Years ago, starting a new business was a do-it-yourself exploration of the unknown. It was a process of experimenting and wandering toward success, rather than following any particular set of guidelines.
Development was a trial-and-error process. Professional help and mentoring were hard to find – except in the big cities.
These days, there are far more development pathways to choose from. Accelerators are usually the quickest route to success, thanks to the nurturing, funding, networking and other resources they offer.
Further, recent analytical technologies – such as fast-tuning “dashboard” business metrics tools – are fueling the popularity of accelerators and driving the growth of the marketplace for these programs.
How Accelerators Work
Traditionally, an accelerator provides guidance and mentoring, technical help, and some initial cash. In return, the accelerator receives a chunk of the company’s equity; after signing up, you’ll have a partner who owns a piece of your business.
The amount of ownership that you’re asked to give up will depend on factors including the accelerator’s reputation for success and the business model.
What You’ll Get From An Accelerator
To make it easier to keep an eye on their hatchling startups, most business accelerators provide office space. Some also provide lab or warehouse facilities as well, depending on the type of startups they’re supporting.
Beyond covering startup and development costs, accelerators are best known for the coaching and mentoring they provide.
If you make a good choice when it comes to accelerator programs, you’ll enjoy plenty of personal growth as a business owner. You’ll also receive marketing help, which is often the most critical determinant of your business’s success.
So let’s assume you have a winning idea for a new product or service, and that you’ve already fleshed it out enough to stand on its own.
Now, it’s important to choose the right accelerator for your startup. Here are five questions to consider before joining a business accelerator:
Question # 1: Who’s behind your accelerator, and why?
The first step in your homework is to figure out who owns/operates a given accelerator, and why they’re doing it.
Accelerators can blur the line between academic and business worlds. You’ll want to make sure that you’re squarely on the money-making side.
Find people who have a proven record
On the academic end of the business-development spectrum, you’ll find local advice and assistance programs offered by colleges and civic organizations.
There, you’ll receive plenty of basic technical help and early learning assistance.
These business incubator programs can be helpful for newbie entrepreneurs with little or no business experience. That said, if you’re interested in quick growth, you’ll want to work with an accelerator led by someone with a track record of guiding others to success before.
You’ll also want to prioritize programs with direct access to potential investors. Instead of relying on academic-style business incubators, focus on working with experienced business people – especially those who have experienced the kind of success you want for yourself.
Work with more business people than academics
Ideally, you should only work with someone who has a proven track record for taking startups to market, and shepherding them to profitability.
Make sure your mentor can teach you about time-tested, battle-worn business strategy and tactics – not just the technologies or resources that are available to you.
Question #2: What kind of “juice” does your accelerator have?
Along with knowing who the top entrepreneur at an accelerator is, before signing up, you’ll also want to know who they know.
In the tech world (and most other business niches), relationships are the key to rapid funding and development. For this reason, an accelerator is only as valuable as the relationships and access it brings.
In order for your startup to be successful, look for an accelerator whose leadership already has all the connections and resources you’ll need.
Most importantly, the accelerator must have direct, visible relationships with funding sources, leading tech companies, designers and manufacturers. Media connections help, too.
If your new product or service impresses people with relationships and resources, they’ll introduce you to investors – and that’s most of the battle anyways when it comes to business success.
Question # 3: What’s the track record?
The next question you’ll want to ask is how many previous successful launches the accelerator has logged.
There are many types of business development programs offered nowadays, ranging from online distance coaching to hands-on development management at a big VC with in-house staff
Since past success is the best predictor of future success, try to work with an accelerator that has already launched other successful businesses in your target niche.
Do some homework by reading old press releases to see who’s worked with which accelerator in the past, and where they are today. You’ll probably see some patterns – and those patterns should inform your decision in pursuing an accelerator program.
Question #4: Local or long distance?
Another crucial question is where an accelerator is located, especially with regards to whether your product/service depends on a particular geographic area.
Obviously, if your startup is tech-related, then the best development locations may be in communities already known for tech development (San Francisco tops the list, for sure). Relocation – even just temporarily – is usually required in these cases.
But if your business model doesn’t depend on geography – for example, if you’re pitching a restaurant concept – consider working with an accelerator with regional scope, perhaps closer to home.
Or, you could try an online accelerator. Of course, you’ll need to be careful to avoid the scams. Any accelerator that’s not bricks and mortar but promises financing deserves extra caution.
Keep in mind the only realistic way you’ll ever receive any funding is by having a face-to-face relationship with someone who has money, or access to someone who does. And, unfortunately, it’s rare to build relationships to this level through an online program.
Question # 5: What’s your goal?
Long before you ink a deal with any business accelerator, you should have a clear idea about your own goals, as well as understand the metrics by which you’ll gauge your accelerator program success.
Now is also a good time to make decisions about ownership and management control. Entrepreneurs usually have strong personalities and thrive in a dynamic collaborative environment, but problems can arise when there’s a divergence in vision between the original and adoptive entrepreneurs.
That’s why it’s best to carefully read the fine print in your accelerator’s development agreement before signing.
Even if you’re already confident your new product or service will be a winner, don’t jump at the first opportunity strictly based on the initial funding amount it offers.
Instead, compare the features and benefits offered across different business accelerators. Keep in mind also that the folks at an accelerator wear two hats – they’re both investors and business developers.
Occasional disagreements are normal. Don’t expect partnership perfection; instead, choose the group with which you have the best overall “chemistry.”
No matter how clear your vision seems right now, all business models are shaped by fresh input from experienced professionals.
Make the Right Accelerator Choice
Of course, you’ll want to have a well thought out exit strategy before approaching any prospective investors. If you’re flexible, this exit strategy can evolve over time; in fact, you should expect the business strategy, interpersonal dynamics and financial discussions to change considerably when you work with an accelerator.
Ultimately, flexibility is the key to success. You’ve got the best chances of surviving and thriving inside a fast-paced business accelerator if you’re able to stay firm in your vision as an entrepreneur, while still being flexible in its execution.
Are you working with a business accelerator now? If so, share how you chose your program and what you’ve gotten out of it by leaving a comment below:
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Image: Fork in the road; Wikimedia Commons
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