What is a Startup Accelerator?
A startup accelerator is a fixed-term, cohort-based program designed to speed up the growth of an early-stage company. Think of it as a boot camp for founders: you enter with a messy early product and (hopefully) leave investment-ready.
How it works Accelerators are intense. They typically last 3 to 6 months and culminate in a "Demo Day," where startups pitch to a room full of active investors.
- The Investment: Most accelerators invest a small amount of capital (e.g., £20,000 – £100,000) in exchange for equity (usually 5% – 10%).
- The Network: The real value isn't the cash; it’s access to mentors, alumni networks, and future investors.
- The Cohort: You join with a "batch" of other startups. This peer pressure and support is often cited as the biggest driver of success.
Accelerator vs. Incubator These terms are often used interchangeably, but they are different:
- Accelerators are for growth. They have a set timeframe (3 months) and usually require you to have an MVP (Minimum Viable Product).
- Incubators are for gestation. They are often open-ended, focus on the very beginning (ideation), and may charge rent rather than taking equity.
Famous Examples
- Global: Y Combinator (YC) is the most famous accelerator in the world (Airbnb, Stripe, Dropbox). They set the standard deal terms for the industry.
- UK & Europe: Prominent UK-based or European programs include Seedcamp, Techstars London, and Entrepreneur First (which focuses on finding a co-founder before you even have an idea).
Is it worth the equity? Giving up 7% of your company for a small check sounds expensive. However, if the accelerator brand signals quality to future VCs and helps you raise a Series A, that 7% "cost" can increase the value of your remaining shares significantly.
Key Takeaway: An accelerator trades a slice of equity for mentorship, network, and a fast-track to your next funding round.
