Great news! MassChallenge has agreed to share their thoughts on helping individuals create startups and to teach us (myself included) about startup accelerators. Thank you MassChallenge!
MassChallenge is a non-profit startup accelerator that has raised over $4 billion dollars! for startups. That’s a lotta dough! If you’d like to see my thoughts on whether or not an idea is worth pursuing, you can check out my post on “Million Dollar App Ideas” here.
Full post after the break:
Are you interested in setting up your own startup company? I am pleased to tell you that these days, there are a number of paths you can take to ensure that your startup gains the support and indeed the investment it requires to thrive. One of these options is a startup accelerator.
What Are Startup Accelerator Programs?
Startup accelerator programs provide support to growth-driven, early-stage companies. They do this by offering education, mentorship and of course, financing.
Startups do not remain in accelerators. Instead, they enter them for a fixed period and are joined by a group of other companies that share the same or similar characteristics that match the investment thesis. Experience within the accelerator is both invigorating and intense. Rapid learning is designed to speed up the life cycle of these young, innovative companies. Essentially, years of learning will be compressed into perhaps several months.
I am sure you are aware of other similar options such as incubators, seed stage venture capitalists or angel investors. While these can be effective they do not have the collective elements of the startup accelerator. This is a fixed term mentorship-driven program which will ultimately conclude with a ‘demo day.’
A typical accelerator will last between three and six months compared to an ongoing angel investment or an incubator that can continue for up to five years.
The First US Accelerators
The first noted accelerator in America was Y Combinator. This launched in Boston in 2005 and was known as a seed accelerator program. TechStars was then founded in 2006 in Colorado. Since then, these two have become two of the top accelerator programs on a global level.
Between 2008 and 20014, these accelerators were increasing at a rate of 50 percent every year.
Today, there are nearly 200 accelerators throughout the US and Canada and over $100 million has been invested in these programs in total. The average investment can be anywhere between twenty and fifty thousand.
The Application Process
As you might expect, these accelerator programs are competitive due to the benefits that they could provide a company. Of 3000 applicants, a system will select 150 teams. They will ensure that these teams match the investment verticals and the requirements of the thesis before accepting between 45 and 90 applicants.
Applicants are required to show why their startup is different from the rest and why it will thrive on the market. They will also need to have a full team and strategy in place to ensure success in both product development and success with a target customer base.
Benefits Of Startup Accelerator Programs
The main benefit is that the founders of the startup will be able to learn and develop their company at a rapid pace that exceeds other opportunities on the market. In learning by doing ventures can be scaled in a matter of months. The main value of these programs comes from the intensive learning environment that is created and may help the company attract seed as well as early-stage financing.
If you are keen to learn more about the staggering impact of accelerator programs on startups today and the process required to apply, I encourage you to check out the infographic below.
Infographic Courtesy of MassChallenge