Experts Agree: Accelerators Are the Best Way to Grow Your Startup
- Mark Gold
- Apr 27, 2017
- 5 min read
2020's mission is to empower entrepreneurs and continue providing communities of diverse visionaries the environment, education and expertise to accelerate success.
If you're an entrepreneur then by now you should know all about the wonders of Startup Accelerators. Now more than ever the key to success lies within the execution of an idea and not the idea itself.
The reason accelerators are so important is because all major support strategies converge into a single program that rapidly converts ideas into viable ventures. In case you haven't heard of startup accelerators, we got a lot of work to do...
What are Startup Accelerators?
Startup Accelerators, also known as seed accelerators, are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day. Startup accelerators support early-stage, growth-driven companies through education, mentorship, networking and investor relations.
In today's hyper-active digital age, finding an accelerator program is easy, however finding one that fits your goals and getting accepted, sometimes proves to be much more challenging. With a vast network of programs popping up throughout the United States and the world over, it's important to understand what accelerators do, and how each program can impact your startup.
Throughout the last decade there has
been significant evidence demonstrating the rapid improvement startups undergo in various accelerator programs. New York State released a study approximately 1.5 years ago stating that the key to growth for entrepreneurs was guidance. The research stated that entrepreneurs with the right guidance can employ up to 3 people within the first year in business.
As seen on Huffington Post:
"A recent study by VentureBeat found that companies graduating from top accelerators before December 2009 returned 11.3x on capital invested. Other studies show that the survival rate of companies that go through accelerators could be three times that of companies that don’t. What’s more, research shows companies that completed an accelerator grew faster than companies that didn’t."
So if you're looking to join a Startup Accelerator there are a few factors to mull over. First, how much percentage (equity) will they be taking from your company? Second, what are the natural strengths or industry-focus of the program, and lastly what were the results of previous participants?
How much equity do they take? (Pros Vs. Cons)
Accelerators typically take anywhere from 3-8% equity in exchange for services and funding. The pros include a funding package anywhere from $50k-$100k and the program's alumni network to tap into. The cons include giving up a portion of your company for typically a 3 month program and committing yourself to a full-time schedule sometimes not viable for students or employees.
What are some natural strengths or industry-focus?
This is a big one. Pros: If you're looking for an industry-specific accelerator like food, real estate, fin-tech etc; the pros include an industry-specific mentorship team, educational program and network. The Cons include a highly competitive and an instinctively non-collaborative cohort restricting your access to investors and leaders since everyone is fighting for the same access in the same space. As far as the strengths, I advise to think outside-the-box on this one and long-term. Each accelerator will have their "natural strengths" which may be in a specific area that you need now or will always need such as marketing, public relations or their industry network. As a founder once told me, you're never to advanced for press and partnerships.
What results has the accelerator produced so far?
An accelerator should release case studies or success stories of previous cohorts at least every quarter. I advise to focus on similar early-stage startups in the same space and take a look at the founder's personal brand. The pros include a birds-eye view on the accelerator's strengths, accepted startups, capabilities, and result-driven effectiveness. The cons include undefined or incomparable components like the founder's work ethic, competencies, ability to quickly learn and executive and key-skills such a pitching, selling, and networking - which are difficult to measure. Sometimes startups do not achieve anticipated results due to their own performance issues which unfortunately becomes a reflection of the accelerator and vice versa - when startups will achieve specific results outside the accelerator but the accelerator will take credit since it occurred during the program's educational time frame.
Taking into account the pros and cons of all 3 areas, a serious attempt to provide a one-of-a-kind accelerator program was born in June of last year.
2020 Startups launched last year as New York City's most ambitious and result-driven accelerator program to date. As one of the fastest growing, result-driven, non-equity accelerator programs in the country, 2020 Startups stands out in a class of it's own by focusing on the pros of all 3 areas mentioned.
A breakdown on how 2020 Startups is disrupting the accelerator market:
First, you get to keep your company (hooray) with no equity requirement. There is a program fee of $2,500 for the 3 months but consider this nifty mathematical breakdown. Imagine forking over 5% equity for $100k at a traditional accelerator which at present value is $5,000 - double the 2020 cost. Now imagine an investment of $500k 6 months later with a 5% deduction to the accelerator being $25,000. Now what sounds better, giving away $25,000 for a 3 month program or $2,500. You do the math.
Second, the natural strengths focus on long-term sustainability which most startups struggle with specifically press and partnerships; something that no startup can live without. By working as a cross-vertical accelerator focusing on scaling startups through press and partnerships, every cohort has gained a tremendous advantage by collaborating and internally networking.
Third, what makes 2020 a viable accelerator is the concrete traction created just shy of one year in existence. According to one member of the advisory board; "there's no reason to create another accelerator even with no-equity unless it out-preforms everyone's expectations". As of early 2017, the program has gained quite a reputation among leading investors and entrepreneurs as immersive result-driven program that is on the competitive level of the country's top accelerators in terms of press, partnerships, networking and 90-day outcomes.
Focused on early-stage hi-tech, low-tech and no-tech startups, 2020 Startups is the first city-subsidized, result-driven, 90-day accelerator program providing free workspace, mentoring, workshops, a marketing lab, investor relations and doesn’t take equity. The key words are result-driven. In the last year over 300 applicants have come through 2020's doors from over 15 countries and everyone proud of that, but we're only getting started.
The secret sauce at 2020 Startups is the program's highly immersive approach as a lean-startup accelerator, adopting the same strategies tech accelerators use for growth hacking. However, the program is open to all types of entrepreneurs typically overlooked by traditional accelerators more focused on billion dollar exists than economic development.
If you're currently exploring accelerators consider 2020 Startups for this:
• Over 90% of participants reported "significant growth" within 90-days
• Participants have been featured on CNN, NBC, Digital.NYC, BuzzFeed, Business Insider Huffington Post and many more outlets
• 3/10 Startups acquired seed funding from $100k - $400k within 90-days
• Participants met and were mentored by executives and experts from New York Angels, IBM, Bloomberg, Shark Tank, NBC, CBS, Google, Flight VC, Gust, Brand Foundry Ventures, NY Venture Partners, Merrill Lynch and many others
The Q3 cohort of early-stage startups will begin this summer on June 5th. Applications are currently open for the Summer and close on May 1, 2017.
For more information on accelerators visit Digital.NYC
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