Jeff Allyn is the Chief Executive Officer at StudioX. Over the past two decades, he has helped organizations earn more than $1 billion in revenue.
Have you developed a product or service that you know will change the world, if only you could get it off the ground? While brilliant innovators and inventors have the creative problem-solving ability to develop great ideas, they often lack the connections, skills, and financial support to get their ideas a foothold in the marketplace.
An accelerator is a program that provides founders with the education, resources, support, and business training they need to push their products toward investment rounds and commercial viability.
Some of the benefits that an accelerator provides are:
- Subject matter experts
- Go-to-market strategies
- Price and revenue models
- Business courses
- Investor shows
- Partner discounts
Without an accelerator, founders have to source and pay for all those resources separately, which can be prohibitive and keep great products in their tracks. Since startups and fledgling founders are notoriously short on money, an accelerator provides an affordable way to access all those business-promoting resources without having to think up a large sum of money up front.
What should you pay attention to in an accelerator?
To access all the benefits of working with an accelerator, you must first find one. There are countless types of accelerators, from large generic to niche-specific programs. Be sure to answer the following questions as you research your accelerator options:
- What is the payment model? Some get a flat fee, others work for a portion of equity, and still others ask for a little bit of both. Whatever financial conditions are involved, think about it carefully. You want to be sure of what you’re getting, especially if you’re giving up equity in your business.
- Is there ongoing support available? Most accelerator programs last from a few months to less than a year. What happens next? Do you have access to support afterwards?
- Does the accelerator have unique access to companies, talent and experience in your specific industry that can create an opportunity for a friendly proof of concept or even a first customer?
- Is your company shown to investors? Financing is one of the most important parts of working with an accelerator, as it’s often what founders need most to get their business off the ground. Some accelerators guarantee an investment in your business. Others will place your companies in front of potential investors during pitch competitions and showcases. The purpose of an accelerator is to take you to the next level of funding, so you want to make sure it’s done effectively.
Accelerators are a vaccine against startup failures
Only about one in three startups continue to raise Series A financing. The reason most founders cite for their lack of success is running out of money, but there are other reasons as well. Poor marketing, lack of research on the product and/or the size of the addressable market, trying to break into the wrong market, and simply not being ready to run a successful business can all make a startup fail. goes bankrupt.
While being part of an accelerator isn’t a guarantee of success, it can help you avoid many of the problems that make startups fail by providing more opportunities for funding and expert advice and guidance.
Incubators vs Accelerators
Incubators and accelerators are often confused. The difference is where in the process they come into play. Incubators come first and “incubate” ideas to the incubation stage where a beta product is created. Accelerators take over from there and hone that beta product into a commercially viable business ready to receive rounds of funding.
The disadvantages of working with an accelerator
While some accelerators work for a lump sum payment, most typically require equity in the business in return for their initial investment. If you don’t want to give up stock in your company, an accelerator may not be right for you.
However, the worst possible scenario when working with an accelerator is not giving up equity, but giving up equity in exchange for poor results. Before signing anything, make sure the accelerator you choose is right for your product. Some generic accelerator programs may lack the subject matter experts and connections you need, or they may not provide the personal attention and engagement you deserve. Do your homework. Working with an accelerator can be a great way to boost your product, but working with the wrong one can mean giving up some of the equity for nothing.
The vetting process to join an accelerator program is highly competitive. To increase your chances of being accepted, show that you have what it takes to get the most out of the program. That means being enthusiastic, eager to learn and willing to be coached. If we choose participants for our accelerator program, I would say that 50% of our decision is not based on the product, but on the founder. The ones buzzing with an eagerness to improve are the ones we want to invest in.
Your idea deserves the best chance of success
Your product could be just the thing that changes our world for the better. Don’t let fear, funding, or a lack of business know-how stop you from sharing it with the world. When you work with an accelerator, you have all the resources and support you need to bring your product to market and take your business to the next level.