Joining an Accelerator: Pros and Cons

What is an accelerator?

An accelerator is essentially a fixed-term programme, focused on mentoring a cohort, or a class, of start-ups, providing them with training, industry contacts and also often with office space. Aside from intensive mentoring, accelerators offer seed funding in exchange for equity, which, in Europe, usually is between £10,000 and £50,000. Admission to accelerators is usually extremely selective, yet open to all. Moreover, accelerators tend to focus on small teams, deeming individual founders incapable of taking on the variety of challenges and tasks that running a start-up company comes with.

The limited time and high intensity nature of accelerators has, perhaps undeservedly, earned them a label of an ‘assembly line’ for new ventures. This, however, in its pejorative sense, would imply some deficiency in quality of the start-ups that go through the process of joining and then graduating from accelerators, an inability of accelerators to reconcile a short time span in which the mentoring takes place with providing sufficient funds and expertise for how to utilise them effectively for the respective businesses to take off. Clearly, considering their very nature, repetition in the process is inevitable, yet the precise benefits that your particular start-up will acquire in the time leading to graduation will be highly contingent on the accelerator you join. Thus, while there are some characteristics that can be probably attributed to all accelerators, it will be eventually in your hands to continue with the research and choose what is suitable for your business.

Advantages

Mentorship is invaluable. Whether it is workshops or one-to-one sessions, the expertise and support you will have access to in an accelerator will allow for really in-depth and tailored advice that will mould and polish your business. Mentoring usually takes a variety of forms, usually not being solely focused on general business advice, but rather, teaching a broad spectrum of skills, like planning market strategy and conducting market research as well as providing the business with access to specialist legal and financial services.

The capital investment, on the other hand, obviously has two sides to it, with the benefit clearly being the cash injection. Nonetheless, considering the usually modest amounts invested by accelerators in return for equity, it is important for the funding not to be your sole guiding objective when deciding on the attractiveness or suitability of a particular accelerator to your business. At the end of the day, it is the mentoring and industry contacts that will push your business further and potentially open doors to new opportunities, including larger funding at later stages.

As mentioned, industry contacts can do wonders and the networking opportunities that accelerators create have an immense value. At the same time, it is important for you not to neglect engaging with other members of your cohort. Even though the programme is not a long one, they will be in exactly the same position as you, and it will be less troublesome to undergo the intensive process of learning and developing with a healthy dose of peer support.

With brand recognition come vast marketing prospects and thus this should be borne in mind when choosing an accelerator. Many programmes culminate in a pitch event or a demo day, but if your accelerator is held in high esteem in the industry, chances are you will have an even further opportunity to utilise this platform to gather media and customer attention.

Disadvantages

Despite the clear benefits that flow from joining an accelerator, it is a commitment that does not guarantee success. Many student-entrepreneurs, when presented with visions of growth and stellar contacts, do not think twice before joining and drop out of college, afraid the opportunity will slip as the programmes are immensely competitive. This, similarly, applies to other entrepreneurs who may not take into consideration all the consequences that come with joining; like relocation, or the need to sideline other commitments. Ultimately, however, it is in your hands to weigh up the pros and cons and make an informed decision.

Everything comes at a certain price and so does, unsurprisingly, joining an accelerator. The investment in return for equity means you are giving away a chunk of your start-up for the funding and services the accelerator provides you with. The scale and impact of this clearly depends on how much equity the particular accelerator is demanding from you. Even though the level of equity required is usually in the 5-10% range, some accelerators go much higher in their demands and thus, yet again, it is absolutely crucial that you know what you are signing yourself up to.

Choosing a suitable Accelerator for your Firm

Notable UK accelerators include London-based Seedcamp and Collider and Birmingham-based Oxygen, and you can find a comprehensive list here. It cannot be stressed enough that each accelerator is unique and particular attention needs to be paid to what they offer, their graduates, their industry focus and whether they take any fees for services. Some accelerators, like Seedcamp, offer open office hours, which you could treat as a first step to recognise the potential and challenges facing your business. Even though the application process is very competitive, do not accept any offer before examining it in detail as what seems to be a promise of success could easily turn into disappointment if does not suit your business. 

Miłosz Palej