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Three Pros and Cons of Startup Accelerators

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An accelerator does exactly what its name suggests. It’s a program that usually runs over the course of a few months that provides guidance and mentorship in order to increase the growth of a startup. Accelerator’s shouldn’t be mistaken for incubators. (Incubators are programs for startups that haven’t been fully developed yet). Given that starting a business is often a high-risk endeavor, it’s usually advantageous to go through an accelerator. 

In fact, Pangea even went through an accelerator! In 2020, the platform went through the MassChallenge accelerator program. When Pangea had applied for the accelerator, their platform had already launched. They just needed more students and potential clients to hop on the app. Thanks to MassChallenge, by the summer of 2020, there were hundreds of college students and employers using Pangea.

However, accelerators are not necessarily always for everyone. There are things every startup needs to consider before they pursue an accelerator program. This article will list some pros and cons to using an accelerator to grow a startup.

Pros of a startup accelerator

One of the most obvious benefits of using an accelerator is the networking that can come out of it. More often than not you’ll be introduced to both founders and ex-founders. These are people who’ve been in your shoes and can empathize with your joys and struggles. As your mentors, they can guide you in the right direction and help you avoid mistakes that they made when they were in your position. 

Another evident advantage to using an accelerator is the dramatic growth that a startup gets to experience, thanks to the help of investors. This is so critical, especially in a market that’s set up to make startups fail. In fact, as of 2019 startups had a fail rate of 90%, with one of the major reasons for failure being ineffective marketing. An accelerator provides a nurturing environment, where a startup can focus on thriving and not just surviving. 

Lastly, the benefits of an accelerator compounds even after a startup’s involvement with the program ends. For one, it’s the obvious company growth. By drawing in more people, brand awareness increases and it draws even more people, which allows the startup to continue growing. But the relationships built from the accelerator are often long-term. Many accelerators even have an alumni network that could be reached if a startup has any future needs, such as talent or another investor. 

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Cons of a startup accelerator

Unfortunately, there are also certain drawbacks when it comes to using an accelerator program. A primary one is the cost. Even if an accelerator is “free,” in order for investors to help expand a startup they will need to take equity– a share of the startup– to expand it. This can mean that even if a startup successfully accelerates, much of the extra revenue could go to investors instead of the team. There are also non-monetary costs; accelerators require that key members–usually founders–of a startup team are present. This means that participants will have time away from directly taking care of their startup. 

Another drawback to accelerators is that they will ultimately hurt you if you choose the wrong one. The success of a startup accelerator is largely dependent on the participant’s ability to network with other participants and investors. However, poorly structured accelerator programs may have lousy investors that a participant can’t network with if they want their startup to grow. The only way out of this one is to withdraw and accept the sunk costs. 

The last con to an accelerator is that it’s not the program for startup founders who are unwilling to compromise or take constructive feedback. Stubbornness isn’t necessarily always a bad thing. You may very well be a visionary and pioneer to something that no one else can put to life. But a startup is meant to delve into your startup, examining every aspect and pointing out potential flaws so that you don’t mess up and learn things the hard way. If you don’t like the idea of change, an accelerator is probably not for you.

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At the end of the day, it’s up to you to determine if an accelerator program is the enhancement your startup needs. It’s imperative that you weigh out your options and consider if it’s what’ll take it to the next level. The only one who can make this decision is you (and maybe your team, too). 

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