Startup acceleration: how business accelerators work

It will be very difficult for you to run your own startup for the first time, especially if you do not have sufficient capital, resources, technical base, and necessary experience. According to statistics, about 90% of startups fail. However, this is no reason to give up an idea if it looks viable. You can become a participant in the market. There, business accelerators can help novice entrepreneurs.

Features and functions of business accelerators

Business accelerators are organizations or projects that support and develop startups. At the same time, experts conduct an economic assessment of the potential of the project and its test of effectiveness and relevance. While working with the accelerator, the startup receives resources that will help it successfully enter the market.

It looks like work with experts, useful contacts in business, training, and funding. This is a full-fledged program that lasts several months. After that, the startup company will get a much better chance to take a new field and become a full-fledged business.

There are several principles of business accelerator operation:

  1. Mentor supervision. With participation in the acceleration program with the startup team, experts will work, which are successful entrepreneurs at the same time.
  2. Attracting investment. The prestige of the accelerator company is, for investors, a sign of quality, so they always invest in the startup purposefully, which this company has chosen for development.
  3. Necessary resources. An accelerator organization can provide the startup team with missing equipment and equipment, office space, and network access.
  4. Training programs. Accelerators help project participants to acquire the missing knowledge. To do this, experts hold master classes, lectures, and internships in large companies.
  5. Acquiring and developing a network of useful contacts. In the acceleration program, there are several startups that function simultaneously. They can share experiences and interact with experts, thereby building effective business linkages.

Unlike business incubators, which do not claim to profit from a startup, accelerators receive a share in the fresh business in exchange for investment.


Accelerator for selected enterprises

Not every startup is suited to participate in such a program. Most fresh projects that are just beginning their business path need a business incubator. The accelerator is needed for more mature projects that already have a viable idea, ambition, and first customers, as well as their teams, are ready to grow.

Often, business accelerators are needed by young companies that need funding. To do this, they hold the so-called Demo Day. In short, it is a presentation to investors.

Accelerator type

Not all accelerators are alike. There are several types of these:

  1. Corporate. Today, the largest corporations use unique acceleration programs. As a rule, their accelerators are aimed at solving the more specific tasks that enterprise experts put before their business. So it can be scaling or increasing business cover in the market.
  2. Venture. Among the features of this type of accelerator, there is the identification of viable startups that are still at the test stage of the business model, and also it is their investment in the future. This is the principle of one of the oldest business accelerators in the United States. It is called Y Combinator, and its founder invests half a million dollars in each project that he chooses.
  3. Ecosystem. Such accelerators involve an in-depth training program and work in a specific region, industry, or industry.

To become a participant in the acceleration program, the entrepreneur should submit an application as well as pass the preliminary selection and interview.

Disadvantages of accelerators

Despite the enormous advantages, the use of the acceleration program has a number of drawbacks:

  1. Loss of profit. In most cases, the business accelerator gets a stake in the startup in exchange for funding.
  2. Presence of distractions. Sometimes, a busy schedule of meetings and training programs distracts the team from working directly on the startup.
  3. Rapid growth is not always a good factor. It happens that the specificity of the project is focused on slow growth, so fast scaling leads to risks.

Thus, participation in the business accelerator program gives the young business a great chance to develop, as well as helps the entrepreneur fill gaps in his knowledge and get useful connections.

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