How Startup Accelerators Work

Today we’re going to be talking about how startup accelerators work.

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Startup accelerators, essentially, are a support system where there is a network, where there are resources, where there is money to help companies to go from zero to 100 super, super quickly.

The first part is applying. Essentially, applying is about filling out a form online where you’re going to be talking about yourself, about your business, maybe your background, what you have done.

The next thing is if they like what they see, perhaps the accelerator, they’re going to call you in either to do an interview in person, or you can also do this in video. During that time, they’re going to ask you about the market, how you’re seeing things, how you’re seeing your product. They’re going to ask you about yourself, your background, and why you went at it with this.

My advice to you is, when you’re filling out the application or when you’re interviewing with them, you really want to make sure that your passion is coming out of the why of why you’re doing this, and also they understand why your background is the right background to execute and bring this idea to life.

The next part is going to be getting funded. Basically, when you attend one of those accelerator programs, they’re going to give you anywhere from $10,000 all the way to $120,000 for a percentage of equity in your business. That could range from as little as 5% all the way up to 12%. I’ve seen them in all different flavors.

The form or the structure of the investment is, for the most part, going to come in a convertible note or on a safe note. What that means is that investment that they’re giving you is not coming with a percentage, or let’s say an equity or a valuation.

The next part is learning. When you attain one of those programs, it is an amazing network of experts and other founders that have also been super successful. What you want to do here is tap into those experts that have that expertise or knowledge specifically to what you’re doing and get their help on either the product and achieving product/market fit or understanding internal processes or understanding who you need to hire and how you can get in front of these people. That’s essentially what you’re going to be doing.

The next part is the network. The network is a massive component here because there are a lot of accelerator programs out there, and there’s a lot of noise. There are only probably two or three that are the best program, and those are the ones that you want to take a look at. Those are like YCombinator, Techstars, AngelHack is great, but there is a lot of noise, and you really need to be able to filter because the network is everything.

So, that network is really fantastic, how those founders are coming in and helping each other out, and I think that network is what you want to go after. Also, that network includes investors like angel investors or venture capital firms, so you want to make sure that you understand and that you’re asking who is part of their network and how they can help you on achieving the milestones that you need.

The next thing is the Demo Day. When it comes to the Demo Day, that means you’ve already done your three or six months already as part of the cohort of that batch of the accelerator. You’ve already done your progress. You’re ready to showcase your product, your service, whatever that is, and have everything in a pitch deck in that 15 to 25 slides where you’re presenting your story. And by the way, you can download the pitch deck template below.

You want to be very careful here. The best accelerator programs are the ones where on Demo Day, they bring qualified investors and top-tier investors. However, not the other accelerator programs where most of the time, what you see is a bunch of service providers that ultimately are going to waste your time.

Ultimately, you need to ask yourself: is a startup accelerator something that you want to do? Are you going to be okay giving away equity of your business?

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