Getting a business or idea up and running is not as easy as it may sound. This is a statement that many entrepreneurs and businesspeople will tell you. The good news is that now, there are business accelerator programs designed to help get your business standing on its own two feet.
The biggest challenge for most startups is that they do not know exactly what accelerators can do to their companies. This complicates the question of whether or not they should join a startup. An accelerator is meant to give you the valuable items that a startup needs most – funding, experts, knowledge, and exposure.
According to Statistics Brain Research Institute, about 50% of startups fail. It has also been claimed that about 90% of accelerators and incubators fail. These figures may be inauspicious, but that is the reality. As an entrepreneur, you have to remain focused on what you believe in. Joining an accelerator will enable you to work with like-minded people, which makes it easier to focus on developing your business ideas.
Choosing an accelerator could be somewhat challenging since there are hundreds available in the space. You have to take the time to scrutinize each accelerator and talk to previous participants since there are many accelerators out there and each offers different services. Examples of successful accelerators are Techstars, 500 Startups, AngelPad, University of Chicago New Venture Challenge, StartX, MuckerLab, Alchemist, Y Combinator, The Brandery, and Dreamit, among others.
The role of accelerators cannot be overemphasized. Several companies have attributed their success to the accelerators they joined. Examples of these companies include Dropbox, Airbnb, Rallyteam, Night Zookeeper, ChoreMonster, and ClassDojo. Some of these companies have even become multinationals.
Advantages and Disadvantages of an Accelerator Program
The need for a startup to join an accelerator is almost certain as long as the founders are ready to learn. Some of the key benefits of an accelerator program are: creating strong business connections and relationships; developing partnerships; capitalizing on resources so as to increase scalability; getting valuable feedback from experienced executives, investors and entrepreneurs; gaining shared mentorship and learnings; accessing early-stage capital; as well as getting exposure and PR value. These are benefits that cannot be easily found in one place, which makes accelerators very important for first-time, second-time or even third-time entrepreneurs.
An accelerator is considered to be a place where your business or revenue models, capital raising skills and business execution skills are extensively fine-tuned by seasoned entrepreneurs, CEOS, business specialists, and peers. If you want to get up your learning curve as a first-time entrepreneur, an accelerator is definitely one of the best tools to use. You will meet people who have previously been where you are and managed to go through successfully. They will tell you the do’s and don’ts to make your startup a success. However, remember that getting admitted into a good accelerator may be difficult because of stiff competition.
It is also important to know some of the disadvantages working with an accelerator may entail. Some of these are giving away your company equity, usually between 5 and 10%; sometimes you may not get the right network to add enough value to your company; and there are lots of events to be attended, some of which may be unnecessary.
5 Factors to Consider when Selecting an Accelerator
As an emerging startup, there are several factors that should be considered when looking for an accelerator. Some of the important factors to consider are as follows:
Strategy – The accelerator should have clearly defined strategies, goals, and expected outcomes. This helps entrepreneurs know what to anticipate and how to achieve these parameters. It also helps in deciding whether the accelerator meets the entrepreneur’s specific needs.
Location – The accelerator should be developed in an environment that inspires creativity, stimulates personal motivation, and attracts external community. Above all, it should allow startup entrepreneurs to maximize their strengths.
Flexible – This is beneficial because both the needs of any business, as well as the condition of the market, fluctuate on a daily basis. As a result, the accelerator should be able to adapt to new industry changes as long they help the startups to grow. This kind of flexibility enables internal employees to rise up to challenges easily.
Empowerment – It is very important for accelerators to empower their employees so as to drive innovation and develop the concept stage until the final product is built. The accelerator should also allow specialized third parties to participate in the program.
Risks – The main risks associated with accelerators are financial and operational/focus risks. You should ensure that your valuation matches what the accelerator will put into your startup during and after the program. The accelerator should also not displace your team and make you lose focus. You have to use every second of the time very well.
Screening accelerators based on these five factors will help you select the one that will benefit your startup the most. Remember that you will be giving away equity of your business. It is important to make sure that you select an accelerator that provides you with the resources you need for your startup growth. This accelerator should have a reliable community of mentors, entrepreneurs, and investors, and be managed by people who have been through this journey before.
There are many accelerator programs available today, but not all of them will help your startup prosper. The Soho Loft has launched an exclusive accelerator program aimed at providing startup businesses with essential guidance and the services needed to bring their ideas from the concept stage to completion. The startup is run by experienced executives, investors, and entrepreneurs. Interested startups can also get a wide range of affordable web and business services to improve the growth and success of their businesses.
David Drake is the Chairman of LDJ Capital, a multi-family office; Victoria Partners, a 300 family office network; LDJ Real Estate Group and Drake Hospitality Group; and The Soho Loft Media Group with divisions Victoria Global Communications, Times Impact Publications, and The Soho Loft Conferences. Reach him directly at David@LDJCapital.com.
