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What Does Joining a Startup Accelerator Mean?

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What Does Joining a Startup Accelerator Mean?

We’ve seen a huge explosion in the number of startup accelerators over the past six or seven years.

Many highly successful entrepreneurs have come through startup accelerators over the years. Some founders of accelerators have become popular blogs and voices in the startup ecosystem.

Others began as founders themselves. Then used their exit capital to help create these mechanisms to help other entrepreneurs.

So, what does it mean to join one? What can you expect? How do you make the most of them?

What Is a Startup Accelerator?

A startup accelerator is a fixed-term program for startups. They are class or cohort-based, with a group progressing through the schedule together. This is often around a 3-month process. Though can be less or more.

Accelerators are mostly privately owned funds that primarily use this model to find investment opportunities and grow them.

For entrepreneurs, the main draw is introductions to investors and mentorship.

Note that startup incubators are slightly different. Most notably that they are more open-ended or can run much longer than an accelerator. Some may be university-affiliated.

Top Startup Accelerators

The real benefits and value of these programs can vary incredibly widely. It has become trendy to start them and use the name accelerator very loosely.

Some of the top startup accelerators based on successful exits include:

  1. Y Combinator
  2. 500 Startups
  3. TechStars
  4. Plug and Play
  5. MassChallenge
  6. SOSV
  7. Startup Bootcamp
  8. IIDF
  9. Wayra
  10. Startup Chile

Applying & Getting into a Startup Accelerator

Even if you are excited about getting into a startup accelerator it can be a lot of work. Expect it to be as much work as an angel or VC fundraising round.

You start by applying. Only around 1% of those who apply get accepted. That makes it five or six times harder to get into an accelerator than Harvard.

You can typically get the application process started online. Though, this is just the beginning of the process.

Often you’ll be applying at least three or four months before the next cohort begins. If you make the shortlist you’ll be invited to fly out and meet them. That’s still no guarantee you’ll get in.

Some now successful founders have had to apply and reapply to get in several times. Sometimes with completely different ventures. Every meeting you have can help. Just don’t get discouraged if the first doesn’t fly.

Be Willing to Move

Joining a startup accelerator means being willing to move wherever they are. It may be New York City, Silicon Valley or even Chile.

This may only be for several months, though most investors will want you to stick around if they invest in your company. They will be more helpful if you do.

Make sure you factor this into your rent and personal finances. If you are moving from the Midwest to Silicon Valley that can be a big adjustment. It may eat up a lot of your money.

Which is one reason Peter Theil had announced moving from San Fran to Los Angeles. Founders were burning too much money on rent instead of investing it in their ventures.

Intense Pace, Rigorous Focus

Joining a startup accelerator may demand more energy and focus than you’ve committed to anything before. At least, the most you’ve experienced in a while.

In the case of Y Combinator, you are moving in with your cofounders and working around the clock from your shared living space. You are expected to make massive progress fast. You are taught to have laser focus.

Most graduating entrepreneurs really find value in this. Just don’t expect to be spending much time sunning yourself on the beach in California while you are there. You are there to hit milestones and get things done.

Working With Other Cofounders

Graduating founders often point to networking with other cofounders as one of the best benefits of attending an accelerator. You are in the trenches with your peers and can learn a lot from each other. You are competing in one sense, but can share a lot about your experiences in fundraising and dealing with investors.

At Y Combinator this is done by getting together for a dinner once a week when you get to get out of your cave and hear an expert speak.

Advisors

The caliber of advisors and mentors you’ll get can vary widely between accelerators. As well as the amount of interaction you’ll get with them.

As a first time founder, you can definitely benefit from all the quality advice you can find. Though it can sometimes pull you in too many directions. Balance this path with just going direct to get a top-notch fundraising advisor in your corner.

Investment

Fundraising is a common reason why many entrepreneurs get interested in startup accelerators. It is typically small amounts of seed-stage money.

It can range from just $10,000 to $150,000. This is typically an equity investment. Convertible and SAFE notes are commonly used in this space. If it’s money you are looking for, make sure you do the math on what this is going to cost you, and the value of everything else you get.

Demo Day

Far more valuable than the initial seed investment offered by the accelerator is the culmination of the program on Demo Day. This is when you present. Often to a room full of investors actively looking for new startups to put their capital to work in.

Note, this does not guarantee an investment from any of them. It may just be the start of a relationship. You may end up raising from them a couple of rounds down the road.

Buzz & Credibility

Having gotten into and graduated from a top-level startup can be a vote of confidence and indicator of your potential to other investors in the future. Leverage that and everything else that’s happening to build buzz and visibility.

Image Credit: Pixabay

BIO

Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books or entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.

Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.

Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).

Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and at NYU Stern School of Business.

Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.

 



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