Start Up Funding – The Power of Accelerator Programs

There are four groups that support Start-Ups:

1. Business Incubators
2. Angel Investors/Venture Capitalists
3. Accelerators
4. Hybrids – a combination of the above.

Business incubators will provide support to your start up business by offering:

• Coaching and mentoring,
• Office space for you to work from
• Access to legal counsel and networking opportunities and
• Potential sources of funding

Angel Investors/Venture Capitalists will offer you both money and expertise; however, in return, they want a piece of your business.

Business Accelerators in contrast will fund your start-up with money or seed capital or loans.

Accelerator programs are very attractive to start-ups; in particular, young innovative companies who want to take their businesses to the next level.  They are not only a source for financing; but also they provide advice, resources, events, connections and mentoring programs to help push young businesses to the next level in a shorter period of time.

All have different services and some only specialize in certain industries or technology, so you do have to do your research to find the one that suits your new business.

For example, in Toronto, DMZ at Ryerson University helps start-ups succeed by connecting them with customers, advisors, influencers and other entrepreneurs. Communitch Rev helps product-ready companies with help on sales and marketing. BrightSpark Ventures invests in early stage tech companies. MaRS in Toronto helps early stage technology companies launch their new products. Each region will have similar options available to the entrepreneur.

When working with an accelerator for a period of 3-6 months you can kick-start your business at a relatively low cost and access valuable information and contacts. You can get access to free co-working space and resources. Some will even offer programs to help you find investors in the early stages of your business.

In Canada, alone there are 150 incubators and accelerator programs.

The very first accelerator program introduced in North America was in 2005. Over the past ten plus years the number of incubators has grown in response to the rapid growth in the number of new business start-ups in the marketplace.

Do they work?

We talked to one of the co-founders at CoSign and he had a very positive experience in an accelerator program called F6S.

The co-founders of CoSign started developing their app while they were working their full-time jobs.

Co-Sign is essentially a technical platform that allows influencers or brand advocates to tag products within the photos that they share socially. The people who read or view the content can then click on the photo and buy the product. Their company gets a commission anytime that product is sold and then splits that commission with the person or site that shared the photograph. It is a brilliant concept.

The owners initially tested the market with a rough beta version of their product in 2015 and proved within a one month period that their product was clearly in demand. They raised $41,000 in 30 days and attracted 5,000 users. So due to its successful beta launch, the owners wanted to expand their tech platform to allow everybody to leverage their product including publishers, mobile apps and major brand companies who wanted to white label their technology.

They needed money and knowledge to do this; so they reached out to an accelerator company F6S.

F6S was a perfect match for them in terms of their market and their needed resources including design, marketing, execution and financing assistance.

F6S helped them relaunch their new product with added features including a publisher tool. This tool enables anyone who owns a Website including Bloggers and publications to turn their photos into shopable posts as well. Instead of traditional static banner ads, their platform allows their viewers to click on interactive engaging photos to buy.

So the owners had a great experience and being a part of an accelerator program worked for them.

So let’s get back to Accelerator Programs!

There are Pros to using Accelerator Programs

• You meet people who can help you and understand where you are at with business; so you will feel that it is not “you against the world”.
• You will meet mentors and advisors and people and former companies who have been through the program. You are starting to network.
• You will meet people in the programs who are going through the same fears and weaknesses that you might be feeling before you start. By working together you can help one another solve the various problems that they may have been coping with. So you are getting different perspectives.
• You will learn new things.
• It will make you accountable because you will be given projects and timelines to work with.
• It just might give you an advantage over your competitors.
• You will be given the opportunity to pitch your business to their roster of investors.

And there are cons

• There is a lot of research that you will have to do to find the right program.
• Unfortunately, they are very difficult to get into; and if you are lucky to be one of the chosen companies, you will have to uproot your life for a period of 4-6-8 months.
• Unfortunately, not all accelerator programs are created the same. For example, TechStars, one of the popular programs only accepts a limited number of entrepreneurs into their program; so competition in top accelerators is fierce.
• The big one here is – like Angel Investors and VCs; they will want equity in your business.

Everything is a process and if you have a product and a team of at least 2 founders, and passion to succeed then I would definitely consider looking into these programs.