What Is a Startup Accelerator? (Plus Benefits and Main Features)

Startup accelerators are one of the many ways a business can find support when entering an industry. There are many ways, such as through incubators or accelerators, that a business can help itself through investments and nonprofit efforts. Learning more about what a startup accelerator is can help you better understand what kind of help you may want to pursue. In this article, we review what a startup accelerator is, what its benefits are and what makes it different from incubators, another form of startup assistance.

What is a startup accelerator?

A startup accelerator is a business support effort that helps fund a business during the early stages of development. Startup businesses may enter an acceleration program for fixed periods of time as part of a conglomerate of companies. Accelerators for startups involve a series of educational and financial support systems to help improve the leadership and ability of the company. A startup accelerator may only last a few months, and during that period, a business receives funding, leadership training and other resources that can help improve the business before the program ends. Related: 20 Tips To Help Your Startup Business Succeed

What does a startup accelerator do?

A startup accelerator program accomplishes many things for a business, including:

Mentorship

One important part of a startup accelerator program is the mentorship training that leaders within the business receive during the startup accelerator months. Before an accelerator accepts a business into the startup accelerator program, they make sure to understand a great deal about the business. This can include what the business is selling, what the business' main customer demographic is and the education of prominent members of the business, such as the CEO. Because the startup accelerator understands the business, they can begin mentorship during the accelerator period to help the business expand on what members already know rather than reviewing rehearsed concepts. Related: What Is a Startup? Everything You Need To Know About Startups

Capital funding

Startup accelerators also provide capital funding. During the process, the accelerator business offers the startup capital funding for the entire project during the duration of the accelerator months. Not only does this prepare the business for future events, but it allows them to avoid costs during that time. It also gives the business an excess of capital to use toward expansion, renovation and improvement of facilities during the accelerator period and beyond. The capital funding from accelerator programs can help bring permanent change within a new business. Related: 10 Common Jobs at a Startup (and How To Get Hired)

Seminar training

Startup accelerator programs provide seminar-based training not only for the leaders within a business but employees as well. Seminars can help the general employee base of the business become more skilled in leadership, teamwork and general business-related abilities. After working with an accelerator business for a few months, a business should have enough seminar training to attract investors, even if employees had little training beforehand. Related: How To Get Hired at a Startup

On-site preliminary assistance

While in an accelerator training program, businesses receive assistance from the program staff. This can include staffing help, workload allocation help and assistance with daily tasks, such as bookkeeping and other business-adjacent matters like payment allocation planning for employees. With on-site assistance, a business can allocate tasks to external employees while handling other matters, such as hiring more internal employees and preparing for business independence after the accelerator period ends.

Benefits of a startup accelerator

There are many benefits to using a startup accelerator program, including:

Networking opportunities

One benefit of a startup accelerator program is that businesses have networking opportunities with the accelerator business and other businesses within their industry. This means that being a part of an accelerator program can not only help a business get started in the industry, but it can also help business professionals make key relationships with others that can help the business long after they complete the startup accelerator program.

Personalized guidance

An accelerator company offers heavily personalized guidance to a startup. Throughout the process of verifying a company for an accelerator program, the accelerator business and business leaders from the startup company perform extensive interviews, meetings and orientation to better understand the needs of the startup business. With the information they obtain during this process, an accelerator company becomes well prepared to give advice and resources by the time a startup is ready to participate in the program.

Collaboration with similar startups

An accelerator program helps a startup to begin to collaborate with other startup companies during the process. Accelerator companies work with many startups at once, and because startups can get resources from the accelerator company, they may be able to network and work with other startups in the industry. This can lead to networking and collaboration opportunities that the startup business may not have originally had without becoming involved in the accelerator business.

Supplemental funding

Another advantage of taking part in a startup accelerator program is the supplemental funding throughout the process. Accelerator funding not only can help fund the start of the business, but it can help provide capital for the costs of a business during the program. This means a business can expand underneath the program, besides using capital funding to start the business.

Differences between an accelerator and an incubator

Another kind of startup support format is an incubator. While startup accelerators and incubators do share many traits, they also have distinct differences. Some differences between an accelerator and an incubator include:

Duration

One difference between an accelerator and an incubator is that an accelerator has a different period of duration. An incubator helps a startup business for a longer time, helping the business for anywhere from one to five years. While the support that an incubator gives also differs from an accelerator, the duration of an incubation institution is longer, designed to help ensure that the business both survives and thrives even after assistance is no longer in place. In an accelerator program, the business helps a startup for anywhere from three to six months.

Investment

Another difference between incubator support programs and accelerator support programs is the amount of investment capital they can provide to businesses. Accelerator programs provide capital to businesses from investments within their own funds. This means that the business startup doesn't need to provide any capital in order to gain capital support. Another way that accelerator programs can provide capital to businesses is by running nonprofit campaigns. Nonprofit campaigns require very little capital from either party but can gain capital for the startup business and its endeavors. For incubator programs, a business can gain capital in two ways. Because an incubator program has a longer duration time with a business, a nonprofit effort may have a higher chance of generating more profit than one that an accelerator program hosts. However, businesses can't opt for an investment profit from an incubator program. Instead, they rent capital support, which is when the startup business invests a certain amount of capital to receive a higher amount. These combined capital opportunities can allow startup businesses to generate the funds they need for establishment and expansion.

Mentorship

Another difference between incubation startup institutions and accelerator startup institutions is the availability of mentorship that a business can gain from the institution. While an incubation startup institution allows a business to develop with the mentoring facilities for a longer period, more mentorship opportunities are available with an accelerator system. When a company joins an accelerator system, they have more specialized training that's based on the interview content they underwent before joining the program. Within an incubation system, although the business undergoes the same kind of interviewing process, the training for incubation businesses is less quantitative and more specialized. Businesses with mentorship underneath an incubation program can ask specific questions and gain specific training, but not training for each employee type, like with an accelerator program. With an accelerator program, everyone receives training, while with incubation training, only those who need training receive it.