startup accelerator indonesia

Launch Your Startup: 7 Essential Steps, Tips to Start

startup accelerator indonesia

Subtittle: Strategies to Start Your Start up

Everyone has ideas. Some of these ideas may be decent, while others are probably not so good. Even if your idea is great, there’s a big difference between having a great idea and creating a successful startup company.

Do you have what it takes to be an entrepreneur?

It will take hard work, dedication, money, some sleepless nights, and even some failure before you succeed. 71% of businesses fail within 10 years.

Once you get your company off the ground, you need to work just as hard to keep it going each year.

You can use this guide as your blueprint for launching your startup company.

1. Make a business plan

Having an idea is one thing, but having a legitimate business plan is another story.

In simple terms, a business plan is the written description of your company’s future.

You outline what you want to do and how you’re planning to do it.

Typically, these plans outline the first 3 to 5 years of your business strategy.

The business plan needs to be the first thing on your list because you’ll use it to help you with some of the remaining steps.

2. Secure appropriate funding

You’ll need adequate capital to get yourself off the ground. There’s no magic number that applies to all businesses.

The startup costs will obviously vary from industry to industry, so your company may require more or less funding depending on the situation.

For a small, part-time startup with no equipment, employee salaries, or overhead to worry about, it may only cost you less than $10,000.

Based on the graphic above, the vast majority of this money comes out of the entrepreneurs’ pockets.

The cost of doing business is much higher than people initially think.

Let’s circle back to our business plan for a minute.

All business plans contain a financial plan. This plan usually includes:

Balance sheet

Sales forecast

Profit and loss statement

Cash-flow statement

82% of businesses fail due to cash-flow problems.

You’ll use these financial statements to determine how much funding you need to raise in order to get started.

You may discover that the number is significantly higher than you originally anticipated.

3. Find investors.

Investors can be:

Friends

Family

Angel investors

Venture capitalists

Proceed carefully because you don’t want to start giving away significant equity in your company before you even get started.

The type of business you’re starting also influences the likelihood that angel investors and venture capitalists will be willing to give you funding.

If you find a potential investor, you need to know how to pitch your idea quickly and effectively.

You need to have your financial numbers memorized forwards and backward.

Refer to your business plan.

Make sure it’s presentable so you can give them a copy, but you also need to know how to successfully verbalize your startup strategy.

It’s imperative that your business plan has a proper executive summary.

Investors are busy and may not take the time to read through your entire plan if the executive summary doesn’t give them a reason to move forward.

Once you secure the appropriate funding, you can proceed to the next step of launching your startup company.

4. Surround yourself with the right people

You’re going to need some help while launching your startup company.

So where do you start?

Certain people often get overlooked when entrepreneurs are getting their business started.

Sure, you may realize that you’ll need some staff and a manager to help run your company. Is that it?

How many people do you need?

It depends on the industry.

Let’s take a look at an example from a study about the amount of employees for startup companies in the technology industry.

Based on this information, the vast majority of startup companies are small teams.

These numbers would be significantly different if you were starting a business in the restaurant industry.

You would need servers, a kitchen staff, bartenders, and managers.

5. Before you do anything, you need to register your business name.

Once your business gets registered, you’ll need to get a federal tax ID number, as well, from the IRS.

The IRS lets you submit your business information online to get your employer identification number (EIN).

You also need to consult with a:

Lawyer

Accountant

Financial advisor

Unless you’re an expert in law, finances, and accounting, these three people can help save your business some money in the long run.

They can explain the legal requirements and tax obligations based on how you structure your business.

Sole proprietorship

Partnership

Corporation

Limited liability company

While your lawyer, accountant, and financial advisors are not necessarily employees on your payroll, they are still important people to surround yourself with.

Don’t forget about insurance.

Shop around and find an insurance agent who can get you plenty of coverage at an affordable rate.

Now you can start hiring people within your organization.

6. Find a location and build a website

Your startup company needs a physical address and a web address.

Whether it’s offices, retail space, or a manufacturing location, you need to buy or lease a property to operate your business.

As you can see from the graph, leasing property for your business is significantly more expensive than buying.

With that said, it may not be realistic for all entrepreneurs to tie up the majority of their capital in real estate. You should strategize for this in your business plan.

Try to secure enough funding so that you can afford to buy property. It’s worth the investment and will save you money in the long run.

You also need to create a website. Don’t wait until the day your business officially launches to get your website off the ground. It’s never too early to start promoting your business.

If customers are searching online for a service in your industry, you want them to know that you exist, even if you’re not quite open for business yet.

You can even start generating some income through your website.

Once your website is up and running, you need to expand your digital presence.

Utilize social media platforms like:

Facebook

Twitter

Instagram

Snapchat

Your prospective customers are using these platforms, so you need to be on them, as well.

7. Become a marketing expert

If you’re not a marketing expert, you need to become one.

You might have the best product or service in the world, but if nobody knows about it, then your startup can’t succeed.

Learn how to use digital marketing techniques like:

Content marketing

Affiliate marketing

Email marketing

Search engine optimization (SEO)

Social media marketing (SMM)

Search engine marketing (SEM)

Pay-per-click advertising (PPC)

If you’re starting a small business in a local community, you can take advantage of some older and conventional methods such as:

Print advertising

Radio advertisements

Television

Billboards

While these methods can be productive, outbound marketing efforts are not as effective as they used to be.

As long as you’re doing these things, you’ll be able to fight through any obstacle your startup company faces in the future.

startup accelerator program

What Makes Startup Accelerator Programs Successful

startup accelerator program

Subtittle: Checklist for your startup to be ready for an accelerator program

Are you ready for the next big step in your startup , a journey that will change your life forever?

1. Trillion-dollar startup idea?

The bigger the idea the more likely you will get noticed in your application. You also need to make sure that you are able to explain your idea so that it is easy to understand.

95% of accelerators seek B2B startups, while only 78% of accelerators look for B2C startups.

2. MVP

Your product/service needs to be completed, but that doesn’t mean it has to be perfect. Launching a Minimum Viable Product shows how your idea can work in the real world, gives you time to get customer insights, and highlights the areas where you would want to improve your product/service when you apply to enroll for an accelerator programme.

68% of accelerator programmes accepted startups that already have a prototype in place.

3. Evidence

Are you growing as a business? Can you prove it? What is the likelihood of growth in your startup over the next 2 to 5 years? How many customers have you worked with? How many people are visiting your website? What’s your ROI? These are the things that you will need to provide when you’re filling in an accelerator application.

53% of accelerators accepted startups that already have some customers, even if some of those customers aren’t yet paying.

4. Your Team

You need employees. No one can run a startup on its own for long (#burnout!!). Your employees need to work full time or be willing to switch over to full time when being accepted into the accelerator.

18% of startups fail due to team problems such as a lack of domain knowledge, lack of marketing knowledge & plan, lack of technical knowledge, friction within the team, lack of motivation, and a lack of availability.

5. Network + Research

Do you have references from mentors and other founders who have gone through one of these programmes? Have you done your research on which accelerator will be the best fit for your startup?

“It’s OK to ask recruiters and hiring managers questions to see if their vision aligns with yours so you can run a successful business.” — Stephanie Wells, Formidable Forms

6. The Pitch

If you get accepted to go through to the interview for one of these programmes, you need to be ready with your pitch. You need to know your business inside out. This means you need to know the metrics, stats, the vision, and how to overcome potential obstacles (check Point 3 again).

“Most tech startup people are so in the trenches of their product that they forget how to talk high level about who the tech is for.” —John Murphy, eBike Generation

7. Accepted 

If you get accepted you are one of few. Take this opportunity to expand your network in the startup realm. In addition, make friends , being an entrepreneur isn’t always easy and not everyone understands that part of the startup world.

New research from the University of Georgia links startup accelerator success with a few key program elements, such as mentorship and open discussion among participating startup founders.

Recently published and forthcoming papers co-authored by Susan Cohen in Research Policy, Administrative Science Quarterly and Organization Science examined the variation among several accelerators.

Accelerators are fixed-term, cohort-based educational programs for startups. There are about 170 accelerators located across the country, including more than a dozen programs in Georgia.

“When I started studying accelerators for my dissertation in 2011, I was routinely asked whether accelerators were a fad and if they were going to last,” said Cohen, an assistant professor of management at the Terry College of Business and one of the first academics to study accelerators. “What we found is a few accelerator programs improved outcomes for the startups, so we compared the ones that had stronger results versus those that were less effective.”

In one paper Cohen found that, although many accelerators used mentorship as a cornerstone of their program, the key difference was how they spaced out those interactions. Some programs concentrated them upfront and prioritized meetings with both mentors and customers, which is a hallmark of the lean startup methodology. The more the entrepreneurs met with mentors, customers and various stakeholders, the more open they were to new ideas, Cohen said. They often joined the accelerator thinking they were ready to launch a product or scale delivery strategies, but the concentrated interactions helped them determine where they needed to change their plans.

“What they soon learned is they had the seed of an idea, and sometimes they had to pivot quite substantially to make the idea work,” she said. “Those interactions helped them to figure out both that they needed to learn and what they needed to learn.”

Second, the accelerators differed in privacy. Some fostered privacy and were concerned that the entrepreneurs might steal each other’s ideas, yet others forced entrepreneurs to pitch each other frequently and work in cramped, open spaces. The accelerators that encouraged transparency often worked better, and participants often helped each other with execution. Plus, their businesses often were less similar than they initially thought and were rarely actually competitors.

Third, standardized programs tended to perform better than programs that were tailored to fit each venture and each entrepreneur. Often, the entrepreneurs — and even accelerator directors — had weaknesses in certain business skills that they couldn’t recognize by themselves. A standard program helped them to cover common ground, broaden their knowledge and speak a similar language.

In terms of benefits, Cohen’s research team found that ventures that participated in some startup accelerators had better long-term outcomes securing funding, including venture capital and angel investments. They also received more online traffic and hired more employees. The effects were large in some accelerators, including up to 170% more funds. However, the results weren’t universal.

“I often caution entrepreneurs who ask me whether or not they should apply to an accelerator to be careful,” she said. “Do your due diligence in making sure it’s a program that will help your company achieve its goals.”

To help with this, Cohen and two partners produce the Seed Accelerator Rankings Project annually for entrepreneurs to evaluate accelerator programs. Since accelerators can’t always divulge information about their individual startups, these rankings help the programs to showcase their results and performance while still maintaining confidentiality for startups.

Based on her dissertation research, Cohen saw several organizational design elements emerge for the top startup accelerator programs. She found that accelerators with smaller cohorts tend to have stronger performance, and programs sponsored by investors or universities (rather than governments or corporations) raise more money. In addition, programs run by former entrepreneurs are correlated with lower valuations, versus those run by former investors or government employees, which draw higher valuations. Other factors, such as providing workspace, show mixed results and may not be as important to the accelerator’s design.

As the popularity of startup accelerators climbs in 2020, Cohen will continue to study what works and what doesn’t. She also wants to know how accelerators influence the career trajectories of entrepreneurs who participate.

“We know accelerators work for some ventures, but we’re wondering what their impact is on entrepreneurial careers,” she said. “We’re also looking at how these entrepreneurs build relationships with different types of investors, such as angel inventors, venture capitalists and corporate investment.”

Cohen studies accelerator programs with several colleagues. “The Design of Startup Accelerators” was co-authored by Daniel Fehder of the University of Southern California, Yael Hochberg of Rice University and Fiona Murray of the Massachusetts Institute of Technology. Cohen published the Administrative Science Quarterly and forthcoming Organization Science papers with her doctoral advisor Chris Bingham of the University of North Carolina and Benjamin Hallen of the University of Washington.

startup accelerator & incubator

What is a Startup Accelerator or Incubator Do to Help Startups Attain Success

startup accelerator & incubator

Subtitle: How Startups Attain Success with Accelerator or Incubator 

Are you ready to make your side hustle becomes your main hustle? Or maybe you’ve got an idea you just don’t quite have the details fleshed out. You may be considering an incubator or accelerator to help you get started. But what’s the difference?  And What is a Startup Accelerator or Incubator do to help startups attain success? 

Accelerators

Accelerators usually begin with a rigorous application process. Top accelerators like Techstars and Y Combinator are highly selective, accepting less than 2% of applicants into their programs.

Typically, the accepted companies have already demonstrated fast growth and a minimum viable product (MVP). They’re often given a small seed investment and paired with mentors from the accelerator’s vast network.

The goal of the accelerator is primarily networking, mentorship, and resource allocation to skyrocket the success of proven business ideas. A business’ time at an accelerator typically ends with a presentation sharing the growth and development they’ve achieved during their weeks or months in the program.

Things to Consider When Joining an Accelerator:

Is it the right time? Make sure you’re joining an accelerator at the right time. If you’re still searching for a co-founder or your first few employees, you may be a better fit for an incubator.

How fast or slow are you growing? If you’re a fast-growing company, an accelerator might be the right fit. If your growth plan is still developing, an incubator might be a better choice.

Will you relocate? Many accelerators require you to relocate for the few months you’re participating in their program.

Incubators

Some incubators select candidates through an application process while others only work with companies or entrepreneurs passed along from within their network of advisors. Some incubators are focused on specific verticals. For example, Monarq Incubator supports female-led startups through their programs.

Incubators also tend to focus on businesses or entrepreneurs from a certain geographic location — or require participants to relocate to their coworking space or local community for indefinite periods of time.

Participants spend their time at the incubator networking with other entrepreneurs, fleshing out their ideas, determining product-market fit, and creating a business plan. Intellectual property issues are also vetted and dealt with at this stage as well.

The incubator process usually lasts a few months — but is often open-ended — and ends with a pitch or demo day where the entrepreneur presents their business idea to the incubator community and/or investors.

Things to Consider When Joining an Incubator:

Do they have the right mentors? Make sure your incubator can offer specific and experienced guidance for your business or idea. The last thing you need is someone advising you on your shipping business idea who’s spent the last 30 years mentoring young restaurateurs.

Do you need funding now? If you’re looking for capital to grow your business, an accelerator might be a better fit. Incubators focus on preparing the entrepreneur or founder with the business model, plan, and mentorship necessary to confidently pitch their finished business plan to investors.

Can You Get By with a Coworking Space?

If funding, business savvy, and a proven business idea aren’t an issue for you, you might consider simply joining a coworking space. You’ll get the office space you need with built in networking opportunities and events. Some coworking spaces even help you outsource administrative tasks so you have more time to spend on the bigger tasks at hand.

Another benefit of joining a coworking space is that you don’t have to give away equity in your company. Incubator and accelerator mentors generally receive equity in exchange for their expertise. That’s not an issue with coworking spaces.

If you’re joining an incubator or accelerator, make sure you have clearly defined, actionable goals. And be honest about whether or not you can achieve those goals without joining an incubator or accelerator. The process for applying to and joining these programs is lengthy and arduous — and it’s time you could be spending getting your business off the ground without parting with equity.

-Incubators

An advantage of being a part of an incubator is that your startup business gets access to a wide range of financial capital alternatives. In addition, it also provides mentorship, networking, and expertise in your specific startup industry, as well as helps startups turn ideas into new businesses.

Sometimes these benefits can also be a disadvantage to incubators. Certain types of mentorships and networking with entrepreneurs may hinder the startup owner’s focus during the risky early stages of their startup and your idea might not always lift off.

Accelerators

On the other hand accelerators in general work extremely close with everyone involved in the startup, which is an advantage. Accelerators also match the partners and investors to fit with the chosen startup.

In accelerator programmes they also focus on the development of pilot projects for their startups to ensure growth and success. Accelerators try to provide a platform for the startups to grow fast while enrolled in the programme to increase the probability of receiving startup investment.

Y Combinator accepts about 1.5% to 3% of the applications it receives.

A disadvantage of accelerator programmes is that they are short-lived and won’t provide as much support as an incubator would over an extended period, however the short-term acceleration might produce better results in the long run. Another con is that these programs only accept a few startups every year and require equity in each startup they accept.

In the end, it depends on how developed your startup is and what type of support it will need to grow.

At a high level, startup accelerators and incubators are organizations that seek to help startups attain success. Startup accelerators tend to focus on providing startups with mentorship, advice, and resources to help the startups succeed, including a Demo Day, a day to focus the attention of the startup investor community on the startups through hosting a series of investments pitches from the startups to startup investors.

Accelerators tend to not offer dedicated office space to startups (and may encourage startups to find their own dedicated space), but may have a physical location for shared resources and accelerator events such as invited guest speaker talks and advising office hours. Incubators tend to offer dedicated office and development space to the startups for a set period of time.

Startup accelerators and incubators can get involved at all stages of a startup’s development, from idea stage to revenue-generating, late stage. However, most tend to focus on relatively early stage startups, as this is when companies can typically most benefit from outside help.

Startups are usually admitted in batches, with many incubators and accelerators offering 1-3 batches per year. Some focus on a specific industry, market, technology, stage, or other thesis, whereas others are more generalists. Most seek to run an application and screening process.

However, while a handful of accelerators and incubators have been very successful in helping startups attain success, being admitted to a startup accelerator or incubator is not a guarantee for success to a startup founder, and not a guarantee of a sound investment for a startup investment.

Accelerators Vs Incubators: How to Choose the Right One

Subtittle: What is a startup accelerator or incubator? Which One Better

Accelerators and incubators both offer entrepreneurs good opportunities early on. Founders get help to quickly grow their business and they often better their chances of attracting a top venture capital (VC) firm to invest in their startup at a later point. Still, the programs are different frameworks for startup success.

Let’s start by breaking down the goals of each of these types of programs. Accelerators “accelerate” growth of an existing company, while incubators “incubate” disruptive ideas with the hope of building out a business model and company. So, accelerators focus on scaling a business while incubators are often more focused on innovation.

While both types of programs were popularized in startup hubs like Silicon Valley, nowadays they can be found all over the world. Although most people associate these programs with tech startups, most of them accept companies from a wide variety of verticals.

Accelerators

One of the big differences between accelerators and incubators is in how the individual programs are structured. Accelerator programs usually have a set timeframe in which individual companies spend anywhere from a few weeks to a few months working with a group of mentors to build out their business and avoid problems along the way. Y Combinator, Techstars, and the Brandery are some of the most well-known accelerators.

Accelerators start with an application process, but the top programs are typically very selective. Y Combinator accepts about 2% of the applications it receives and Techstars usually has to fill its 10 spots from around 1,000 applications.

Early stage companies are typically given a small seed investment, and access to a large mentorship network, in exchange for a small amount of equity. The mentor network–typically composed of startup executives, venture capitalists, industry experts, and other outside investors–is often the biggest value for prospective companies.

The mentor networks aren’t small, either. TechStars, for example, has hundreds of mentors in its program.

Aaron Harris, a partner at Y Combinator, said he’s not sure that accelerators necessarily work as a whole, but Y Combinator’s success is due to the way it approached incentives.

“A lot of that success comes back to the alignment of incentives,” Harris said. “Good programs completely align all parties — at YC all the partners who advise the companies have a stake in their success. We also do as much as we can to limit distractions. We don’t schedule unnecessary meetings, don’t force them to work in a big loud co-working space, etc.”

At the end of an accelerator program, you’re likely to see all the startups from a particular cohort pitch at some sort of demonstration day (often shortened and referred to as a demo day) attended by investors and media. At this point, the business has hopefully been further developed and vetted.

“The goal of the accelerator is to help a startup do roughly two years of business building in just a few months,” said Mike Bott, general manager of the Brandery. “If you go through a good one, you’ll know at the end where your startup founding team and business stand.”

Incubators

Startup incubators begin with companies (or even single entrepreneurs) that may be earlier in the process and they do not operate on a set schedule. If an accelerator is a greenhouse for young plants to get the optimal conditions to grow, an incubator matches quality seeds with the best soil for sprouting and growth.

While there are some independent incubators, they can also be sponsored or run by VC firms, angel investors, government entities, and major corporations, among others. Some incubators have an application process, but others only work with companies and ideas that they come in contact with through trusted partners. A good example of an incubator is Idealab.

Depending on the sponsoring party, an incubator can be focused on a specific market or vertical. For example, an incubator sponsored by a hospital may only be looking for health technology startups.

In most cases, startups accepted into incubator programs relocate to a specific geographic area to work with other companies in the incubator. Within the incubator, a company will refine its idea, build out its business plan, work on product-market fit, identify intellectual property issues, and network in the startup ecosystem.

A typical incubator has shared space in a co-working environment, a month-to-month lease program, additional mentoring, and some connection to the local community.

Co-working is a big part of the incubator experience and has been split off as its own separate business offering around country, with co-working spaces charging rent for access to utilities. Some accelerators offer a co-working space, but most provide companies with private office space or let them find it on their own.

“If you need private space, most incubators are open seating, and this can be distracting for larger teams,” TechStars mentor Troy Henikoff said. “The economics are usually on a per-seat basis, which is great for the first few people, but at a certain point it may be less expensive to get your own office.”

Both incubators and accelerators offer a great opportunity to help young companies and ideas for startups get headed in the right direction, but it’s up to you where you need to start.e 

Accelerators and incubators both offer entrepreneurs good opportunities early on. Founders get help to quickly grow their business and they often better their chances of attracting a top venture capital (VC) firm to invest in their startup at a later point. Still, the programs are different frameworks for startup success.

Let’s start by breaking down the goals of each of these types of programs. Accelerators “accelerate” growth of an existing company, while incubators “incubate” disruptive ideas with the hope of building out a business model and company. So, accelerators focus on scaling a business while incubators are often more focused on innovation.

While both types of programs were popularized in startup hubs like Silicon Valley, nowadays they can be found all over the world. Although most people associate these programs with tech startups, most of them accept companies from a wide variety of verticals.

Accelerators

One of the big differences between accelerators and incubators is in how the individual programs are structured. Accelerator programs usually have a set timeframe in which individual companies spend anywhere from a few weeks to a few months working with a group of mentors to build out their business and avoid problems along the way. Y Combinator, Techstars, and the Brandery are some of the most well-known accelerators.

Accelerators start with an application process, but the top programs are typically very selective. Y Combinator accepts about 2% of the applications it receives and Techstars usually has to fill its 10 spots from around 1,000 applications.

Early stage companies are typically given a small seed investment, and access to a large mentorship network, in exchange for a small amount of equity. The mentor network–typically composed of startup executives, venture capitalists, industry experts, and other outside investors–is often the biggest value for prospective companies.

The mentor networks aren’t small, either. TechStars, for example, has hundreds of mentors in its program.

Aaron Harris, a partner at Y Combinator, said he’s not sure that accelerators necessarily work as a whole, but Y Combinator’s success is due to the way it approached incentives.

“A lot of that success comes back to the alignment of incentives,” Harris said. “Good programs completely align all parties — at YC all the partners who advise the companies have a stake in their success. We also do as much as we can to limit distractions. We don’t schedule unnecessary meetings, don’t force them to work in a big loud co-working space, etc.”

At the end of an accelerator program, you’re likely to see all the startups from a particular cohort pitch at some sort of demonstration day (often shortened and referred to as a demo day) attended by investors and media. At this point, the business has hopefully been further developed and vetted.

“The goal of the accelerator is to help a startup do roughly two years of business building in just a few months,” said Mike Bott, general manager of the Brandery. “If you go through a good one, you’ll know at the end where your startup founding team and business stand.”

Incubators

Startup incubators begin with companies (or even single entrepreneurs) that may be earlier in the process and they do not operate on a set schedule. If an accelerator is a greenhouse for young plants to get the optimal conditions to grow, an incubator matches quality seeds with the best soil for sprouting and growth.

While there are some independent incubators, they can also be sponsored or run by VC firms, angel investors, government entities, and major corporations, among others. Some incubators have an application process, but others only work with companies and ideas that they come in contact with through trusted partners. A good example of an incubator is Idealab.

Depending on the sponsoring party, an incubator can be focused on a specific market or vertical. For example, an incubator sponsored by a hospital may only be looking for health technology startups.

In most cases, startups accepted into incubator programs relocate to a specific geographic area to work with other companies in the incubator. Within the incubator, a company will refine its idea, build out its business plan, work on product-market fit, identify intellectual property issues, and network in the startup ecosystem.

A typical incubator has shared space in a co-working environment, a month-to-month lease program, additional mentoring, and some connection to the local community.

Co-working is a big part of the incubator experience and has been split off as its own separate business offering around country, with co-working spaces charging rent for access to utilities. Some accelerators offer a co-working space, but most provide companies with private office space or let them find it on their own.

“If you need private space, most incubators are open seating, and this can be distracting for larger teams,” TechStars mentor Troy Henikoff said. “The economics are usually on a per-seat basis, which is great for the first few people, but at a certain point it may be less expensive to get your own office.”

Both incubators and accelerators offer a great opportunity to help young companies and ideas for startups get headed in the right direction, but it’s up to you where you need to start.

accelerator program

Startup Accelerator Business Model, Everything You Need to Know About Accelerator Programs

accelerator program

Subtitle: What you Have to Know About Startup Accelerator Business Model

If you’re looking at a viable business model for your startup, I’m sure you’ve found out by now there are different choices with some fundamental differences. One of those choices that everyone fancies is a startup accelerator business model which provides everything a startup founder dreams of:

  • Financing
  • Education
  • Mentorship

All of it is condensed in a very limited time span, which makes this particular choice an intense experience. Despite all the buzz they receive, these seed accelerators (their other moniker as they support seed and early-stage startups) are not a great fit for every aspiring startup out there. 

Why? Let’s start with the basics:

What are accelerator programs?

One way would be to define them as hybrid models focused on the development of early-stage startups through mentorship, education, and support during a (typically) three-month period. In other words, tech startup accelerator programs “accelerate” the growth (hence the name) of an established business (one that already has a team, proof-of-concept, market validation, and so on) by providing everything necessary to scale. In exchange for the seed money they offer, they take equity in the business (some are non-profit). 

How do startup accelerators work?

First, there is a rigorous application process where the acceptance rate is only 1-2% for the more popular and established programs, while the percentage is just a teensy-weensy higher for the less prestigious accelerators.

Once accepted, a startup enters an accelerator on-site for a precisely defined/fixed period which is typically three months but can also be half a year. You also become part of a cohort of companies, which is another plus because a great deal of the connections you make during the process can turn into long-term, meaningful relationships – not to mention lead to potential funding-related introductions.

Because the accelerator experience is aimed at accelerating the life cycle of a young startup, it’s very intense and immersive with educational seminars and workshops, group and individual mentorship meetings, investor pitches, networking events, and everything else needed to fine-tune the product/service and business model. You are thrown into a highly compressed cycle that would usually take a few years so it’s vital to be able to focus, learn, and make progress at a rapid pace. 

Finally, the speedy learning-by-doing experience comes to an end with a ‘demo day’ – a business version of college graduation where startup founders present their business model. Each startup in the cohort gets an opportunity to publicly pitch to the investors and community, with the possibility of private and follow-up presentations. 

The entire startup accelerator structure is what makes all of this an enticing proposal. There are distinct collective elements that make this form of cultivating early-stage startups fairly unique: 

  • Fixed period
  • Cohort-based
  • Mentorship and education-driven
  • ‘Demo day’ exit

And with that, we reach the question that’s on every founder’s mind:

Are startup accelerators worth it?

With its ever-growing importance in startup communities across the globe, it’s easy to see why the startup accelerator business model is often perceived as the predominant way for scaling and securing funding from investors. While some programs actually provide limited funding or guarantee it in exchange for an equity stake, it’s important to note they aren’t suited for every startup. 

The thing is – they are not mandatory for building and growing a successful business. While not every program works in the same way, the high-pressure environment is one constant you’ll find in every accelerator. Arguably, not everyone is equipped both emotionally and cognitively to thrive under such conditions, which is a must in this case. 

There are plenty of alternatives where you can reap largely the same benefits without devoting yourself to the exhaustive pace of an accelerator. That being said, the truth is these programs have literally transformed promising businesses like Airbnb, Stripe, Dropbox, Udemy and many others into global companies. Plus, the value of accelerators is reflected by the fact that all parties involved (investors, startups, end users, even the economy) benefit from the intensive learning regime. 

Once more, I’ll reiterate: learning-by-doing is critical to scalability, and accelerators make a point to speed up that process by stuffing years’ worth of learning into a few months. As such, they are great opportunities to quickly grow early on but also to attract other investors. 

How do you know if your startup is ready?

Most accelerators follow a similar process so before you decide to apply for one, you need to ask yourself a few key things:

  • Are you in the right stage of development? If you’re growing quickly, have a minimum viable product (MVP) and some form of competitive advantage, you’re likely ready to go a step (or two) further.
  • Can you and your team move on-site for 3 to 6 months? In order to be admitted into the program (and take full advantage of it), you must be on-site, even fully relocate your startup in some cases. 
  • Are you able to dedicate yourselves 100% to your startup during that time? The majority of accelerators require a full-time effort from the entrepreneurial team
  • Can you thrive in a frenzied, highly demanding environment? Because not everyone is suited to handle learning organized in such a fashion, not everyone is coachable in the eyes of experts who lead the accelerator.

On a side note – do you know how to clearly articulate what you (c)are about? Paul Graham of YCombinator, probably the most successful startup accelerator around, says most of the applicants don’t present their startup concisely, poorly explaining what they do and ultimately, conveying little to no relevance and importance. There’s something to think about.

Final thoughts

The startup accelerator business model is designed with an aim to help entrepreneurs of all walks of life scale their business and make an impact. From verifying your idea or concept to validating the market to securing financing and everything in between, there are many benefits that, in the end, significantly improve a budding startup’s chances for success. 

Do note this: addressing these key issues doesn’t automatically make much of a difference as these programs can differ in their success. My advice to you is to take your time, evaluate both accelerators and other options, and think long and hard about your ability to fully commit. Understand both the value you’ll be receiving and gamble you’ll be making.