An accelerator is an organization that provides capital (usually a seed investment), mentorship, and networking connections to startups. Y Combinator, the first seed accelerator, is a well-known example.
Who can join an accelerator?
Accelerator programs focus on startups with a validated MVP (minimum viable product). This might mean they have some paying customers, a number of free users, or other signs that the product is a good fit for the market.
Normally, accelerators receive a significant number of applications for each place. Startups that are ready to scale and invest time in mentorship and networking have the best chances of success. They should be prepared for a high-pressure environment and a lot of work in a short length of time.
What does an accelerator provide?
As well as seed investment, an accelerator typically provides:
Intensive mentoring and training, alongside a cohort of other startups
A physical space (not in all cases, particularly since the Covid-19 pandemic)
Industry connections and networking with peers and potential investors
Seminars, workshops, and mentorship opportunities
A “demo day” at the end of the 3 - 6 month program, where the startups in that cohort present their product to investors
What’s the difference between an accelerator and an incubator?
Incubators are aimed at startups who are still developing their product. Non-profit groups, such as academic and government organizations, run the vast majority (93%). They don’t provide direct funding but can help startups find other sources of funding – and they may also provide office space and administrative support. They may mentor startups for 2 years or more.
Accelerators work at a much faster pace with a typical program length of 3-6 months. They’re private companies that invest funds (for a share of equity that’s normally between 4% and 15%), and they provide focused support and mentoring. They normally look to support small teams, not individual founders. They expect a lot of focus and work from the company during the months of the program.