Business accelerator – what is it and how does it work?

Business accelerators are revolutionising the way young companies develop and influence their market success. Through intensive support, mentoring and access to networks, these programmes are becoming key to accelerating the growth of start-ups.

From this article you will learn:

• What is a business accelerator?
• What is the relationship between a business accelerator and a business incubator?
• How does a business accelerator work?
• Who can benefit from business accelerators?
• How to join a business accelerator?
• What are the limitations of business accelerators?
• What can you gain from business accelerators?

Business accelerator – definition

Business accelerators are programmes or institutions that support startups by providing resources, mentoring, work space and often also funding in exchange for equity. Their aim is to accelerate the growth of start-ups and increase their chances of success in the market.

A business accelerator is a programme that supports the development of start-ups through mentoring, funding and access to a broad network of contacts.

Definition of a business accelerator

Business accelerator vs. business incubator

A business accelerator and a business incubator are two models of support for start-ups and young businesses, and although both share many common features, there are key differences between them. A business accelerator focuses primarily on the rapid growth of start-ups in the short term. A business incubator, on the other hand, offers long-term support that can last up to several years. Like accelerators, they provide start-ups with office space, access to networks and various types of resources such as hardware or software. They are less likely to engage in equity stakes in companies and focus on the early stages of business development.

The common goal of both accelerators and incubators is to help start-ups get through the difficult early stages of development, minimising the risk of failure and increasing the chances of success. Although they differ in their approach and scope of support, both models play a key role in the start-up ecosystem, complementing each other and offering entrepreneurs a variety of development paths.

Operation of a business accelerator

The business accelerator acts as a support platform for start-ups and helps accelerate their growth and overcome early-stage challenges. As part of the accelerator programme, start-ups have the opportunity to work with experienced mentors and are given space to work.

One of the main strengths of accelerators is their ability to connect start-ups with potential investors. Many accelerators organise special events, such as Demo Day, where start-ups present their products and services in front of a group of investors, which can lead to potential investment opportunities. Often, accelerators themselves also offer funding to start-ups that participate in the programme, for which they usually receive a stake in the start-up’s capital. The accelerator is also a useful networking tool and allows you to benefit from your network of contacts in the industry, which can help start-ups to establish business partnerships, gain customers or raise further funding.

Beneficiaries of business accelerators

Beneficiaries of business accelerators are the entities that benefit from the value and support provided by these institutions. Here are the main groups of beneficiaries:

• Start-ups and their founders benefit from access to mentors, funding, workspace, training, networking and other resources offered by accelerators. Participation in an accelerator programme can help young companies get through the difficult early stages of development, increasing their chances of success.
• Investors have the opportunity to see innovative start-ups ready for funding, which is an opportunity for them to find promising investments in one place.
• Mentors and industry experts, although only advising, also benefit – they can network with start-ups or learn about new trends in the market.
• Accelerators can attract talent and investment to a region, promoting innovation and job creation, which contributes to the local economy.
• Working with accelerators or sponsoring such programmes gives corporations access to innovation, fresh ideas and potential start-ups for acquisition.
• Universities and other educational institutions often collaborate with accelerators, giving students and graduates access to practical experience, networking and potential career paths.

Joining a business accelerator

For many start-ups, the key moment to consider joining an accelerator is at the stage when they already have a prototype of a product or service and need support in commercialising their idea, attracting their first customers or gaining investment.

To join an accelerator, a start-up must first apply to the chosen programme. Many accelerators have specific application requirements, including application forms, presentations (pitch deck) or videos. During the application process, start-ups are assessed for innovation, market potential, quality of the team and other factors. Before joining, it is also worth researching the accelerator’s reputation, success story and profile of mentors. It is also worth paying attention to the financial conditions for participation.

Another important aspect is to understand the range of support offered by the accelerator, whether in terms of mentoring, access to networks or marketing and sales support. It is also worth remembering that participating in an accelerator requires commitment and work. It is an intensive process that may require the full commitment of the team for several months, but if this time is used well, it can bring significant benefits to the start-up and accelerate its path to success.

Limitations of business accelerators

Business accelerators tend to focus on specific stages of a start-up’s development, mainly the early stages, which may not be ideal for more advanced companies. Accelerator programmes are also often short-lived, meaning that the intensive support may only last a few months, after which it diminishes significantly. Many entrepreneurs also need to consider the funding offered by accelerators, as in return for financial support, they often expect a stake in the capital of the start-up. This can lead to a situation where the original founders lose some control over their own business.

It also cannot be assumed that every accelerator offers access to top quality mentors. The quality of mentoring can vary and not every mentor will be suitable for every business. The culture within an accelerator is also an important aspect. Each has its own unique atmosphere and approach, which may not be suitable for all entrepreneurs. There is also often pressure to achieve results quickly, which can lead to rash business decisions. It is also worth noting that there may be additional costs involved in participating in an accelerator and the potential competition within it should not be overlooked either.

Benefits of business accelerators

Simply participating in an accelerator does not guarantee success, but for many start-ups it is a leap forward, accelerating their path to realising their vision and achieving their business goals. One of the most attractive aspects of accelerators is access to experienced mentors and industry experts who provide young companies with valuable guidance, knowledge and perspectives that can help solve business challenges. In addition, start-ups can benefit from networking, which opens doors to potential customers, business partners and investors.

Participation in an accelerator often comes with access to resources such as office space, tools or training. These can be crucial for start-ups that do not have a large budget but need the right tools and environment to grow. It is also worth noting that accelerators help build organisational culture in a company and soft skills among founders and teach them how to communicate effectively, present ideas, build teams and negotiate.