The importance and development of knowledge-based companies and start-ups are not hidden from anyone these days. We see many people around us who, having an attractive idea, a professional team, and strong will, have started a new business and in addition to creating jobs and helping the production cycle and the economy, they have also generated significant incomes. An accelerator is one of the most important factors defined in startups that plays an important role in its success or failure. In this article, we will answer all your questions about the accelerator in simple language.
What is a startup accelerator and what services does it offer?
As the name implies, accelerators or accelerators will help shape and flourish your idea and business. Accelerators help you in many ways.
They will help the owners of ideas and businesses to provide a correct and principled definition of their product or service. Assist them in preparing and producing the prototype. They will help idea owners to find their main and potential customers and find the right way to communicate with them. They help start-ups with startups. If you need a skilled workforce, they will refer you to a specialist.
The period that accelerators spend on a project is usually short, up to a maximum of three months. The accelerator offers growth, management, finance, marketing, and technology-intensive courses for startups that have the potential to grow their success and productivity.
Another service of accelerators is to provide the physical environment needed for an activity. You may need a shed or workshop for your business, and renting or buying it may be difficult or even impossible for you. Accelerators will also help you in this case and will provide the physical space you need.
Accelerators will also help you grow your business internationally. If you want to have an international business and brand, accelerators will bring you to this eternal dream.
4 The main element of accelerators
Once we are familiar with the general definition of a startup accelerator, it is important to know what common and unique features these organizations have scientifically and professionally.
- The first feature is that the period of activity of these organizations in startups is fixed. As mentioned above, this period is short and usually 3 months.
- The activities of these institutions are based on teamwork and collaboration. Owners of ideas, people who specialize in accelerator institutions, and people who are experts in the field of activity, come together again and again and think and make decisions as a group.
- Leading these institutions from beginning to end is based on training and mentoring. You and your team may be unaware of many issues in your field of work or have no information about them. The accelerator team will teach you everything you need from the beginning.
- After the allotted time, as mentioned above, the accelerator will leave the startup process and become one of its shareholders.
What happens to businesses after the accelerator period ends?
As mentioned above, after the accelerator period, on a specific day, several accelerator projects were introduced to investors on the day of the show so that they could find their major investor. But will all projects succeed? The answer to this question is no. Three general situations can occur for projects introduced on the day of the show.
- The idea of a startup can find its main investor and start its professional activity.
- The startup idea may be completely rejected on the day of the show and may not find any investment.
- In the third case, the idea may be of interest to investors but it cannot find its original investor in the valuation. In this situation, the idea of the startup and its team is given a few months to be able to resolve possible problems and try their luck on other days of the show.
Where do accelerators profit?
An accelerator usually brings in several projects and startups at the same time, and these institutions do not just put their time and energy into one problem. But in the meantime, what will be the benefit for these institutions? Accelerators sign contracts with business owners and buys a portion of the company’s stock before they begin operations. In this case, if the idea and business succeed, the accelerators will be among the shareholders of the company and will receive an annual profit.
History of accelerators
The history of accelerators dates back to 2005 in the UK. The company was founded by Paul Graham and his partners under the name Y Combinator. The company invites many startups to interview each year and selects two specific and strong ideas from them.
After selecting the startups, they fully assist them in various areas of consulting, capital for growth, and communications, in return for which they own 7% of the company’s shares. There are currently many expedition companies around the world, but Yi Combinator is still one of the largest and most powerful companies in the world.
The company has collaborated on more than 700 major projects around the world, is associated with 1,400 investors, and is valued at more than $ 30 billion.
What are the steps for working with accelerators?
If you also have a new startup idea, it is enough to get acquainted with several accelerators. Accelerators receive a variety of ideas each year and are reviewed by their expert team. If your startup goes through their initial filters, you will be accepted to the reception center.
In a period of one to three months, the professional activity of accelerators has started and the main concepts required by your business such as future work, market status recognition, customer identity recognition, working on prototype and business model, forming an expert team, etc. They will teach you.
The second stage, also called the acceleration stage, is the start time. If your business has earned the necessary points from the second stage, the accelerator will provide you with the necessary capital to start the business and in return, they will buy a part of the company’s shares between 10 and 20% in their name.
This period usually lasts between 3 and 6 months and you, as the owner of the idea and business, should do your best to get results and returns. Of course, the good thing about working with accelerators, in addition to financing, is that you are not alone in all the steps and challenges, and the expert staff of accelerators will support you in any field.
At the end of the acceleration period, a business sample is prepared to be introduced to investors. Startup services or products are introduced to shareholders at an event on a Demo Day to invest in the core business of the idea. Of course, as mentioned above, the accelerator company will remain a shareholder and receive a profit until the end of the start-up company.
What are the differences between accelerators and growth centers?
If you are familiar with the world of startups and entrepreneurship, you have probably heard the names of growth centers more than accelerators. For more than a decade, growth centers in our country have been helping knowledge-based companies and ideas that can be developed. But are accelerators the same as growth centers? What are the differences between them? In general, it can be said that these institutions have three general differences with each other:
Duration of cooperation:
One of the most important differences between accelerators and growth centers is the length of time your business is supported. As mentioned above, the time it takes for an accelerator to take time for each business is limited to a maximum of 6 months, while for growth centers this time can take up to 5 years or more.
Participation profit rate:
As mentioned above, accelerators register a portion of the shares of an established company in their name as a service fee, but growth centers usually provide their services at no cost to you.
Type of cooperation:
Another difference that can be expressed for accelerators and growth centers is the type of cooperation and participation. Accelerators have a direct impact on the process of work and decision making, while growth centers do not have much involvement in the process and provide only the necessary conditions such as capital and space.
Advantages and disadvantages of accelerators
In this section, we will introduce you to the advantages and disadvantages of accelerators. Undoubtedly, one of the most important benefits of using accelerators is financing, providing physical space, expert advice, and overall speeding up your start-up. But will using accelerator services have any disadvantages for businesses?
One of the disadvantages of using accelerators is that you are not alone in making decisions in your business. Accelerators, both at the beginning and later as a shareholder, can have a direct impact on the company’s activities and decisions. Let. This may be because in some cases your thinking as a company manager and business owner is not in line with the opinion of accelerators.
Is there enough money and capital for all start-up businesses in sclerotia centers? The answer is no. An accelerator company may consider more than 100 projects over some time and select only a handful of them to invest in. You may have to wait for the results to be announced during this time and miss out on other opportunities.
How will accelerators help the national economy?
If startups and accelerators are developed in a country, a country’s economy can make a huge leap. Accelerators make the space between the university and work closer. Accelerators connect with more than a thousand college graduates, enabling them to enter the job market more easily and in less time.
These institutions also contribute to the localization of national knowledge and technology. Many pure ideas in the country are sold to foreign countries due to a lack of domestic investment. This causes the technologies to be localized in the country.
The sources of national income in the country are diversified with the help of these institutions, startups, and growth and technology centers. If a country’s revenue sources become more diverse, the country’s economy will create a very safe margin for itself.
Accelerators create a culture and increase the spirit of teamwork, dissemination of culture, creativity, and innovation and make the country a dynamic atmosphere.
Unemployment in the country will be reduced as much as possible with the help of accelerators and entrepreneurs.
If you are from a remote city or province with the least facilities, having your own business is no longer a dream! With the help of accelerators, you can start your activity in the same place of your residence and help its development and progress.
Conclusion
Accelerators are institutions that help startup ideas get to fruition in less time. These companies provide expert advice to owners, introduce experts to complete the work team, provide the physical space and equipment needed and invest. If the business idea comes to fruition, accelerators will own between 10 and 20 percent of the company’s stock. Accelerators will be very useful and effective for the institutions themselves, for the idea owners, and for the country’s economy.