Business accelerator

economic-dictionary

A business accelerator is any organization that helps to promote ideas and startups in the early stages to accelerate their growth and adequately prepare to be able to target investors with a proven business idea.

The main objective of a business accelerator is to achieve growth and advances in a limited period of time that in the normal market, would have a much longer duration.

Characteristics of a business accelerator

It is an intensive program to help entrepreneurs that lasts between 3 months and a year, at the end, they will present their project to investors on Demo Day. We can qualify it as the final exam or the day of graduation for startups.

Each program has one or more calls per year, where interested entrepreneurs present their candidacy and will enter the selection phase. In this phase, the accelerator's jury assesses the potential of the project and the talent of the entrepreneurs in order to decide who are the startups that enter the program.

During the business accelerator program, startups receive the following resources:

  • Physical coworking and incubation spaces: Where to work with the team, together with the accelerator's mentors and other entrepreneurs.
  • Project mentoring and training: A team of experts will help define and validate the startup's business model. They offer training and tutoring in aspects such as defining the business idea with a canvas, marketing strategies to gain traction in terms of users and clients, legal aspects, product development, how to prepare a financial plan and present it to investors or how to prepare your pitch (speech) to convince of your project.
  • Networking .: Being able to access a wide network of events and contacts with business experts, potential clients, investors and people in the environment with whom to establish synergies.
  • Initial financing (seed or seed): Many programs offer an initial investment in exchange for shares in the company to be able to develop the project and obtain profitability in the future.Although it will depend on the program and conditions, this type of investment is usually up to € 100,000.
  • Demo Day: It is the summit of the acceleration program where entrepreneurs present their project, the progress made and what they will be able to achieve if they obtain the financing they need from investors who specifically come to the event. In this way, they have the opportunity to start negotiations for a first round of financing that allows the startup to grow and the accelerator to make their initial investment profitable.

Types of business accelerators

We can distinguish various types of business accelerator programs according to the institutions that organize them and the startups that access them. We classify them according to:

  • The organization: It can be a public or private entity, a group of investors, a multinational or a group of entrepreneurs. The interests are different, some want to obtain a return on their investment, others make public resources available to entrepreneurs or others a way to innovate within their company.
  • Project phase: There are programs for entrepreneurs who only have a business idea, others for those who are going to get their first clients and users and others for those who are looking for a higher round of financing to continue growing. Depending on the stage the startup is in, the needs of entrepreneurs will vary.
  • Startup sector and requirements: There are accelerators that accept projects from any sector and other verticals specialized in a specific sector. Generally, the requirements to be admitted as a startup is to have an innovative and usually technological character, present a scalable model and have the objective of seeking a round of financing.
  • Financial contribution: There are programs that offer financing to the project and others do not. Those who offer financing can do so in various ways: In exchange for company shares, through participatory loan, as a grant or in kind through products from other partners, such as software licenses.

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