The Pros and Cons of Startup Accelerators

by Startacus Admin

We feature quite a few of these productive little programmes for budding businesses here at Startacus and we always try to make sure that we point out all the facts so you can make an informed decision before applying for one.

Now we think it’s about time that we delved a little deeper into the world of startup accelerators and highlight some of the benefits and indeed the potential stumbling blocks that can sometimes be attached to them.

A word to the wise, this article is talking about accelerator programmes in very general terms, and as always we strongly advise that you check out the individual websites to avoid any unwarranted confusion....All clear? Good!

What is a startup accelerator?

Sometimes they are also known as seed accelerators (which is even more obscure) so in simple terms, a startup accelerator is a programme which takes fledgeling businesses and provides them with funding, mentoring, training and industry contacts with the ultimate goal of increasing market readiness and ensuring future growth and profitability. Or if you prefer you can think of it as a kind of factory, where all the muddled bits and bobs of a business go in one end and a shiny new fully functioning one pops out the other- that's the theory anyway. But clearly growing a business is far from an exact science and accelerator programmes are still a fairly new concept (Y Combinator pioneered it in 2005) so there is no guarantee that taking part in one will make your venture a success.

There are accelerator programmes available for most types of business and the fee is usually a small equity share in your venture, although this is not always the case. The government runs a number of business incubators focusing mostly on particular industries such as medical technology and green energy. We’ll take a look at these state sponsored start-up programmes in a future article but for now let’s focus on privately funded accelerator programmes.

How can an accelerator programme help your startup business?

• Mentorship - This is one of the key elements that draws startups to accelerators.Many will offer you one-to-one sessions and ongoing support from industry experts and successful entrepreneurs in your field. Not only can they offer you the benefit of their invaluable experience, they can also offer contacts and very useful introductions.

• Product development/testing, market research, marketing strategies, legal advice, financial planning and growth strategies usually form a key element of accelerator programmes.

• Capital investment - a lot of programmes deliver an injection of funds to develop and grow the business, some will also offer interest free/low interest loans as well.

• Opportunity to secure further investment - most accelerator programmes culminate in an `investor day` in which the startups have the opportunity to pitch their businesses to a range of industry experts and investors.

• Networking - There will typically be 5-10 other start-up businesses in a programme and this can offer a unique opportunity to build professional relationships with other early stage businesses and establish possible strategic partners

• Discounted services - Where accelerator programmes have affiliations with other companies they often offer significant discounts to those startups that successfully complete the course, including legal and accounting services.
  
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  Published on: 24th September 2013

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