Hitting The Accelerator
If you're an entrepreneur in the tech space -- or any space really -- you’ve probably at least heard of, or considered going through an accelerator or incubator to help grow your company.
Accelerators are programs for startups to grow, find mentors, and get funding. They typically last around three months, culminating with a “demo day” - a series of pitches to investors in hopes of securing funding. If you’re accepted into an accelerator, you’ll be joined by other entrepreneurs as part of a group or "class", like at university, but much smaller. Most accelerators usually accept somewhere between 10-20 applicants, and share a workspace with members of their group in order to encourage collaboration and camaraderie.
Accelerators have grown significantly in popularity over the last several years, and they can certainly be an advantage to you and your company. The collaborative environment, access to mentors, funding, and ability to pitch to a group of investors are all great resources. There's also the prestige associated with many accelerators that will look great on your company's resume, so-to-speak. If you're a foreign national in the U.S., going through an accelerator also set you up for the O-1 visa, which is a great bonus.
But there are also disadvantages to accelerators, and depending on the direction of your company, you may be better off going a different route. Let’s take a closer look at accelerator programs.
Why Go Through An Accelerator Program?
Accelerators are great for a few reasons. First, you have access to a whole group of people with different backgrounds that can help you. The programs also have experienced mentors that will give advice and help direct you.
Most accelerators also provide you with seed funding, usually around $20,000 - $150,000. This can be used in a lot of ways, but usually to hire team members or supporting hardware and software. This funding is in exchange for a small equity stake in your company, typically between 5-8%
Being in an accelerator also gives you the chance to pitch your product to a big group of venture capitalists and other investors. It’s rare to get access to a group of people like this all at once outside an accelerator.
Being listed as an accelerator graduate can also be huge for your company’s brand recognition. When other companies, potential employees, and investors see that you graduated from a program, it sets you apart from other startups.
Disadvantages Of Accelerators
Many entrepreneurs choose not to join accelerators, and they can be just as successful.
The main reason is to avoid the equity grab in your company. Accelerators typically take around a 5% stake in exchange for your seed funding and entrance into the program.
You’ll also feel pressure to align your company with the vision of your accelerator. You’ll be expected to scale and iterate rapidly and put a big focus on fundraising and finding investors. This approach might not be the best for you and your company. You might be looking for slow growth with a small core team. That’s okay too.
Accelerators are also full of events and seminars, and attendance is usually mandatory. Some people enjoy this sense of community and learning, while others may want to focus on their own business and look for these resources elsewhere.
If you're a foreign national, an accelerator is a huge advantage if you’re looking to get an O-1 visa, which can be very advantageous for both you and your company. With limited travel restrictions, the ability to renew indefinitely, and perks beyond, it’s a great option for startup founders and key talent.
To find out more about the O-1 visa and how to qualify, read our article here.