One of the biggest challenges of running a business is simply getting it started in the first place. It can take a lot of time, effort and resources to build the momentum needed to turn a profit — and when you've already put your heart and soul into your business idea, it can be frustrating not to see an immediate return.
For business owners who want to move this process along faster, one option is to participate in an accelerator. Success stories from popular programs like Y Combinator and Techstars make the accelerator approach seem like an attractive path, but that doesn't mean rapid growth will come easily and effortlessly. Here's how to determine if it's the right choice for your company.
What is an accelerator?
An accelerator is a short-term intensive program that provides businesses with numerous growth resources, such as funding, mentorship, education and networking. These programs are highly selective, and often last three to four months. Accelerators will invest money in the participants' businesses, usually in exchange for equity in the company.
Every accelerator program is different and has its own standards and requirements. Some are more selective than others, and may have a lengthy application and interview process for prospective participants. As more niche accelerators emerge, there are more opportunities for startups to get the specialized, industry-specific resources they need to succeed. [See Related Story: Business Incubators and Accelerators: Here's the Big Difference]
What can an accelerator program do for your business? Three of the biggest advantages of this approach are:
Speed. Accelerators make things happen quickly for your business. If your business is viable, your work under an accelerator program will be incredibly fast, said Jason van den Brand, who joined 500 Startups to accelerate his online mortgage refinancing platform Lenda.
"Growth is the goal and you've got it or you don't," he said. "Find out fast, and if your business isn't working, pivot and figure something else out."
Access. When you're trying to start your business on your own, it can be difficult to get your hands on the funding, technology and customer base you need to grow. Joining an accelerator can grant you access to these resources, which you might not be able to get otherwise, said Manju Bansal, vice president and global program head of SAP Startup Focus.
Adam Draper, founder and managing director of Boost VC accelerator, said that in addition to strong mentorship, accelerator participants also typically receive access to funding, legal support, free housing and office space for the duration of the program.
- Credibility. Being plugged into the extensive and powerful network of an accelerator program can give your business instant credibility by association, Bansal said.
Is it right for your business?
Not every type of business will benefit from an accelerator. Someone who's planning to open a local restaurant or boutique shop likely won't need the same resources or wide-reaching network as someone who's launching a tech startup. It also depends on what stage your business is in. Any early-stage company could be a potential good fit, said van den Brand. However, if you're a bit more established, participating in an accelerator program might not be worth the time you'd have to take away from running your business.
"Startups need to be prepared to invest time and effort into the 'acceleration' process," Bansal told Business News Daily. "[They need to] build out the MVP (minimum viable product) and create the market proposition, pricing, collateral, etc. The cumulative effort ... sometimes gets overlooked in the excitement of applying for or being accepted into the program."
Bansal also noted that startups need to be very clear on why they want to join a specific accelerator and what they are expecting to get out of it.
"What may work for a particular startup may not work for a different startup, so the individual needs and aspirations of the startup founders have to be kept in mind," Bansal said.
The best thing you can do as part of your decision process is to do your homework, said van den Brand.
"Work your network and interview as many founders that have done the accelerator as possible," he said.
Although an accelerator isn't right for every startup, those that do go through the process find that the connections and support they receive last far beyond the duration of the program.
"You want to put yourself in the best position to succeed, and one way [to do that] is to connect yourself to a network of people who are supportive of your success," Draper said. "An accelerator delivers that to the extreme."
If you've decided an accelerator program might be a good choice for your startup, visit Business News Daily's guide to accelerators for more information on how to choose and apply for one.