Startup accelerators offer an attractive funding and support option to early-stage companies. While they often get lumped together with other startup funding options like incubators, angel investors, and early-stage venture capitalists, accelerators are their own special animal. These programs are for companies that are established and gaining traction but need help getting to the next level.
Do you think your startup is ready to join an accelerator? You may be wondering a few things, such as what are the benefits of accelerators for early-stage tech companies? How should you choose which accelerator to try for, and what will help you get admitted? How do you get the most out of an accelerator? And is an accelerator the right thing for your business? These are all great questions that we’ll clear up.
We’re very familiar with these programs here at Lighter Capital; we’ve funded companies that have graduated from all of the prominent accelerators. Not only that, but Lighter Capital’s own founder Andy Sack was formerly the managing director of Techstars Seattle. (Techstars Seattle is now run by Chris DeVore, who is a partner with Andy in Founders’ Co-op, one of the largest incubators in Seattle.)
With this background, let’s cut to the chase and discuss a few things you need to know about joining an accelerator. Here’s our answers to 5 common questions asked by entrepreneurs contemplating taking the plunge.
What are the benefits of accelerators for early-stage tech companies?
The main benefit of accelerators is the network of connected people — like-minded folks who are also trying to grow their companies and facing many of the same issues you are. This community usually thrives even after graduation from the 10-12 week program, forming the basis of a powerful network.
Another benefit is that being in an accelerator gives you a bit of validation with investors, especially if you’re with a top-tier accelerator. Accelerators also help a lot in teaching participants how to raise money.
A lot of accelerators give you access to free or discounted services and products, such as Amazon AWS computer time and discounts on software like Hubspot. These benefits continue even after the accelerator is over. Here at Lighter Capital we’ve recently launched our own similar program, Client Perks, to benefit our own network of clients.
How should I choose which accelerator to join?
Accelerators can be very different one from the other. Class size, focus, reputation, and advisors are some of the main variables.
Being associated with top-tier accelerators like Y Combinator, Techstars, StartX, Alchemist, and 500 Startups will give you benefits in terms of bona fides and connections. However, be forewarned that these programs are very, very competitive. For example, TechStars usually accepts only 1 percent of its applicants.
Choosing an accelerator that’s in line with your business and your goals is most important. Some of these are better at B2B versus B2C. Some are even more specific in their focus; Alchemist concentrates exclusively on B2B SaaS, for example. Y Combinator does both B2B and B2C but is more well-known for its B2C engagement.
If you match up appropriately, the resources and connections you’ll find at your accelerator of choice will be able to help you the most.
What will help me get admitted to an accelerator?
Companies that are admitted to these accelerators usually have achieved some amount of revenue and/or traction. Traction could look like users, beta customers, or actual subscribing customers. Publicity might help a bit. Accelerators will also want to see that you have a solid team and good product-market fit.