Inc. magazine reports that accelerator programs in the U.S. have doubled every two years between 2008 and 2014 with roughly 172 accelerators in America today. With entrepreneurship rapidly growing and reshaping economies on a worldwide basis, accelerator programs can enable entrepreneurs to jump start their businesses and help attract venture funding.
The primary role of an accelerator program is to facilitate rapid growth of a startup company through planned funding, mentorship, resources, guidance, and community support in exchange for equity or pure satisfaction.
Many people are familiar with programs like AngelPad, MuckerLab, Techstars, and Y Combinator (which now actually classifies itself as a seed fund), but many universities have their own very successful accelerator programs as well.
In my role as Entrepreneur in Residence at MIT and Program Director for MIT’s Global Founders’ Skill Accelerator (GFSA), I’ve been researching accelerator programs in the U.S. and how they compare with programs in India, China, and Europe – and I thought I’d share the highlights of some of that research in a series of blog posts.
How Does an Accelerator Program Work?
In a typical accelerator program, the program offers seed funding, office space, access to technology, expert mentorship, and an inspiring community environment—all packed into a limited time frame, usually three to six months. In most accelerator programs, the final benefit to the startup is a repeatable model, which may be used many times to churn out successful companies in an assembly-line fashion.
So what will the accelerator programs gain in return? Well, the gain may be company stocks, equity, or just plain satisfaction of being able to mentor startups to the level of fully operational businesses.
However, as literally hundreds of startups from all over the globe appear every day looking for ideal accelerators, it is prudent to know that joining an accelerator program in itself does not guarantee success. Here is an interesting tutorial on how to join an accelerator program from Business News Daily: Accelerator Programs 101: How to Apply and What to Expect.
The article points out that the typical applicant is in the early stages of business development and has either just launched or is getting ready to do so. Many companies that join an accelerator have a finished product or concept, and may have even raised capital, but others may only have an idea and no funding whatsoever. Startups that may be looking to join an accelerator must have certain prerequisites and the right mindset.
Prerequisites for Joining an Accelerator
Wherever in the world you are looking to join an accelerator, there are some common prerequisites. In order to locate a good match between a startup and an accelerator, startups ought to consider these prerequisites:
- You must have a product—not just an idea!
- You must be willing to take financial risks.
- You must be willing to wait and watch, while you are learning about the startup process.
Without the right mindset, a startup, no matter how enthusiastic, will not be successful.
Entrepreneurial Growth on the Rise
In a recent CNBC report, the Kauffman Foundation’s Startup Activity Index shows that in 2015 U.S. entrepreneurship levels had the greatest year-over-year increase in the past two decades. The group estimates that every month, some 530,000 Americans become new business owners. Yet, statistics show that as many as 90% of startups fail, so seeking out an accelerator program can help startup ventures beat the odds with resources, networking, and experienced mentors.
I’ll be sharing a series of blog posts on accelerators around the globe – and the approaches taken by different regions. For my next post check back here on my blog or follow me on LinkedIn or Twitter, as I will post about new updates there as well.