An accelerator is a short training program for entrepreneurs jump-starting new businesses. In exchange for a small percentage of equity, the accelerator program offers office space, some capital, and mentorship. On the question of whether an accelerator is good for your business depends on you as a business owner, type of business and what you want to achieve out of the experience.
Some accelerator programs will focus on specific sectors of business such as healthcare, education, or finance. Others will be more general, tackling almost everything business. While some accelerator programs are difficult to get into than others, the most common programs involve a lot of applications that make it more difficult for startup businesses to get noticed. Before you get into an accelerator program, it is important to understand its pros.
- Injection to Capital Investment
Many accelerator programs offer an injection of funds to help grow your business. In addition, some accelerators can also provide interest-free or low-interest loans to finance your business.
- Networking opportunities
Accelerating programs usually will contain few other businesses, which can offer you a great opportunity to build a network of professionals. You can establish strategic partners who are building a foundation for their early businesses.
- Product Development
Some accelerator programs can provide your business with services such as product testing, market research, financial planning, legal advice, marketing strategies as well as growth for the product. You can identify the best positioning for your products or services.
- Mentorship Opportunities
Mentorship is one of the vital elements that attract many businesses to accelerator programs. Most programs provide one to one mentorship sessions and ongoing support from successful entrepreneurs and experts in your industry.
What about the cons of accelerator programs? What are the negative effects of these programs that you need to be aware of?
- Business Equity
The amount of equity shares that accelerators need will vary from program to program. Depending on the type of accelerator program you can pay up to 10% of your company equity for a program that will only last for 6 months.
- Risks and Commitment
Although joining an accelerator program means you must be committed, it does not guarantee your business success. For many entrepreneurs, it means leaving their family behind for some months by relocating to a different city.
The main goal of an accelerator program is to accelerate the growth of our business. However, there are still man entrepreneurs that leave the program or fail to complete building a product or service that will meet market demand.
No two accelerators are the same, which makes it difficult to measure the amount of benefit you can receive from participating. Some accelerator programs have a clause in place with the right to buy your business after a certain period. For some entrepreneurs, this can be an excellent welcome strategy. On the other hand, some entrepreneurs may not like the idea.
When deciding whether to use an accelerator programs for your business, it is crucial to ensure that you understand their terms and conditions fully. This is the only way you can be sure you are giving your business the best chance to thrive.