Have you ever heard about startup accelerators or incubators? How do they really work? Are they worth it? Spend 5 minutes of your time to understand if your startup needs it.
There are a lot of hybrid models and a lot of different names for startup accelerators and incubators. However, they can be quite different in execution. According to Forbes.com. there are now around “7,000 business incubators and accelerators and more than 90 percent of them are nonprofit and focused on programs for community economic development.”
How do accelerators work?
First thing you need to do is to apply and wait. Only 1% to 3% of startups typically get accepted. If your startup idea really touched a heart, be ready to the next stage called “Get funded”. It might be one of the main reasons why entrepreneurs choose this path, but you need to understand that you will not receive $2M at once. Accelerators offer seed money ($10,000 and up to $120,000) in exchange for equity in the company. So if you are someone who doesn’t want to dilute the equity of a company, being a part of accelerator is not a good idea for you. Next stage is all about focusing on your company’s development and networking. Devhance’s team thinks that networking stage is the most important one when you enter accelerator’s program. The last stage called “Demo Day”, where each startup presents yourself for active investors. This is where the experience and time invested is really proven or not.
What can stop you joining startup accelerators?
- When you don’t want a co-founder and you don’t ready to dilute equity
- Almost every accelerator forces you to relocate for 3 to 6 months, be ready to leave your home
- If you think startup accelerators will get your sure-shot success
- Really thrive in an intense, high pressure environment and spending 100% of your time only working on your idea, when you just want to focus on your business.
So, are startup accelerators worth it?
Definitely it depends on you and your priorities. Incubators and accelerators can offer many benefits, if you can get it. It is hard not to mention networking process when you are a part of accelerator, it really can help you a lot. But if you are confident about your networking and fundraising skills, then probably an accelerator program isn’t required. Think about all the pros and cons and make a right decision.