Should you join Startup Accelerators?

Are startup accelerators worth it?

This and many other questions are the ones that surround your head when looking for options to seek professional help for your startup or even consider financing options.

Finding prompt answers to these questions becomes even more imperative when we consider that most startups tend to fail. According to the Bureau of Labor Statistics, 20% of startups fail in the first year, 50% within five years, and 65% within ten years.

Although the statistics can be discouraging, giving up will never be an option for your business. Instead, learning about your options is the right thing to do to take your business forward, and that's why you clicked on this article to get all the information you need about startup accelerators.

In this article, we will talk about what a startup accelerator is, when it is convenient to join one, its pros and cons and if they are worth it, or if you should consider another type of funding for your business.

Without going over the matter, let's go straight to what concerns us!

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What is a startup accelerator?

Also known as a seed accelerator, this term refers to a business program that can support any growth-driven early-stage business through education, mentoring, and financing. The companies that are in the pre-revenue stage are usually the ones that opt for this program the most.

The admission process for one of these programs can last approximately one year. Once your project is accepted, you will receive guest speaker services, advising hours, a negotiated amount of capital and sometimes a shared coworking space. The terms of this type of service usually last between 3 to 4 months, and you must deliver around 3-8% ownership of the startup.

This option is preferred by businesses that have to do with technology, AI and Saas, and large companies such as PayPal and Google opted for it at the beginning.

With this information in mind, let's consider what things to consider when choosing a startup accelerator program. Read this complete guide on digital marketing funnel and then choose the right digital marketing channel for your business.

What should startup founders consider before opting for an accelerator?

Like any other funding process, investigating before opting for any program is best. If you take this as your option, evaluate these aspects to join the one indicated.

Check your compatibility.

Can we compare love between couples with business relationships? Well, in a certain way, yes, that compatibility between both parts is essential for its proper functioning.

So as a startup, you should study well if the accelerator you want to apply for is your match.

The first green flag for an accelerator is its experience with startups in your niche. However, you must add personal factors such as the startup's stage, product, model, and more. To finish evaluating if this is a good option, focus on:

• Their professional portfolio
• Look for industry-specific features

Set realistic expectations.

Returning to the subject of love between couples, it often happens that when we start a relationship, we tend to project the other person as our ticket to happiness forever, but if you have lived long enough, you know that not every new couple will be successful. 

All this metaphor can be transposed almost literally to your alliance with an accelerator, and so that you don't make the same mistakes as in love, the best thing you can do with your mentors is to set reasonable and achievable expectations. The main idea is to know where you are right now with your startup and to plan a route so that you can reach the next step with the help of the accelerator. Be realistic; this way, it will be easier to guide you to something achievable.

To complement this process, you can investigate more about what type of results the program or mentor usually gives. Check these Amazon FBA tips to grow your business and see how optimising your Amazon listing could help you grow. 

Prepare to be committed.

The relationship metaphor continues to serve as a glove for the accelerator program, and like any healthy relationship, compromise is necessary.

With acceleration programs, you may have to program yourself with all your accelerator engagements. This means that you will attend many events or appointments with people in the middle, and you will have to present yourself to them with the best attitude and desire to expand your relationships with the right people. Also, remember that this isn't a thing of just a weekend, as we said that this program could last to three months and even six in some cases.

Reading this might give you a headache, as we understand that adding events to your startup operational to-do list can be tiresome, but hey, it's part of the process.

In this case, it is best to organize your agenda regarding events and try to attend as many as possible. 

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Create an actionable plan.

Now is the time for planning what you will do and the actions to achieve it. When you have the chance to talk with an accelerator, know that these people don't have any time to run around loose ideas or much less that they will give you a guide if you are not sure where you are from. The idea is to bring a series of short-term and long-term goals on which both parties can build and thus start the program.

Before this process, make sure that:

• Set KPIs and milestones for any goal
• Make sure your co-founding team is complete
• Investigate if the program aligns with your goals
• Look for advisors or mentors if you need them.

Know your mentors.

Finally, once again, using the "love metaphor," it is necessary to know the other person, the accelerator, to learn more deeply what it offers us.

The startup accelerator market has grown a lot. However, the growth of mentors does not result in something good at all but instead increases the chances of getting one that is not as good as it claims to be. In the same way that "in the dating market," it is necessary to know more about the professional path and the things in common that your business has with the accelerator than only accepting it after swiping to the right (if you understand the reference).

In any case, this part also demonstrates your worth as a startup since you must give yourself respect in these terms of negotiation and not leave your venture to any unprofessional person.

In this case, it is best to schedule a "first appointment" or meeting to be more professional and have an opportunity for you to learn about aspects such as:

• Their compatibility with your industry
• Success stories
• What makes it the best option for you?
• Know if the program would positively affect your startup.

What can you expect after joining a Startup Accelerator program?

If you have studied your options well and have found the startup accelerator program, the benefits you will obtain from this alliance are quite a few. First, you will expand your network of contacts to quite remarkable people; if there is something valuable in the business world, it is contacts.

On top of this, the mentorship a good accelerator can give you can see you refine business models, product offerings, and overall strategies, which could lead to further growth and more sustainable success in the long run.

Let's see what other good results you can get with this program.

Get extra experience.

The best thing about joining a good acceleration program is that the doors to the professional world will open for you. 

In an acceleration program, you will have the opportunity to meet industry professionals with insights that not many of us have at hand. They often say that professionals and top sellers become the best for not sharing the professional secrets that led them there, so when you come into contact with them, you can learn about those insights that only they have. 

In these events and mentoring, you have to be like a sponge which absorbs all the knowledge that comes from observing and listening to what these people speak. When you partner with mentors, you will be able to:

• Compare your startup with others and evaluate how you are doing.
• Learn from industry leaders
• Get insider perspective and strategic advice

Equity as Payment

We mentioned this before, and it is good or bad, depending on how you see it. In any case, it's something you should be clear about.

You see, part of this alliance with an accelerator is that they get paid through equity. However, in exchange for this price, your startup can get that much-needed boost to start growing, so it may be worthwhile.

To assess if this equity is profitable for you, evaluate this:

• Good equity should be between 5% and 10%.
• Evaluate if that percentage serves you in the long term.
• Most importantly, analyze if you are in a position to manage that equity deal.

Get access to capital.

As a startup founder, we know that one of your main goals is to connect with investors. When you join an accelerator program, you can access a vast network of capital solutions and investors.

Most of the time, accelerators are more effective when your startup is raising funds. This is because investors tend to show up for demo days, which is when you can pitch your startup to these people.

When you get the approval of an accelerator, you can be sure that your startup will be more attractive to investors. Even sometimes, accelerators can provide initial cash injection.

Networking opportunities.

By attending so many events in the company of your accelerator, you will have the opportunity to network and expand your list of important contacts. This is important because, within these events, you can get the necessary allies, and if you know how to sell yourself well enough, you can get colleagues to help you grow professionally.

Gaining Credibility

Anyone who tells you your reputation doesn't matter in the business world is probably not succeeding with their startup.

That's right, your reputation matters a lot, and by joining influential people, your status starts to rise, which gives you more opportunities with investors.

Even to qualify for a venture debt, investors will evaluate you for your credibility as a company, and who will give you that value? The people you are surrounded by.

That is why an accelerator can catapult your popularity by relating to important people, and that is where you should bring out your business charms to be seen as a reasonably profitable business.

The pros and cons of Startup Accelerators.

Pros:

• Accelerators can help you with funding to help your startup get off the ground and proliferate.
• Accelerators help you benchmark your company against other startups.
• Accelerators mentorship can help you develop your skills
• You introduce your startup to the professional world.
• Accelerators can help you with risk management.

Cons:

• As we already said, accelerators take equity in exchange for funding and mentoring, which could represent a high cost for startups in the long run.
• As you can see, working with an accelerator requires much networking, which can create considerable pressure if you find it challenging to navigate these scenarios.
• Building a relationship with your accelerator will take a long time. In addition, it can become uncomfortable that it takes much prominence within your business operations.
• With the growing popularity of this program, many impostors have come to offer their services as a mentor.
• When you attend an accelerator program, you could get relocated, which can be a bad or good thing depending on the situation.

Are Startup Accelerators worth it?

If we are 100% honest with you, we have to say that there is no lapidary answer to this question since, ultimately, although we are tired of hearing this answer, it is the same: it depends.

The startup accelerator program can achieve incredible things for your business in the best possible scenario. However, not all startups do.

Now, if they ask us if it is the best fundraising option, the truth is that there are other options that you could choose that take away the part of paying with equity, as is the case with this program. This option is the venture debt, which we explain in greater depth in the following article.

Even so, within the same article, we have seen that the accelerator program can open the doors for you to be contacted by venture debt investors, and if we add the knowledge and contacts that you can make, we can affirm that this program is worth it under the conditions optimal.

Final thoughts.

Managing a startup and trying to make it successful is a process that requires continuous education about the business and knowing how to operate within the spheres of power of investors.

If you need and want more help, at Codedesign, we offer handy information so that you can manage your operations efficiently. In the same way, if what you need is to take your startup to the right people at the right time, our digital marketing experts can advise and help you with this entire process. If you want to know more about our services, contact us now!

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