There are many ways to fund a startup business. Since their inception in 2005, startup accelerator programs have become one of these options for entrepreneurs. Like any funding strategy, startup accelerators will be the perfect fit for some businesses, but not for others. 

How do you know when a startup accelerator is the best option for your business?

In this ultimate guide to startup accelerators for entrepreneurs, I’m going to take you through the startup accelerator process so that you can best answer that question. This will involve discussing:

  • What a startup accelerator is and how it works
  • When startup accelerators are the correct option.
  • And how to pitch your ideas to a startup accelerator to secure funding and guidance.

Let’s get to it!

Y Combinator and the Startup Accelerator

To understand how and why startup accelerators are so popular, we need to learn about how these programs came to be, and in what form they started.

Back in 2005, a company called Y Combinator started a quiet revolution in business funding. This was the beginning of the startup accelerator. The company specialized in funding businesses during their seed stages. 

The seed stage is the earliest round for funding and is often also referred to as the angel investor round.

Y Combinator’s goal was to provide enough capital for new businesses to get started before moving on to more advanced funding rounds. Their mission statement remains to support new businesses during their initial steps, helping them create something impressive that can then be used to raise more capital.

However, Y Combinator isn’t a simple investor providing capital for equity. While that’s part of what it does, Y Combinator focuses on creating a support network for new companies and their founders. 

They dedicate themselves to helping founders find a direction, expanding on their ideas and developing product and service concepts that future investors will back.

Furthermore, Y Combinator provides startups with networking opportunities, direct meetings with potential new investors, and even help to negotiate the mergers and acquisitions process.

Each year, Y Combinator invests a small amount of capital in a large number of brand-new startups. They provide the support network and contacts to give these companies the best chance of succeeding.

To do this, Y Combinator has created an environment where startup founders can focus on building products and learning from their users. Although they offer significant advice, they do not take a seat on the board of any company in which they invest, nor do they try to seize control of the company. They scale their advice based on how much the startup founders request and need help.

This is what Y Combinator did and continues to do to this day. In that time, the startup companies they have helped have included massive projects such as Reddit, Airbnb, Coinbase, and Dropbox. By the end of 2019, they had invested $155billion in startups over a 14 year period.

As a fun fact below here is the application from Dropbox which served them to get into YCombinator.

The Aftermath of the First Startup Accelerator

Within a decade, the blueprint that Y Combinator had created with its initial program was taken on board by businesses from around the world. Initially, this interest grew around tech-heavy locations such as California’s Silicon Valley and London’s Fintech movement.

As more companies created startup accelerator programs in an attempt to mimic Y Combinator’s business model, word spread. Startup founders increasingly looked to startup accelerator programs for funding and guidance.

This became a symbiotic relationship as startup accelerator programs helped fledgling businesses to find their feet while receiving small amounts of equity in businesses with the potential to become one-billion-dollar enterprises.

As time passed, there were more examples of startups reaching huge profit margins via these programs. The more they proved their worth, the more entrepreneurs began to turn to them. This then led to more startup accelerators being created to meet this demand.

Today, while it can be argued that the startup accelerator industry is crowded, startup founders continue to find success with their assistance. Alongside Y Combinator, other leading startup accelerator programs include:

1) TechStars:

Based in Boulder, Colorado, TechStars’ accelerator program has assisted over 1,000 startups to generate more than $8billion.

2) 500 Startups:

Producing companies such as Udemy and Credit Karma, 500 Startups operates out of Mountain View, California, and has offered financial assistance and mentoring to more than 1,500 startups across 60 countries.

3) Plug and Play:

Another Californian startup accelerator with global reach. Plug and Play Ventures invested in 262 startups in 2017 alone. Its portfolio of companies is worth more than $7billion.

4) MassChallenge:

Based in Boston, MassChallenge has been in operation for a decade, creating more than 80,000 jobs worldwide, and focusing on Fintech and Biotech industries.

5) SOSV:

This accelerator funds more than 150 startups per year, with a network of 1000 mentors worldwide. Its intensive 3 – 6-month accelerator program has focused on physical products over digital ones, giving it a different flavor to other programs.

6) Startupbootcamp:

Focusing on digital innovators, Startupbootcamp assists ambitious founders from around the globe to scale their business ideas. With average funding of around $980K for each startup, this accelerator program invests heavily in its startups with larger initial investments than often associated with accelerators.

7) The IIDF:

Based in Russia, the International Initiatives Development Fund prides itself on being the most active Russian VC fund and accelerator available to startup founders. Investing in seed stages, the IIDF also offers funding and guidance for Series A rounds.

8) Wayra:

Founded in 2011, Wayra is a part of the Telefonica brand. It currently operates in 10 countries, including the UK, and provides unprecedented access to business development through its Telefonica network.

9) startup Chile:

This accelerator program operates, unsurprisingly, out of Santiago, Chile. startup Chile invests substantially in opportunities for minority business leaders, with 21% of its current startup founders female. As of 2020, its startup companies are valued at $1.4billion.

What is a Startup Accelerator?

Y Combinator is what’s known as a disruptor. This involves bringing something new to the table through disruptive innovation. As Alexandra Twin of Investopedia puts it: “Disruptive innovation refers to a new development that dramatically changes the way a structure or industry functions”

Y Combinator came into the fundraising industry and disrupted how things are done. It accomplished this by creating a new, effective model for fundraising and investment. One that works both for startup accelerator investors and startup founders receiving that capital. 

We call this model, the startup accelerator, though, as you’ll see, the strict definition is currently in flux.

By looking at Y Combinator’s success above, you should already have an idea of what a startup accelerator is. But let’s look in more depth at the features of a startup accelerator so we can expand this idea to where it is today. We’ll start with two key points about how startup accelerators work.

1) Startup Accelerators are Broad:

Although startup accelerators are popular, they often have a broad definition. Alongside this, because these accelerators offer a relatively new way of offering investment, the very definition of what a startup accelerator is continues to evolve over time. For this reason, each startup accelerator will offer subtly different services to startup founders. This also means that what is expected of a startup accelerator now, may alter drastically over the coming decade. Entrepreneurs should stay abridged of these changes. One of the many reasons to find the best business mentor.

2) Startup Accelerators are Confusing:

Given our definitions above, it’s easy to think that startup accelerators are simple. They are not. One of the reasons for this, and something we will explore below, is that startup accelerators are only one form of assistance offered to startup founders. Incubators, angel networks, co-working spaces, entrepreneurship courses – they all share some features of startup accelerators and so can be mistaken for them all too easily. 

Given that the term is innovative and evolving, and that there is confusion over exactly what is included in a startup accelerator, creating a working definition can be difficult. With that said, I’ve worked with thousands of entrepreneurs and investors, and in that time I’ve boiled the startup accelerator framework down to six easy-to-understand features.

These Six features are:

1) Transparent Applications:

Unlike some venture capital firms and other investor groups, a key feature of the startup accelerator is that it is open to all. Startup accelerator programs do not care about elitism. They care about working ideas that are scalable. For that reason, startup accelerator programs allow anyone to apply. If the program does not allow you to apply, then it’s more of private investment and mentoring group.

2) Competition is King:

Despite the openness of startup accelerator programs, they are, by nature, fiercely competitive. Although anyone can apply, the number of startup founders who will be accepted will always remain small. Startup founders should not lose heart if they cannot find a startup accelerator program that is a good fit or is turned down during the application process. There are always alternatives to startup accelerators

3) Pre-Seed Investment:

Startup accelerator programs will sometimes offer pre-seed stage investment. This is usually under $50,000 and is given in exchange for equity. Seed stage investment is, also given, and that amount can be upwards of several hundred thousand dollars.

4) Time Sensitive:

Startup accelerators work because they invest most of their money, time, and mentors, in the earliest stages of a business. However, they expect to see if a business idea will fly quickly. This is why startup accelerators usually offer a limited window of support between 3 to 6 months after entry to the program. This does not mean that the startup accelerator exits from the business at that point. They maintain their equity, but take a back seat after this intense period of guidance, turning their attention towards new applicants. They then hope that those businesses which have gone through their accelerator program will increase in value over time without interference.

5) Teams, not Individuals:

Like many pre-seed and seed-stage investment initiatives, startup accelerators tend to focus on founders who impress them. However, the guidance given is usually focused on the larger team at a startup company rather than one founder or individual. The reason for this is that most startups are a collaborative process. Research shows that investors are more likely to invest in businesses with more than one founder because the burden of running the startup is shared, and ideas can be bounced between those people. This doesn’t mean pitching a strong team with a poor product. Accelerators want to see a strong team and a great product.

6) Cohort Classes:

Startup accelerators tend to specialize in specific niches. They invest their time and resources in cohorts or classes of startups that are operating either in similar domains or share a lot in common. This way they can maximize the impact of the mentors they have at their disposal, giving relevant advice specific to a niche. This increases the chance of success, and so startup accelerators don’t focus on random individual companies.

Similar Investment Programs

As mentioned above, there can be much confusion about startup accelerators due to other similar forms of investment. With this in mind, before we move on to the different types of accelerators that exist, let’s rule out specific investment programs so you know you’re dealing with a legitimate, real startup accelerator. To start off below is a chart to know where accelerators differ from other sources.

Startup Accelerators

Most of these programs are labeled under another term: “Incubator”. The concept here is similar to a startup accelerator in that an incubator offers support to a business as it goes through its initial fledgling stages. These are the most critical stages in any business, and most don’t make it without support. Incubators give some protection from this difficult trend. 

As Vice Chairman of multinational company Deloitte and business innovator Jay Samit says: “No first-time entrepreneur has the business network of contacts needed to succeed. An incubator should be well integrated into the local business community and have a steady source of contacts and introductions.” 

A good incubator can, therefore, be as powerful as a startup accelerator, but due diligence is required on the part of the entrepreneur to make sure they sign up for the program with the best chance of helping their business.

The line can blur even more. In some cases, startup accelerators are connected to incubators, making the difference between both even more difficult to determine.

To help with this confusion, I’ve outlined some of the more popular incubator types below, showing why they are not startup accelerators:

1) Startup Courses:

You’ll also see these referred to as “entrepreneurship” courses. These are offered by business schools or successful business educators. They are designed to help entrepreneurs understand the basic workings of building a startup. This includes theoretical concepts as well as practical aspects. The latter sometimes involves setting up a new company as part of the course. These courses often require a fee. Good examples of this are the 8-week course offered by Oxford University online and the innovation and entrepreneurship course offered at Stanford.

2) Angel Networks:

We mentioned angel investors earlier. They often invest during the seed stage. In some cases, some will band together into what is known as angel networks or angel groups. Together, they invest in new businesses, but will also offer some mentoring along the way. They are not official startup accelerators as they are not a single entity, but rather a number of investors working together to help new entrepreneurs.

3) Guidance Initiatives:

Also known as “mentoring schemes”, this involves academics, experienced entrepreneurs, and/or investors, giving back to the business community by offering advice to new entrepreneurs. There is no offer of capital for equity, but there may be networking opportunities that later lead to this. For the most part, guidance initiatives are advisory only. Mentoring is incredibly important as 50% of all businesses go bust within the first five years. Many of these catastrophes can be avoided with the right mentor. The right mentoring scheme can be transformative.

4) Awards and Competitions:

Some organizations offer awards or competitions where new entrepreneurs can submit their business ideas. The winners receive recognition for their idea and can use this award during investment pitches as persuasive evidence that they have something worthwhile. Some competitions will reward one winner with investment and/or mentoring. An example of this is TechCrunch Disrupts, an annual competition where new startups can win a grand prize of $50,000.

5) Meeting Places:

There are several types of meeting place which is created in order for entrepreneurs to meet, share ideas, and network for mutual benefit. In some cases, they will even help each other directly with their business ideas. Co-working spaces are the most common type and are open to freelancers and new entrepreneurs, giving them a space to work in while opening up opportunities for learning. Some meeting places are partnered with programs, events, special talks, and even courses to further nurture business acumen. But there is no offer of funding, and some meeting places are exactly just that – rooms where people can work and meet. Other forms of meeting places are “maker spaces” and “hackerspaces” where the goal is to create a community of ideas where entrepreneurs collaborate on projects for the benefit of all involved. Many colleges and universities provide such maker spaces for students and other affiliates.

6) Social Venture Programs:

Also known as “social venture academies”, these programs are offered to social entrepreneurs. Social entrepreneurship is defined by Investopedia involves entrepreneurs who pursue “novel applications that have the potential to solve community-based problems. These individuals are willing to take on the risk and effort to create positive change in society through their initiatives.” In effect, these programs are not open to all entrepreneurs like startup accelerators are, but only to a select group of “social” entrepreneurs. An example of this is Ballard Center’s Social Venture Academy, where entrepreneurs gain access to mentoring, idea validation, product development, product execution, and general funding.

7) Seed Funds:

Like angel investors and startup accelerators, seed funds provide funding during the early stages of a startup’s journey. However, these typically do not involve mentoring or assistance with infrastructure. They are purely a financial investment as a form of an incubator. Where this becomes complicated is that, while some programs call themselves “seed funds”, they are actually closer in reality to a real startup accelerator. For example, Seedcamp is promoted as “Europe’s seed fund”, but they also offer mentors to assist each business they invest in. Sometimes, the very name of a program doesn’t tell the entire story. Seedcamp’s network of advisors is other startup entrepreneurs. It has a lot in common, therefore, with some meeting places. So while Seedcamp is a great option for entrepreneurs as their portfolio is worth more than $2billion, it’s important that entrepreneurs know exactly what type of organization they are joining. It might look like one form of funding when in reality it turns out to be something else.

As you can see, sometimes the distinction between a startup accelerator and other incubators is sometimes stark, but sometimes subtle. It can be disappointing for startup founders if they believe they are going to receive ample mentoring and funding when the program they enter offers only one of those, or provides both in a form that isn’t as helpful or comprehensive as would be found in a startup accelerator. 

How Startup Accelerators Vary

Now that we understand what a startup accelerator is and is not, it’s important to understand that not all startup accelerators offer the same exact services. As we stated previously, startup accelerators are innovative funding methods, and so the nature of these accelerators is in a state of flux. This has materialized as disagreement about exactly what a startup accelerator should offer and how best to support entrepreneurs.

But how do startup accelerators vary?

Startup accelerators can differ in terms of:

  • Their overall goals 
  • The niches in which they specialize
  • The way they structure funding 
  • The amount of funding available
  • The scope of their mentor network 
  • The quality of expertise available 
  • The amount of time given to each startup
  • The types of provided opportunities for future investment
  • The regions in which they operate

Despite these differences, there are trends that we can see within the business community which allow us to categorize startup accelerators into three different groups.

These groups include:

  1. Venture Startup Accelerators
  2. Government Funded Accelerators
  3. Corporate Sponsored Accelerators

The key difference between these three types of accelerator is how they are funded. The funding source alters the mission statement and scope of each accelerator. By understanding how a startup accelerator is funded, you as an entrepreneur can have a better idea of the scope and type of assistance you are likely to receive.

Let’s look at these three accelerator types now in more detail.

Venture Startup Accelerators

This category of startup accelerator is backed by venture capitalist groups, firms, or funds. Venture capitalists look to invest in businesses that will provide a large return on investment over a 3 – 5 year period. They are among the most influential investors because they pull together their financial might from high-income sources and business networks, and then invest in companies that transform their respective marketplaces. If you are looking for investment, it’s a good idea to learn all about venture capitalists.

A key function of venture capitalism is to seek out startups and other businesses with the potential for becoming billion-dollar companies. Of course, many entrepreneurs believe that their business idea is “the next big thing”, and so venture capitalists (usually their representatives) must sift through these many opportunities to find the vein of gold that will generate profit.

After 2005, some venture capitalist groups looked at Y Combinator’s model and thought that they could use it as a screening process. Venture-backed startup accelerators were born. Instead of waiting for businesses to prove their worth, many venture capital firms invested small amounts of their capital in startup accelerators.

Why did they do this? Because for a small amount, they could buy equity in businesses, offer mentoring and infrastructure, and see first hand if a business venture has the legs to be a success.

In essence, then, venture-backed startup accelerators provide investors with a testing ground. If a startup shows promise, then the venture capitalist fund, group, or firm then invests larger amounts of money, ensuring they get the first opportunity rather than competing investors.

The goal then is to fast-track businesses to a place where they can generate revenue for venture capitalists. The advantages for the startup entrepreneur of receiving venture capital backing are stark. Between 2012 and 2019, the average early-stage venture capitalist deal rose from $5.9million to $10.3million.

The advantage of this is that successful businesses within such a startup accelerator could potentially gain vast capital during the next investment round as venture capitalists can increase their share. 

An associated disadvantage, however, is that if a company does not show promise quickly, it can be deprioritized and gain a negative reputation for being seen as an investment risk.

Government Funded Accelerators

Government-backed accelerator programs work differently to other types of a startup accelerator. The reason for this is that the goals of a government-led startup accelerator are significantly different from both venture-backed accelerators and corporate-sponsored accelerators, which we will discuss below in a moment.

Because such startup accelerators are funded by governments, the primary goal is not just to return a profit. Instead, government-funded startup accelerators hope to:

  1. Keep pace with technological innovation in competing countries.
  2. Create jobs to decrease national unemployment figures.
  3. Stimulate the economy within less financially viable areas.
  4. Train new business leaders and create larger skills and talent pool from which the country will benefit in the future through subsequent, later business projects.
  5. Gain public recognition for funding home-grown talent. This is usually done to improve public relations and attract voters.
  6. In some rare instances, to develop technologies that government agencies will later purchase the rights to if the entrepreneur is happy with the deal. After this, such technology can be used by a government for a range of applications.

As you can see, government-funded accelerators have a number of metrics for “positive outcomes”. It’s possible for a startup business to not be successful on its own in the long run in terms of profit, and the government still has reached some of its own goals through the program. For example, a business might not scale beyond a point, but if it’s generated a couple of hundred jobs in an economically deprived area, then that is still a success.

Another example would be something like CivTech in Scotland, where the government uses a “challenge-based” accelerator model, offering funding to digital entrepreneurs willing to tackle specific technological hurdles.

In some instances, government-funded accelerators are perfect options for social entrepreneurs who want to improve the community and the lives of others through their business acumen. As Peter Thiel puts it in his book “Zero to One: Notes on Startups, or How to Build the Future”: “The most valuable businesses of coming decades will be built by entrepreneurs who seek to empower people rather than try to make them obsolete.”  

The advantage of a government-funded accelerator is that the entrepreneur has access to a large number of resources at a national level, as well as being able to feel good about their contribution.

However, as governments change over time, support and funding for an accelerator can be pulled at any time through the bureaucratic process. Other startup accelerators have a purity to them by focusing purely on creating profitable companies. Government-backed accelerators have many objectives, and so the profit mission statement can sometimes be underserved.

Corporate Sponsored Accelerators

A corporate-sponsored accelerator is one that is kept financially afloat by either one or several companies. It is usually brought under the name of a single corporate entity. In 2016, there were approximately 71 of these programs in existence, with large tech companies such as Microsoft, Citrix, and Telefonica running similar accelerators.

A good example of this is the AT&T Aspire Accelerator, which provides $1million worth of funding to 8 startups each year, alongside mentoring and networking opportunities. The Coca Cola Bridge is an interesting one. It’s a corporate-sponsored accelerator but has elected for a seven-month cycle instead of the traditional 3 or 6.

Unlike government-backed accelerators, corporate-sponsored accelerators are usually interested in profit as the main concern. The sponsoring company has complete control over the direction and research carried out via its accelerator. For this reason, entrepreneurs quickly find themselves funneled towards researching and developing products/solutions for the sponsoring company.

This can be problematic, as it moves resources away from establishing a customer base and towards research and development. In some instances, entrepreneurs in these programs are treated more like subsidiaries of the sponsoring company.

Despite this, corporate sponsorship can still be successful, especially when the sponsoring company offers access to its own resources. This could be through being advertised via their branded social media, as well as being able to learn from their engineers and developers.

Like venture capital startup accelerators, corporate-sponsored programs can be used to funnel a business towards venture capital investment.

A final caveat about this type of accelerator: In some instances, corporations will sponsor an accelerator with investment purely for philanthropic or brand reputation reasons. When this occurs, the sponsored accelerator can work like a government-backed accelerator, in that profit is not the main motivator.

Are You Ready for a Startup Accelerator?

It can sometimes prove fatal for a company if it applies too early for an accelerator. Once word gets around that you are underprepared, other investors and startup accelerator programs may give you a wide berth. Startup accelerators expect you to have done your preparation.

Before learning how to select a startup accelerator, you need to make sure you and your business are ready to give the best possible pitch by having certain characteristics in place. 

Here are some of the key considerations:

1) Growth:

If you have already started gaining customers and employees, and this is happening at a fast rate, then your business will already be desirable for a startup accelerator program. Why? Because you have, in effect, tested your product idea as a proof concept in the real world, with real customers. Under these circumstances, you will increase your chances of being accepted.

2) Willingness to Learn:

A huge part of the startup accelerator journey is to work with a network of mentors. Some business people do not take advice well. If you’re the type of person who’s going to receive advice from a mentor and immediately become defensive and not listen, then you’re not ready to enter a startup accelerator program. Furthermore, if during the pitching process the judging panel senses this from you, they will deny your application anyway. Some accelerators, encourage their mentors to learn from the startup founders as well. For TechStars, they put this two-way mentoring process on their guide to being a business mentor.

3) Prepared for Questions:

Both the pitching and mentoring parts of an accelerator program will require that you answer questions about the challenges your company is going to face. It’s easy to become so passionate about a product or service that you forget about those challenges. Investors, of which a startup accelerator is one, want to know about the challenges your business will face. That includes the competition and the hurdles to developing the product or service you want. If you’re not ready to answer questions about the challenges, you haven’t done the preparation work yet. Be prepared to have your business idea stress-tested during the pitching process.

4) Minimum Viable Product:

Your minimum viable product is one which is at an early stage of development, but has already been given or sold to customers so that your business can in return receive feedback. This helps a startup accelerator understand the viability and potential of your products. Try to have produced at least a small run of products or a pilot scheme for your services before the application process. Again, this is a form of testing in the wild, but it is the bare minimum an accelerator judging panel will expect.

5) Market Research:

Like any investment pitch, applying to a startup accelerator is about explaining and showcasing the potential market for your proposed product. Before applying to a startup accelerator, ensure that you’ve carried out enough market research to know your target audience, as well as both the current size of your market, and the potential size within a 3 to five-year time frame. This information will bolster your application, showing that there are hard facts behind believing your product will be a success. Be sure to also have a marketing strategy template at your disposal as well.

6) Affordability:

It must be remembered that startup accelerators provide funding, but often in smaller amounts. If this funding amount is not enough to get you through the entire 3 to 6 months program, then you will require investment from other sources. It’s best to apply to a startup accelerator being able to show you can afford to be part of the program. This means you and your team putting this 3 to 6 months period aside to focus on the advice and guidance you will receive. A startup accelerator will not accept your application if your business cannot afford to put this time aside after funding.

7) Plan B:

If possible, during the seed stage your business’s survival should not be predicated on receiving entry to a startup accelerator. It’s important that you continue to research other potential investment sources such as angel investors, VC firms, and even investment from friends and family as well. Always have more than one Plan B when fundraising so that you can immediately switch gears towards another possible investor, without having to down tools and come up with a plan on the spot. If you do not have adequate contingency plans at your disposal for this and future funding rounds, the investment may not be forthcoming. 

8) Reputation:

Startup accelerator programs will do their research. They will look into your business before signing you up for the program. This means they will know if you have a bad reputation online with other business people. If you been receiving terrible reviews from customers, this may put them off from investing in your business, though if your ideas and other prep work are outstanding, they might feel they can turn this around. Either way, try to ensure that you have a good, positive online footprint before pitching to a startup accelerator.

9) Book Keeping:

It should go without saying that your books should be in order. Ensure that your company accounts, patents, trademarks, and human resource documents are all in good working order. If your company is a managerial mess, this will give a very bad impression to investors. 

What Startup Accelerators Look For in Applicants

A further way you can prepare for the startup accelerator process is to anticipate what they are looking for from applicants. This will vary from program to program, but there are some specific things judging panels will expect from you. These include:

1) Competitive Advantage:

It’s an uncomfortable fact that no matter how innovative your idea is, there will always be competitors within your niche trying to create, if not the same product, one that solves the same problems for your target demographic. A key point to a great pitch is to highlight the competitive advantage your business and product concept has over that competition. Startup accelerators look for this competitive advantage and if they don’t see it, they will not sign up for your company.

2) Affordability:

Startup accelerators invest in a lot of businesses, so they only have so many resources they can invest in any one business. If it’s going to cost too much to get a startup business off the ground, or the valuation placed on the business by the founders is too high, then many accelerators will pass on investing. This isn’t just a money issue, either. Can an accelerator afford to put the time aside for one startup when that startup is going to require significant oversight? Even if a product has a great idea behind it, if it’s going to take millions of dollars and a year to get out of the seed stage, then that’s often outside of most accelerators’ investment strategies.

3) Communicating the Advantage:

Having a competitive advantage is only one part of the equation. Are you able to communicate what that advantage is concisely and in a powerful way? You must be able to summarize the advantage you have and how that will be turned into profit for investors in just a few sentences. The shorter the better. It’s a real shame when someone has put together what you need for a great pitch deck but cannot convey ideas concisely to investors. Just one bad ingredient in a pitch can destroy an entrepreneur’s chances of securing investment.

4) Scalability:

There are plenty of small businesses that are excellent projects for one or two people. Such startups may provide a good living for their founders, especially if their business model is a low-profit cottage industry. This, unfortunately, is not good enough for most startup accelerators. A startup accelerator wants to see a business that can scale, and scale quickly. That means that within a short time, it is going to be able to build a large profitable business with a growing revenue stream. While some startup accelerators will look for an early exit, many will retain the equity in the companies they help for the first three years or so, hoping that by that time each company has gone on to be a huge asset. If your business does not have the potential to scale to a lucrative position, then other forms of the incubator may be better suited.

5) A Good Team:

When creating an effective pitch deck, I always recommend to new entrepreneurs to include a team slide as part of their killer pitch presentation. This is similar to a startup accelerator pitch. While the product concept has to be fully formed, if it is in unreliable hands, startup accelerators will not invest. You must be able to present to startup accelerators that the leadership within your company is strong and talented. The team which supports that leadership must also be capable and, if possible, proven in a similar field. Lastly, you need to show cohesion within your team, focusing on the ultimate goal of sustainable profit with a healthy margin. The startup that does this, has a good chance of being signed up by a startup accelerator program.

6) Agreeableness:

Studies show that agreeableness translates to higher income and more success. This is one of five key personality traits that psychology calls “The Big Five”. When combined with another of these traits, “openness”, the results are even more impressive. When pitching to a startup accelerator, it’s important that the accelerator knows that the advice and guidance of its mentors are going to be taken seriously and often followed. If they feel you are not “agreeable” and “open” to their ideas, then there is no point in offering to fund. Remember, startup accelerators offer more than just funding – advice is a key part of the process. If you are not looking for advice and only require investment, then other investment options would be better suited to you.

7) Initiative:

While a startup accelerator offers guidance and infrastructure, the gatekeepers to entrance will still want to see some initiative on your part. They are not there to do all the work for you so that you can just become a silent investor. They expect you to show talent, desire, and initiative. A great way to show this is to have taken important steps towards networking and building a community around your business. More importantly, this should be done before you approach a startup accelerator. Being able to show how you’ve connected with other business owners and customers, highlights that you’re willing to put in the work for your brand. If some of those names are successful business people, then all the better! Just because you’ve had a conversation with someone who has a great reputation, this doesn’t mean you are guaranteed investment. But it does help, especially if you have any partnership, licensing or cross-promotional agreements in place.

The application funnel looks very similar to what you see below.

Accelerator Funnel

Make a Great Exit

Listeners of my show The Dealmakers Podcast, which shares essential information about fundraising, will know how important a great exit is. This will set your company apart from hundreds of others pitching for the same slot on a startup accelerator program. 

Investors want to know how they are going to make money and how quickly. The primary way to do this is to have a definitive exit strategy. A great exit strategy for an investor involves one of the following:

  • Selling any shares for a large profit.
  • Being bought out through a friendly merger or a takeover which the investor supports.
  • Winding down a company and selling off its assets to the highest bidder.

Whatever the exit strategy, most investors will look to do this between 3 to 5 years from the date of their initial equity purchase. Always promote a clear way that investors can exit your business with a healthy return on investment.

For example, you could present market research showing how large your market is and will become, along with projections for the company’s revenue and perhaps even its overall worth at that point.

If part of your strategy is to sell your company at some point to the highest bidder, this does not necessarily exclude you from applying to a startup accelerator. In fact, if you believe your company can be sold within a few years for millions, if not billions, of dollars, this is exactly what startup accelerator investors will want to hear. 

They want to know that they will get a great slice of that same sales profit.

Remember that even when startup accelerator programs offer you mentoring, they are there to make a profit. That is what they care about most, so structure your pitch towards that goal.

How to Choose a Startup Accelerator

Most startup accelerators come under one of those three previously mentioned strategies: Venture-backed, government-backed, or corporate-sponsored. But there are other subcategories as well, so choosing the best startup accelerator for your company can be daunting. 

There are so many open to applicants, and when you include all forms of incubator programs, research from the International Business Innovation Association estimates that there are more than 7,000 active seed funding programs in the US alone.

As we’ve explored, some accelerator programs will have different motivations and therefore outcomes. What you need to do for your startup company, is to figure out which startup accelerator is the best fit for you and your new business. 

Sometimes having no accelerator is better than a faulty one, but we’ll explore that issue later.

To choose the best accelerator for your situation, consider the following:

1) Know the Stipulations:

Most accelerator programs will ask for equity in your business in return for their support. This will have an impact on the amount of control you have over your startup and how future investors will see your company.  For example, New York-based accelerator Dreamit has its Urbantech program, which focuses on building customer numbers over product development. It also works remotely with founders rather than in person, which could be ideal for those who don’t want to relocate, but problematic for those who value face to face mentoring and networking. Ensure that you research exactly what type of accelerator you are applying for and what stipulations will be attached before signing on. 

2) The locality isn’t Everything:

If working with a startup accelerator means temporarily moving to another city or even country, you might be put off from doing so. After all, this is an extremely disruptive life-changing choice. However, you have to do what you can to make your business a success. It can be tempting to opt for an accelerator program near to where you are based. This should not be the overriding criterion, however. If an accelerator has better outcomes, larger investment amounts, more favorable equity offers, and a better network of mentors, then you should seriously consider choosing them over a local accelerator. Most accelerators will not expect you to remain nearby after the initial 3 – 6 month period. 

3) Specialization:

The industry you’re working in will determine which startup accelerator programs are most likely to accept you. Some accelerators accept applications across the board, though many often specialize in specific industries. Working with a startup accelerator that understands your niche and has the experience and infrastructure to open up doors within that sector, should always be prioritized. You would be surprised by how many startup accelerators cater to specific niches. Take Clean Energy Trust, for example, which fuels innovation based on energy efficiency and environmentalism. Getting the right contacts within your chosen industry is important, and through an accelerator’s network, you may just get the right introductions along with future investment.

4) Your Stage:

Some startups are going to be at a more advanced stage than others, even during the time of seed-stage funding. Different startup accelerators will offer varying help with traction development based on your readiness and business maturity. Make sure that the startup accelerators you apply to are a good fit for your specific stage. There’s no point in applying to accelerator programs that require you to have a working prototype when you haven’t even started the prototyping process. Other accelerators will happily work with companies at the earliest stage, such as Malaysia’s 1337 Ventures, which focuses on pre-seed investment.

5) Track Record:

Any organization can call itself a “startup accelerator”. It’s important to put your business in the best of hands. If an accelerator program has no track record, then be sure to query the experience of the team behind it and the amount of funding they can give you. If it’s a startup accelerator with a proven track record, including existing successful companies within your niche, then that should give you the confidence to apply the knowledge that they have the know-how and resources to assist you correctly. You can easily find the number of successful business exits a startup accelerator has made online.

6) Who Are the Principals:

In other words, who are you going to be working with regularly at the accelerator? The biggest advantage being part of an accelerator gives you, is access to talented individuals who can provide you with the helpful product and business feedback. Who you will be working with at an accelerator will affect your outcomes. The point of contact or lead mentor will set out a plan of action, including what your business should prioritize, the schedule you should work too, and what aspects of your business need significant refining. It is the principals at the startup accelerator who set the tone for the eventual outcome and exit. Before signing up with a startup accelerator, ensure that you know who the principals are. Just because your first point of contact during initial meetings is impressive, doesn’t matter; if you’re then handed off to a junior associate without the same skill set, you could jeopardize your business. That’s not to say that a junior associate can’t work brilliantly with you – you just have to know who you will be dealing with, and what their abilities are.

7) Investment isn’t Everything:

Fundraising is obviously important, but just because your business requires funds does not mean you should rush into a decision to acquire them. When looking at your entire company, optimize your business for future success, not to attract a specific startup accelerator. If you have a better chance for overall success by going in a direction that may limit your access to an accelerator, take that route. In any case, startup accelerators will want you to show initiative, sometimes that involves charting your own path rather than using a generic cookie-cutter approach in order to secure funding. Stand out from the crowd by prioritizing your overall success. Some accelerators are even open to equity-free deals. This is a part of Google’s Launchpad Accelerator, which has been in operation for 5 years as of 2020 and already has 9 successful exits.

8) Talk to Alumni:

Another great way to test the efficacy of a startup accelerator is to speak to founders who have already gone through the program. Find a selection of alumni who are 1, 3, and 5 years out from using a specific startup accelerator. What were their experiences? Do they regret using the accelerator? If so, is it because of something specific they experienced or just that they now believe an accelerator wasn’t a good fit? Try to ascertain the pros and cons carefully, not basing your opinion on anyone’s second-hand experience.

How to Pitch to a Startup Accelerator

There are two key parts to pitching when applying to a startup accelerator. These are:

  • Presentation Skills
  • Pitch Deck

With regard to presentation skills, these involve being clear and concise. It also means being personable and open to questions. And finally, being able to withstand the stress of being asked probing questions about your business by potential investors.

Most of this can only be honed through practice. I recommend selecting the founder with the best presentation skills and then drilling them on handling the presentation and questions.

The second facet of pitching to a startup accelerator is in developing a pitch deck. A pitch deck is a slide presentation that showcases why your business deserves investment. I’ve produced a large number of instructional articles on how to make the best pitch deck, and the vast majority of that applies to the startup accelerator pitching process. 

However, anyone familiar with those articles will know that I am a big fan of catering a pitch deck to its audience. This maximizes the impact of the presentation so that it contains the features those specific investors are hoping to see. 

My advice is to research the startup accelerator you are going to apply to and find out what sort of a pitch deck they tend to accept. Many startup accelerators have information readily available about the pitching process.

In some instances, you won’t even need a pitch deck for the application process, though I would always advise having one on hand.

Y Combinator, for example, has a process involving:

    1. An application form
    2. An interview
    3. Funding
    4. 3 Months of accelerator training
    5. Introduction to the Y Combinator alumni network where assistance is offered from founders who have already been through the program.
    6. Finally, there is “Demo Day”, where founders get to pitch their businesses to some of the top investors in the world. Hopefully, this will secure investment for as many startups as possible.

As you can see, for some startup accelerators, there are three opportunities to pitch your startup. The first two opportunities, the application form, and the interview are to get into the program. The final third opportunity, the demo day, is to pitch your business to investors in order to raise more funds at the end of the program.

Most startup accelerators conclude with a pitch or demo day.

Other startup accelerators such as 500Startups do require that you have a pitch deck during the application process. In this case, the ideal 500Startups pitch deck isn’t presented in person. Instead, it consists of text and images and is no longer than 10 slides in length. 

Like many startup accelerators, they don’t want their applicants spending time guessing what they are looking for in terms of the format. For that reason, this accelerator has a free template for applicants, as do many other similar programs. 

The structure of the 500Startups pitch deck is very much like the standard design for other investors like venture capitalists and angel investors, but with a couple of tweaks. Even if you are not going to pitch to 500Startups, it’s a helpful exercise to sketch out a pitch deck to their specifications to practice honing your presentation for a specific audience.

The 500 Startups slide structure includes:

1) Logo and Elevator Pitch:

This is your opportunity to make a good first impression. Larger accelerators typically only spend a few minutes looking over applications, so first impressions count. On the slide, you get to introduce your company. You don’t need to use any complex jargon, just a simple description of who your customer is, the problem they have which your product/service will solve, and any unique selling point.

2) The Problem:

On the second side, you can expand upon the problem you’re solving. Try to do this in a concise and powerful way. It’s recommended that you do this through the perspective of the customer so that investors can see how much customers would want your product.

3) Solution:

This is where you tell investors about the solution you’ve created. Introduce your product and list its key features and benefits for customers. Explain clearly how your solution solves the issues customers face.

4) How it Works:

In this slide, you are showing the details of your solution. This expands on your product, explaining exactly how it works. This is a great place to differentiate your approach or technology from similar products, briefly. Product designs, concept images, etc. should be included here.

5) Traction:

One of the most powerful slides in your pitch deck. Here, you are going to grab the attention of the investor by showing the inroads you have already made into the market. Ideally, this includes revenue growth, using a simple metric like a month on month sales or Gross Merchandise Volume depending on your business model. 500Startups recommends that if you have a B2B model or any licensing deals with recognizable outlets/brands, these should also be included here.

6) Business Model:

In your sixth slide, it’s time to highlight how exactly your business generates income. This involves concisely explaining your business model. It’s important that you familiarize yourself with the different types of the business model out there so that you can expertly discuss these matters with investors, especially if there’s the opportunity to switch your business model to a more lucrative option. Highlight your top revenue sources by size. Don’t worry if you aren’t generating revenue yet. In that case, you should describe how you will generate revenue in the future. What are your distribution channels? How much will these generate after launch?

7) Competition:

The biggest mistake you can make for your competition slide, is to assume that you don’t have any. No matter how original your product is, there will be something similar on the market or in development. For example, Facebook may seem like the first social network, but when it was being pitched, they could show websites like Friends Reunited or message boards with a similar goal of bringing people together to show the appetite for such a service. On your competition slide, show the competition, their market share, and their revenue. Then, highlight why your product//service has the edge over the competition. What are its killer features compared to the competition?

8) Market Opportunity:

Investors rarely want to know about small markets. They want to see that a product has the potential to sell well. Accelerators tend to want to see proof that a market is either at the $1billion threshold or can get there in the not too distant future. Look for third-party research that supports any assertion you make about the market size. If this research does not exist, you can roughly calculate the market size yourself.

9) Progress to Date:

This is different from your traction slide. While your traction slide shows your numbers, the progress slide lists big milestones. This includes when you launched a product when you secured investment and for how much equity, when you found your first customer, and when you received any kind of award or recognition. This should be listed chronologically, but don’t overcrowd the slide. Stick to the most important ones so that investors can see the general flow of achievements.

10) Team Slide:

The final presentation slide is your team slide, and highlights where you and your team are with your product and why you should be trusted with investment. This should list any previous business accomplishments such as other businesses. It can also highlight qualifications and experience relevant to your niche. This is especially important if that experience gives your product advantage, and is related to having insider knowledge and networking opportunities. If, on the other hand, your experience is in sales or customer growth, this can also be relevant. Investors don’t just invest in companies, they invest in entrepreneurs who will handle their investment carefully and strategically.

Whichever pitch deck template you are using, think about this type of flow. Most pitch decks have a similar structure. Always prioritize any bespoke requirements listed by a startup accelerator during their application process.

What if my Pitch Fails?

First-time entrepreneurs can be negatively affected if their initial pitch fails. This can affect future presentation performance and can even result in an entrepreneur giving up and closing down their business.

If you are turned down by an investor during a startup accelerator pitch, it isn’t the end of the world. Yes, you may have spent weeks making your pitch and crafting your presentation of it, but your business idea still lives.

In fact, the truth is that most startup pitches fail. This needn’t be a dark time. As Matt Hunckle, Founder and CEO of Verge suggest, “startup pitches that fail the most, end up being the best”. If you take each failed pitch (and there probably will be more than one) as a learning opportunity, then the experience can help you reforge your pitch deck into an unstoppable persuasive weapon.

How many pitches will you have to go through to find investment? Well, there are no guarantees, but a study by DocSend found that most startup founders had to contact between 20 and 30 investors before closing that round of investment. 

Of course, these weren’t all startup accelerators. However, the same principles apply. A startup accelerator is just another investment opportunity. It comes with the offer of mentoring, guidance, networking, and with potential later secondary investment, but it is still at its core a simple case of telling investors why your company will make them money.

If you pitch as many as 100 investors and don’t receive any offers for investment, then there is probably something wrong with either your product or your pitch deck. That’s when you need to look at your deck and ask for feedback from potential investors about the quality of the deck itself. 

In the end, only you can decide if it’s time to cancel one product/service and move onto another. Remember, startup accelerators have limited spaces and it may be that you just haven’t found one that’s a good fit for you. If startup accelerators fail, then there are other investment options out there.

What to Expect From a Startup Accelerator

So far, we’ve outlined the difference between startup accelerators and other incubators. We’ve also explored, in a broad sense, how Startup accelerators can differ from each other and how to put a pitch together. Knowing what a startup accelerator does, however, is not the same thing as understanding and experiencing being a part of an accelerator yourself.

In this section, I would like to outline what you can expect from a startup accelerator in terms of first-hand assistance. What is the experience of working with a startup accelerator like? Once you understand this, you can then better prepare yourself and your business for working with one. 

This will markedly improve how much you get out of an accelerator, and your business’s outcome.

A Process of Education

In an Interview from 2015, one of the co-founders of the TechStars accelerator program, Brad Feld, gave some excellent insight into the startup accelerator experience. He stated that entrepreneurs should look at startup accelerators as a form of immersive education. Just like going to college, university, or even high school, working for several months with a startup accelerator is about learning on a deep and profound level. However, it’s more intense than most forms of learning.

Brad Feld outlined several aspects of the education process he believed most entrepreneurs will experience if they are accepted by a well-run startup accelerator program. These include:

1) Focus:

Mentors will encourage entrepreneurs to enter into a state of focus when working. This is characterized by goal-orientated problem solving, supported by periods of intense attention heavy sessions. This could be everything from brainstorming product features to finalizing branding and developing marketing strategies. In order to succeed, entrepreneurs should attempt to enter into a flow state, where tasks are completed without stress and almost automatically.

2) Experiential Learning:

Also known as “learn by doing”, entrepreneurs are encouraged to develop their skills as they work on their business models. This type of learning has huge benefits over studying textbooks. By being immersed in a task, you have to sink or swim. This motivates entrepreneurs to do their best and course-correct quickly when something isn’t working. Entrepreneurs soon learn what works and what doesn’t from practical, trial-by-error experience.

3) Compressed Learning:

Alongside learning by doing, entrepreneurs will find that the time needed to learn parts of business development, can be substantially compressed by being immersed in this process. As Ian Hathaway of the Harvest Business Review puts it: Startup accelerators are successful when “founders compress years worth of learning into a period of a few months.” Remember, startup accelerators offer their time on a 3 – 6 months timescale. One of the reasons for this is because of compressed learning leading to positive outcomes. By necessity, much needs to be accomplished in a short span of time.

Accelerating a Startup is Hard Work

We can see from Brad Feld’s perspective, that accelerators work primarily because they speed up what the entrepreneur can achieve in a shorter timescale. Indeed, Susan Cohen for MIT Press argues that the defining feature of a startup accelerator is this compressed duration. Everything stems from this limited time, creating a sense of urgency about what has to be achieved.

The faster you need to accomplish tasks during your time with an accelerator means the harder you will have to work. Success in business isn’t about sipping a Martini on a yacht, it’s about making things happen for your company.

The Cycle

Successful startup accelerators like Y Combinator have established their reputations due to having a blueprint for the accelerator process. This involves a cycle of development stages which each startup founder is asked to graduate through.

For Y Combinator, their cycle lasts three months, and each cycle has the same tried and tested structure. This includes a range of events such as mentor meetings, social meetings with other founders, networking with silicon valley entrepreneurs, being given guidance on what to prioritize, and building up to the final demo day where founders can pitch their ideas to other investors.

Each accelerator will have its own cycle, with its own features. These are normally listed on each startup accelerator’s website. Again, there’s no point in applying to startup accelerators that have a cycle you do not think will get the best from you and your startup.

Some accelerators offer guidance after the cycle is completed, but others do not.

Meetings, Meetings, Meetings

While the startup accelerator experience is in a sense a place to learn, it is also a place to put those lessons into practice. There are continual meetings and seminars with mentors and other speakers, but there is also ample time to work on your startup across the 3 – 6 month period. 

It’s up to you to balance this time. At the end of the cycle when you have to pitch to investors, it would be a waste of time to be unprepared. You should learn what you can and make strides, even if that is simply creating a far more effective pitch deck.

Your goal is for the startup accelerator to open up further investment opportunities, and that can only be accomplished by streamlining your business so that it is a desirable asset.

When Not to Use a Startup Accelerator

Startup accelerators are a great option for many entrepreneurs. However, they are not a guaranteed road to success. Let’s face the truth, there is no such thing in the business world. As an entrepreneur, sometimes you will succeed and sometimes you will stumble. Being part of a startup accelerator really just increases your chances of success.

In fact, there are instances when it is in a company’s best interests to not use a startup accelerator. In these cases, signing up with an accelerator program could be detrimental to your overall goals.

Let’s now look at some of the more common reasons why you should not apply to a startup accelerator:

Inaccurate Expectations

In the book, “Speed up Your Startup”, Infogram COO, Mikko Jarvenpaa, carried out a study with 150 startup founders. Each founder had signed up with a startup accelerator as a portfolio company. 

The study was called The Accelerator Value and Expectations Survey. He discovered that startup founders can sometimes feel let down by their accelerator experience because it differs drastically from their initial expectations. 

For example, some founders stated that they felt accelerators offering just a few workshops on specific topics was not enough in terms of learning or guidance. If you expect more than a specific startup accelerator can give, then you should look elsewhere for funding.

It’s important to manage these expectations. While startup accelerators have become very popular, the Wall Street Journal has reported that over 40% of all startup accelerators haven’t produced any startups that successfully went on to raise significant venture capital. That’s not to say that they won’t in the future, but it’s still a startling statistic. 

Standards vary, with each accelerator having its own successes and failures. Nothing is guaranteed, so try not to go into the application process thinking it’s a sure thing once you’ve been selected. The hard work is only just beginning. Even after securing funding, 40% of venture-backed startups fail. This is not to frighten you, but you need to manage your expectations and the expectations of anyone with a vested interest in your company.

Diluting Focus

Startup accelerators tend to be hectic because of the limited duration we mentioned before. This means taking a lot of meetings and balancing your schedule precisely. This also means that your focus on any one task can be diluted. 

You might want to focus on product development but you have to attend marketing meetings continually. Alternatively, you might want to focus on building a user base, but instead, you have to focus on what your mentor wants you to do, such as developing company infrastructure. 

For example, CEO of CoachUp, Jordan Fliegel, used both an accelerator and an incubator in a 12 month period. By the time he exited those programs, he was convinced that he should have focused on building a customer base first, instead of being shepherded towards the goals of the program. 

A startup accelerator will take an element of control out of your hands, and if this takes focus away from a vital task, it can be detrimental.

Grueling Schedule

Another negative aspect of the startup accelerator process is how grueling it can be for a startup’s founders. We mentioned the focus aspects previously, but having to attend and prepare for numerous presentations and demo days, along with classes and learning opportunities, can be too much for some founders.

One of the reasons people go into business is to have control over their own schedule. They want to be able to work when they want to work, unlike a 9-to-5 job where your schedule is set in stone by your employer. Developing a business is about freedom for many people.

Joining a startup accelerator can, at least temporarily, limit that freedom. For others, the schedule may just be too much to handle. It all depends on the individual. Even the social aspect can be difficult. For example, one of Y Combinator’s tried and tested approaches is to have dinner with a successful entrepreneur giving a talk.

This is organized every week. 

That’s on top of daily meetings and mentoring sessions, and often, you’ll hear the same advice time and time again. One Y Combinator portfolio founder said there was a lot of redundant information being said over and over. For some, that helps with the learning process, for others, that’s psychologically grueling.

Dilution of Equity

When you sign up for a startup accelerator, you immediately forfeit equity within your company. As part of the accelerator agreement, you will sell an equity stake in the business, this dilation of equity can result in more difficult fundraising rounds later, as we mentioned earlier.

If you require more investment in subsequent fundraising rounds, and most companies will, then your investors will require equal or better terms to the startup accelerator. They may also be put off because there is already vested interest from a third party in the company, meaning their opportunity to make a larger profit is reduced.

For this reason, some startup founders choose not to dilute the equity of their business during the pre-seed and seed stages. Those who do not want to give up this equity, should not apply to a startup accelerator.

Remember that storytelling plays a key role in fundraising and you will need capital to scale things up. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Difficult Terms

Speaking of equity dilution, each startup accelerator will offer different amounts for a percentage of your business. For example, the accelerator program 500 Startups, offers a gross investment of $150,000 for a 6% stake. However, 500 Startups also charges a $37.500 fee to participate in their program. 

This is not the norm, but it highlights how some incubators and accelerator programs will have their own stipulations for entry. If the terms are too difficult for a founder to accept, then it’s best they do not apply, as that can turn into resentment later. This will only grow and then go on to affect your interactions with the accelerator program and its representatives.

A Single Vision

Business is usually a collaborative process. If not at the start, eventually. Even with a single-minded entrepreneur with their well-defined vision, you have to rely upon producers, designers, marketers, or someone else other than just yourself at some point along the supply chain.

That being said, if you are opposed to compromising your vision, then the type of investment that gives someone else a voice in your company might not be the best direction for you. As investment rounds increase, those collective voices are only going to amplify. 

If you feel that your product or service’s vision relies on conceptual purity, then bringing other creative energies into the process can be a bad thing, at least before the main product/service is launched.

Startup accelerators are intense. The whole purpose of them is to listen and learn from mentors and the experience of those involved with the program. If this amounts to a compromise of your vision, then signing up with a startup accelerator is not a good idea. 

Some entrepreneurs want to protect their vision because it’s a map to where they want to be. As the philosopher, Seneca said: “To the person who does not know where he wants to go there is no favorable wind.” While I would always recommend being open to mentoring as it shows a willingness to learn, sometimes believing in your own vision is paramount.

The Relocation Problem

As we discussed in a previous section, some accelerator programs will require that you relocate in order to take part. This doesn’t happen with every startup program, but it is mandatory for some.

When applying for a startup accelerator, you should know where they stand on this issue. If they require you to move to another country or city, and this is not palatable to you, then there’s no point in applying in the first place.

Y Combinator’s own FAQ states its procedures on whether applicants will have to move to their headquarters for the duration of the program:

“We tried this once, and by Demo Day that startup was way behind the rest. What we do, we have to do in person. We would not be doing a startup a favor by not making them come to YC events in person.”

Recently, Y Combinator has added a caveat to this stating that “If you have a business that requires that you be somewhere else, we will work something out so you can participate in YC events while also being attentive to your business.”

Y Combinator now allows some limited rotation of its founders, taking turns at attending demo days and other meetings at Y Combinator’s base in Silicon Valley. Of course, this isn’t helpful if there’s only one of you.

The point here is to know exactly what you are willing to do with your time and in terms of your location for the duration of the program. Most programs allow you to later be based wherever you want, but this is a serious investment of time with serious potential for your startup.

What Happens After you Finish a Startup Accelerator Program?

If you are lucky enough to have been accepted and have benefited from an accelerator program, you’ll need to build on what you have learned once the initial accelerator period is complete. This is where some entrepreneurs struggle. It can be comforting to have so much guidance available at a moment’s notice. While there may be some kind of aftercare, it’s usually nowhere near as comprehensive. Startup founders have to look forward and focus on leveraging the investment they have already been given, to create new opportunities for growth.

To adapt to the new world as a graduate of an accelerator program, you can continue this process of learning and growth by:

1) Building Connections:

Network with other alumni and take advantage of any program follow-up, if available. Connect with others outside of the program to expand your business network and continue to learn from more experienced entrepreneurs.

2) New Investment:

If you were successful during the finale of your program and have secured funding after pitching at a demo day, then growing the business through that period until reaching the next funding round is your priority. However, if you did not secure funding, then it is time to try other funding avenues such as angel investor networks and venture capital firms if your business can scale.

3) Contemplate the Experience:

Think about what you did and didn’t get out of the startup accelerator experience. Incorporate what you learned, and seek new mentors to fill in any gaps you feel the accelerator program left out.

Top 10 Startup Accelerators Based On Successful Exits

The graph below is taken from Seed-DB and the data shows how much money the accelerator has generated from companies being acquired.

Program Location # Co’s $ Exits
Y Combinator Silicon Valley, CAUS 1801 $6,195,483,100
Techstars WorldwideN/A 1336 $3,596,800,000
AngelPad San Francisco, CA / New York, NYUS 153 $1,468,250,000
DreamIT Ventures US & IsraelN/A 197 $397,000,000
fbFundNot Operating Silicon Valley, CAUS 45 $359,500,000
LaunchpadLA Los Angeles, CAUS 33 $335,000,000
K5Launch Los Angeles, CAUS 15 $150,000,000
SeedcampBecame Seed Fund LondonUK 118 $137,000,000
NYC SeedStartNot Operating New York, NYUS 21 $130,000,000
i/o venturesNot Operating Silicon Valley, CAUS 16 $72,850,000

Top 10 Startup Accelerators Based On Capital Raised

The table below contains the accelerator programs where startups have raised the most amount of capital. the data is taken once again from Seed-DB.

Program Location # Co’s $ Funding
Y Combinator Silicon Valley, CAUS 1801 $39,839,695,289
Techstars WorldwideN/A 1336 $8,664,791,204
500startups Silicon Valley, CAUS 686 $3,195,638,016
AngelPad San Francisco, CA / New York, NYUS 153 $2,234,261,983
SeedcampBecame Seed Fund LondonUK 118 $1,124,789,400
The Alchemist Accelerator Silicon Valley, CAUS 344 $1,036,045,522
DreamIT Ventures US & IsraelN/A 197 $1,032,491,096
Amplify.LA Los Angeles, CAUS 36 $689,256,760
Mucker Lab Santa Monica, CAUS 27 $628,025,626
FounderFuel MontrealCA 69 $596,485,083

Conclusion

I hope you enjoyed my Ultimate Guide to Startup Accelerators for Entrepreneurs. I love helping entrepreneurs to reach their potential, and so I’m offering my own mentoring program to assist as many startup founders as I can. It’s a privilege to help people make their business dreams come to fruition. If you would like to know more, consider joining the thousands of people who have already benefited from becoming part of The Inner Circle Community.

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