A business accelerator is all that organization that helps to promote ideas and startupsin early stages to accelerate their growth and prepare properly to address investors with a proven business idea.
The main objective of a business accelerator is to achieve growth and progress in a limited period of time than in the normal market, they would have a much longer duration.
Characteristics of a business accelerator
It is an intensive program of assistance to entrepreneurs that lasts between 3 months and a year, at the end, they will present their project to investors on Demo Day. We can qualify it as the final exam or the graduation day of startups.
Each program has one or several calls a year, where interested entrepreneurs submit their candidacy and will enter the selection phase. In that phase, the jury of the accelerator values the potential of the project and the talent of the entrepreneurs in order to decide who are the startups that enter the program.
During the business accelerator program, startups receive the following resources:
- Physical coworking and incubation spaces:Where to work with the team, along with the mentors of the accelerator and other entrepreneurs.
- Networking .:To be able to access a wide network of events and contacts with business experts, potential clients, investors and people from the environment with whom to establish synergies.
- Initial financing (seed or seed):Many programs offer an initial investment in exchange for actions in the company to develop the project and obtain profitability in the future. Although it will depend on the program and conditions, these types of investments are usually up to € 100,000.
- Demo Day:It is the summit of the acceleration program where entrepreneurs present their project, the progress achieved and what they will be able to achieve if they obtain the financing they need from investors who come specifically to the event. In this way, they have the opportunity to start negotiations for a first round of financing that allows the startup, to grow and accelerate, to make their initial investment profitable.
Types of business accelerator
We can distinguish several types of business accelerator programs according to the institutions that organize it and the startups that access them. We classify them according to:
- The organization: Itcan be a public or private entity, a group of investors, a multinational or a group of entrepreneurs. The interests are different, some will want to obtain a return on their investment, others make public resources available to entrepreneurs or others a way to innovate within their company.
- Project phase:There are programs for entrepreneurs who only have a business idea, others for those who are going to get their first clients and users and others for those who are looking for a higher round of financing to continue growing. Depending on the stage in which the startup is located, the needs of entrepreneurs will vary.
- Startup sector and requirements:There are accelerators that support projects from any sector and other verticals specialized in a specific sector. Generally, the requirements to be admitted as a startup is to be innovative and usually technological, present a scalable model and have the objective of seeking a round of financing.
- Financial contribution:There are programs that offer financing to the project and others do not. Those that offer financing can do so in various ways: In exchange for company actions, through participatory loans, as a subsidy or in kind through products of other partners, such as software licenses.