the formal definitions.
In her article What Do Accelerators Do? Insights from Incubators and Angels. Innovations,1 Susan Cohen, explains the main differences:
“Essentially, accelerators disaggregate the financial resources and knowledge resources previously offered by incubators and angel investors, and provide more advice and less money than either one. The limited duration of accelerator programs is the feature that most clearly defines them. A consequence of this limited duration is that cohorts or batches of firms start and graduate together; this intensely focuses the attention of the founder, mentors, and accelerator directors on the nascent ventures for the duration of the programs. Periodic graduations, marked by demo days where ventures pitch groups of investors, further distinguish accelerator programs from incubators and angel investors. While accelerators are often compared to incubators, they may actually have more in common with angel investors.”
Step Two: Understanding Better;
Deeper understanding (Kate Bush)
To help us navigate the different offerings, here are some points to take under consideration:
TIME: One more Time (Daft Punk)
Accelerators offer programs that are framed in a specific time (From few weeks to 2–3 months), basically, meaning they have a start and an ending to it.
Accelerators are also cycle creations, offering programs one after the other.
TEAM: We are the people (Empire of the Sun)
Accelerators run in cohorts; they bring together in each cycle a group of Startups that go through the program together. This is a great networking and learning opportunity.
The advantages lie in the ability to share experiences, lean on others, and move forward together. Vertical accelerators can also be a great business development and partnership opportunities for each member of the cohort.
STAGE: High Hopes (Panic! At The Disco)
Accelerators focus on early-stage startups, those who have raised funds in a pre-seed stage and or are in the process of raising.
In terms of product, Accelerators will strive to accept candidates that have at least an MVP (Minimal Viable Product).
Some accelerators will accept startups that are not yet fully constituted; however, this does not mean that they would want someone with a PowerPoint idea, but rather, will be looking for an MVP and a strong founder which they feel needs the help to move fast.
INVESTMENT: Money (Is what I want) (The Beatles)
Accelerators offer an investment to the startups that join the cohort. Investments are equity based and include at times a component of services that the accelerators grant the companies (Meaning that the investment is a mix of cash and services)
It is rare, but sometimes accelerators are also nonprofit — meaning that they are for benefit and therefore, do not invest in equity!
EDUCATION: Learning to Fly (Pink Floyd)
Accelerators are also providers of education. Their main goal is to give the cohort the tools they need in order to maximize their potential growth. Education in these programs is set up as webinars, masterclasses, workshops, and talks.
It is rare to find this type of knowledge sharing in incubators and with angel investors, simply because they usually provide more ad-hoc information based on a specific topic, rather than a wider overview provided by accelerators.
MENTORSHIP The Knowledge (Janet Jackson)
Accelerators by nature, and due to the time limit of each cycle are intense programs. As such the hands-on approach and guidance provided is high.
These programs usually have a pool of talent they rely on to assist and to call upon when needed for the cohort, granting the participants access to additional knowledge, experience, and networking opportunities.
SELECTION: Choose me (James Blake)
The selection processes of accelerators are competitive. You will be competing to enter the program at the same time as the accelerator will be competing to have you join it (assuming you are as good as you think you are…)
Be prepared to make presentations, attend events, meetings and supply materials for the evaluation.
PEOPLE: I want more (Faithless)
This is also your opportunity to see how you feel and evaluate the accelerator.
Accelerator operators, just like any other investor, is a two-way street, make sure you find in the operator people you can work with, have experience, expertise, connections, and network that can benefit you and your company.
Step Three: Data Analysis
Unwritten — Natasha Bedingfield
Like any step you will take on your entrepreneurial journey, choosing co-founder, an accelerator, an incubator, an investor or a corporate partner is made up of two parts. An emotional decision that should be driven by data analysis.
First, research. Learn. Read. Ask questions. Check options. Not every program will be the right fit for you. Make sure you apply and turn to the one that will answer your needs (it is focused on your technology, is in the right vertical market, offers real services and such).
Once you find that program for you, evaluate the people. Will you be able to work with them? Would they add value to your venture?
