Why Join a Business Accelerator?
What are business accelerators and what value do they bring to small businesses? Founders First takes a look.
By Kim Folsom
This is part one of a two-part series on business accelerators. Today we’ll look at what business accelerators are and the benefits of joining one. Next time, we’ll take a closer look at the best practices for the most successful accelerators.
With approximately 170 start-up accelerators active across the U.S., you might be asking what an accelerator can do for your business. Can an accelerator really help take your company to the next level?
The answer can be an emphatic yes — if you’re in the right accelerator, with the right program, talent, and experience to help you get where you want to go. If you find the right match, a premier growth accelerator can help you run your business more successfully than ever before and open up doors to more opportunities, more revenue, more profits, and even more prosperity for your community.
But let’s start with the basics first.
What exactly is an accelerator?
An accelerator is a fixed-term educational program that is cohort-based (meaning you work collaboratively with other teams) and designed to help you learn by doing at a fast pace. In other words, instead of spending five years figuring out how to run your business by trial and error (and maybe failing), an accelerator can give you those necessary lessons in weeks or months.
The term “tech startup” is often associated with accelerators, and there are a lot of accelerators that focus exclusively on embryonic tech startups looking for rapid funding and growth. But what if your business is already generating revenue, or is service-based, or a B2B company? You have options, too. Founders First is a business growth accelerator that breaks the mold of tech-startup accelerators. We’re a national platform for growing service-based small businesses led by diverse founders. We’re like a top-tier tech accelerator, only we work with service-based small businesses to help them thrive and become significant leaders in their industries and communities.
Our model includes pre-funding programs to accelerate growth as part of our non-profit, Founders First CDC. We are the largest revenue-based direct funder of diverse-led small businesses with $100 million in committed capital. And we provide post-funding advisory support to help our funded companies expand their revenue to the high seven and eight figures.
So, you don’t need to be a tech startup to join an accelerator that can help your business and your community succeed. The key thing is picking an accelerator with a proven track record and a method that will work for your type of business or industry.
We offer three different tiers of accelerator experiences at Founders First, including a business growth bootcamp and a FastPath executive program.
Who should join an accelerator?
Startups or small businesses looking to grow through education, mentorship, and potentially financing should consider enrolling in a premium accelerator. If you want an immersive experience that will help you learn years’ worth of lessons in just a few months, an accelerator could be for you. If you learn by doing, an accelerator could definitely be for you. Most accelerators take on business problems and even use role-playing games to help improve your decision making in real-world scenarios.
“For me, the most impactful insight I got from the Founders bootcamp was how to actually operate a business,” said graduate Derrick Ashong of Ampit. “And I know that sounds crazy. We were obviously running a business already. But it’s one thing to just be in operation and another to really understand how HR syncs in with an operating plan, how you execute against it and measure on a monthly basis where you stand.”
Why should you join an accelerator?
Put simply, you should join an accelerator to get results. Often companies join an accelerator thinking they’re ready to launch a new product or scale up to success, but the engagement, mentorship, and education helps them see they need to change their plans. Companies whose business models pivot, which is usually the result of entering a great accelerator, have a greater success rate than those who don’t. According to Failory, startups that pivot 1–2 times improve their user growth rate by 3.6x and raise 2.5 times more money. Startups that don’t pivot or pivot more than twice do considerably worse.
The whole idea of joining an accelerator is to get you locked in on the best business model possible. Ideally, you leave with a couple of ideas to try with a high success rate instead of meandering on your own and pivoting ten times without finding a model that works.
“Since joining the Founders’ bootcamp one year ago, we have more than doubled our annual revenue,” said Meir Singer of BlueCloud USA. “We’ve introduced new, recurrent revenue streams, outsourced many roles, and have an incredible team of employees.”
According to Harvard Business Review, companies that graduated from top accelerator programs reached more key milestones — like raising capital, gaining customer acquisition, and exit by acquisition — more quickly than those who did not participate in an accelerator.
According to the Brookings Institute, from 2005 to 2015, 172 U.S.-based accelerators invested in more than 5,000 U.S.-based startups with a median investment of $100,000. Those companies went on to raise $19.5 billion in funding, or on average $3.7 million per company. So, as part of an accelerator, you have the chance to raise a lot more capital.
Accelerators can also have a positive impact on regional entrepreneurial ecosystems as investment can tend to spill over into other companies and benefit the regional economy. At Founders First, we take that a step farther. One of our goals in working with companies with diverse leaders is to help create service jobs that can have a big impact on a local community. We actively seek out companies that would normally be on the outside looking in when it comes to major startup and financing centers like Silicon Valley or Manhattan. We want companies to thrive right where they are so their success can help lift up their communities as well.
You can learn more about our accelerator programs here. And be on the lookout for part two of this article, where we’ll look at best practices for premium accelerators.