BERKONOMICS – Business insights from Dave Berkus

Accelerators: a recent and positive trend

by on Apr.24, 2014, under Growth!, Raising money, Surrounding yourself with talent

Often I see executive summaries from entrepreneurs who have never managed any form of business, or even managed employees in their past life, and who don’t know the first thing about business formation and managing for growth.  I used to tell them to find a partner with knowledge in business creation and management.  Although that is still a good idea in many cases, there is a recent alternative available to some entrepreneurs on a competitive basis that seems most attractive and positive.

Accelerators are organizations that selectively accept entrepreneurs into a program of intense coaching in a physical environment sponsored by the accelerator that also provides seed funds for the startup to begin its business.

[Email readers, continue here...]  Accelerators are popping up in college towns, urban cities and near existing technology hubs.  Some have become well known in the entrepreneurial community as benchmark operations for others to emulate, including  TechStars and Y-Combinator. Others have a more local flavor, catering to single audiences, such as students or 2014-0329_OxyTEDx-0276graduates of a nearby university.

Another term, incubator, is increasingly being used to define real estate operations run by universities or private groups in which the principal added value is the reduced price or free rent and access to resources from the incubator’s sponsor.  Accelerators, on the other hand, put entrepreneurs through a three week to three month intensive program closely monitored by accelerator management and volunteers, teaching, coaching, aiding and building the fledgling business to make it ready for its next round of financing upon graduation.

And graduation is typically marked by an organized “demo day” in which prominent investors, VCs, angels and super angels are invited to attend and see demonstrations and hear presentations from graduating entrepreneurs.  There are many stories of funding deals made on demo day amid the excitement of seeing new, polished startups with great ideas and the beginnings of an infrastructure.

Are you a candidate for an accelerator?  You’ll give up some small amount of equity to the accelerator, receive some amount of cash in return during the program, and learn more in a short time than you’d expect from more formal education programs.


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