Startup accelerators are companies that offer programs to help startups get off the ground and get funding through funding competitions, mentor sessions, and networking opportunities. They’re not cheap though – with fees ranging from $5,000 to $100,000 – so it’s worth considering whether or not you should invest in one of these highly competitive startup accelerator programs. Is it worth it? Let’s take a look at the pros and cons of joining an accelerator program to help you decide if it’s right for you!
If you do not meet the criteria, do not apply
In order to join an accelerator, you will need to have your own startup idea, be able to work full-time on that idea during the 3 month program (which is not easy), and be able to pitch your idea confidently in under 30 seconds. So unless you have all of these boxes checked, do not apply! Save yourself time and disappointment.
The more competitive accelerators will help grow your business
The most competitive accelerators will help grow your business. They’ll bring your team together, give you resources to make progress on your product, and help you get in front of potential investors. So, for startups with more advanced products or more traction, participating in an accelerator could have a significant impact on growth (and even an exit).
The focus on growth puts pressure on founders to produce results quickly
if you aren’t moving fast enough, you could get kicked out. This can be very intimidating for founders. As such, many choose to pursue their business in stealth mode or not to pursue outside investment at all; that’s their prerogative. But there are also benefits to joining an accelerator: it introduces founders to mentors who have deep experience in starting businesses, helps them refine their pitch before talking with potential investors, gives them access to investors through demo days and much more.
There’s no guarantee of success.
There are no guarantees in life, much less entrepreneurship. Sure, joining an accelerator will expose you to other startups and give you access to mentors. It’ll also tell investors you’re serious about starting your own company. But it’s important to keep in mind that no one can promise a successful outcome.
Funding from accelerators comes with strings attached.
The money you receive is usually predicated on acceptance of an equity stake in your startup. In other words, joining an accelerator might be a bad idea if you don’t want to give up some of your company. In some cases, getting funding also means that you’ll have to take out extra loans—yes, student loans for someone who hasn’t even graduated from college yet—to cover rent, travel costs and other expenses while you work on your business full-time during each program.
Your company gets more exposure in front of investors.
Any business owner will tell you that exposure is important. Even if you’re not actively raising capital, startup accelerators offer new companies an opportunity to develop their products or services in front of a large audience of investors and top-tier mentors. Not only do accelerators provide networking opportunities; they also host demo days where founders can pitch their product or service to an audience of hundreds (or thousands) of people who are willing to invest in new companies.
Working with mentors who can improve your company will be helpful even if they are not investing in you.
Typically, accelerators don’t provide funding in exchange for equity—though some do offer small seed rounds to their participants. This means you’ll be able to develop your product with real customer feedback while you’re still in fundraising mode.