Got a big entrepreneurial idea but hindered by a lack of experience in setting up a company? Need money to get it started but have no clue where you can access the funding? If this is your case, you may consider checking out the numerous startup accelerators available within and beyond the United States.
A startup accelerator is a hub where early-stage entrepreneurs can access close mentorship, systematic training and even free office space. The first publicly recognized startup accelerator — and so far, one of the most sought-after — is “Y Combinator.” It was founded around 15 years ago during a time when tech companies were booming and swiftly squeezing into nearly every aspect of our lives.
The emergence and development of startup accelerators mark the increasing democratization of entrepreneurship, the irresistible rise of the new economy in recent decades and the diversification of capital flow across different segments in our society.
Startup accelerators seem to be the schools for early-stage entrepreneurs. They normally have a fixed number of terms, ranging from six weeks to a year. Of course, the access to startup accelerators is not totally suspended after entrepreneurs “graduate.”
The entrepreneurs will still have fairly close interaction with their advisors at the accelerators and can seek advice and communicate any significant progress made, especially if the startup accelerators have invested money in the company. In this case, they are one of the holders of the companies and understandably follow up with them more consistently and intensely than startup accelerators would usually.
During my time at college, I am fortunate to have the chance to engage in the accelerator program at my university. I would like to share with you my understanding of startup accelerators and how we can use them to optimize the growth of our businesses. Here are several factors that I consider significant when selecting startup accelerators:
The Training and Mentorship
The quality and quantity of the training and mentorship provided by the startup accelerators matter, especially if you are a first-time founder. As many successful entrepreneurs and venture capitalists have claimed, there is no single success formula for an early-stage company. Each industry has its own nuances and niche knowledge, not to mention that the market condition is constantly changing. It could be incredibly helpful to have someone with substantial experiences to guide us along the journey, especially at the initial stage.
For example, if you want to “uberize” the salon service in your city, it might be beneficial to partner with someone who has similar experience uberizing consumer services. He or she might provide you with insight into what may concern consumers and what hidden traps you need to avoid.
To accelerate the growth of this business, it is vital to examine what functional divisions you need in the company and how you might consider allocating the resources across these divisions. How to project the cash-burning speed and optimize the balance between costs and benefits is another critical tension that nearly all entrepreneurs need to wrestle with before the ultimate exit.
Having the condensed training and intense mentorship could substantially decrease the time and the cost of mistakes along this challenging yet incredibly fulfilling journey.
However, in my opinion, one thing to always keep in mind is that an entrepreneur may want to maintain a sufficient degree of independent thinking. As previously mentioned, the market condition is constantly changing, and advice from others — even previously successful founders — might not be a 100% fit for your business. The distinct features of each business further amplify the importance of critical and independent thinking in the information assessing process.
Therefore, use advice as an inspiration, but remember to leave room for creativity and the “real” effectiveness.
The Peer Network
Startup accelerators are normally cohort-based. You are not the only startup selected to participate during the program period. You will “sweat” building your company and hacking the growth along with a group of early-stage entrepreneurs who are identified to have tremendous potential.
I see this network of early-stage entrepreneurs as critically beneficial due to two reasons:
First is the peer learning opportunity. People in your batch might come from different backgrounds and have different perspectives to offer. For example, if you are building a consumer-driven startup that delivers products to consumers directly from storage, you might benefit from the founder next to your desk (who may be digitalizing the process of investing in foreign currencies) in harnessing the power of technology to make the shopping experience more seamless.
The success of a company involves many complex layers that demand a nontraditional approach to reach the optimal solutions; having input from peer entrepreneurs can expand our mental space as well as motivate us to think beyond our boundaries.
The second benefit is peer inspiration. Creating a business might be a lonely or sometimes even painful journey. Human beings can be substantially impacted by environmental stimuli. Our feelings are closely related to how we perceive and proceed with things. Working alongside like-minded peers not only enables us to fill our minds with the goal of making our startups successful, but it also normalizes our challenges and difficulties while forming a positive coping mechanism with visible or even invisible support.
The Funding
Many startup accelerators offer to fund a selected cohort of startups in exchange for equity. Funding can sometimes be the “blood” for an early-stage startup to expand its growth. Though it is important, I consider it as less significant than the two other factors mentioned above. There is no difference between the monetary currencies except for knowledge capital and human capital.
From my perspective, these two forms of capital should be prioritized over funding. It is also important to thoroughly investigate the necessity of the funding and the amount of equity you should give away based on meticulous analysis of the commercial potential of your business.
Other factors you might need to consider include the location, length, industry expertise, exit history and investor network of the startup accelerators before you decide to commit to any of them.
