So what is an Accelerator?  Briefly, an Accelerator provides an entrepreneurial team an environment and program where their business ideas, concepts or technologies can develop in a short period (typically three months) into what may be a viable business opportunity.  The companies are usually focused in the tech sectors around apps, software, internet technology where an idea can become a disruptive business.  The companies are typically very capital efficient – where a small amount of capital goes a long way.  An accelerator is extraordinarily selective in inviting companies into their programs.  They receive hundreds of applications for a few spots perhaps up to 20 in their program.  So before deciding to apply for an accelerator, here’s what they offer:

• Facility:  Accelerators typically provide a work area for the startup for no charge.  With it comes internet access, communication services and most importantly an environment where a company can collaborate with other startups in its “class”.  I have always said entrepreneurship can lead to “professional loneliness” as startups typically are hidden in basements, back offices or homes.  An Accelerator fosters a creative, team-oriented and success driven environment.
• Funding: Accelerators may provide each company with modest startup capital somewhere from $15,000 to $25,000.  Not a ton of money, but enough to pay some bills as the business gels together.
• Access: Accelerators provide access to some of the top investors, service providers and entrepreneurs in the region who work directly with the accelerator companies during their program.  These individuals typically are committed and active as they know the companies they are working with have been vetted.
• Program: Accelerators provide the companies a “program” where their ideas are reviewed, developed and critiqued by experts; education in the entrepreneurial process and tools are offered; and their investor “pitches” are honed for impact.
• Launch: Accelerators provide the companies upon their “graduation” with a high-profile launch … the “Demo Day”!  This is the companies coming out party where investors, high-profile execs, entrepreneurs and others are invited to see the results of three months of the intensive program with each company.  It is the opportunity for the companies to present their technology and business models.

Although many believe accelerators have become formulaic in the way they approach the programs they have not in what they provide each company.  Each accelerator has its own flavor, its own resources, and its own contacts.

So if you’re an entrepreneur, how do you decide which to pursue and apply for?  Are they the answer to launching an entrepreneur’s dream? I don’t believe so. Accelerators are only one tool in the box to launch a company.  They are not the guarantee for success, competitive advantage or even funding.

End Article

Hopefully you have a better understanding of what a small business accelerator is and how it could potentially help your business. You can find a great amount of information on small business accelerator programs online and can learn more from these posts:

Part II : To Accelerate or Not to Accelerate?  

TechStars Boston Announces 2012 Class  

If you've used a small business accelerator program, or have any suggestions for startups, please share them below!

Don't forget to try our new Online Help Chat to find answers to your incorporating questions!

ESE was the very first venture conference on the East Coast to feature early stage companies in search of their initial rounds of venture capital.   Since its founding, over 700 companies have presented at ESE and over $1 billion in capital has been invested in the companies.  It has been an honor to watch these companies and innovators grow and a privilege to work with them.

As the evening was wrapping up, a young entrepreneur approached me.

He asked, “Mind if I ask you a question?”

“Not at all”, I responded.

“You’ve been around a long time in the venture industry.  What do you see different about the current wave of startups and entrepreneurs versus the first wave a dozen years ago?”

I asked him how old he was and he said 25.  Right there, it dawned on me that when I began my career in venture, this young CEO was 8!

As I answered his question, the conversation shifted to how venture and the venture capitalists behave and have changed over the years.  And I began to think, most articles and blogs I read and even authored typically focus on what the entrepreneur should do to attract venture capital or run their companies. So at the risk of controversy, here are some pointers on deciding whether a certain VC is right for you and your organization.

• What Defines a VC as a VC?  Well it’s a fund. It’s frankly having money.  There is no professional standard, no test like passing the bar or CPA, no licensing.  Just money.  As long as a fund can be raised, anyone can call themselves a VC.  Whether it’s from institutions, pensions, relatives, family or friends, money is money. So as an entrepreneur you should undertake as much due diligence on the VC as they do with you.  Make sure they have the requisite business and industry experience to assist you.  A confident VC should welcome this scrutiny and even provide you with a host of references.
• Is the VC an entrepreneurial thinker?  Many VCs come from consulting or investment banking backgrounds.  They see a lot of industries, companies and situations in their experience, but do they have entrepreneurial backgrounds?  I believe that’s essential to a healthy relationship.  The VCs should have an appreciation for what it takes to build a business.  The sacrifice, both personally and financially.  I believe that an effective VC should have entrepreneurial experience and understand first hand the sacrifice it takes to launch, run and succeed.  The VC should have, at some time, put their own capital at risk.
• “What are you going to do with MY money?”  I have heard this question numerous times from VCs. I personally hate this question. First of all, if you are dealing with an institutional fund, it is NOT the VCs money.  They are fiduciaries for their investors and should treat with such respect.  Second, make sure the VC asking the question really has money in the fund.  I believe that all VCs should have personal investment in their own fund to act with credible authority.  In addition, this question is usually posed by an analyst in funds that usually don’t have any investment in the fund.  This is just a sign of arrogance and youth.
• “Have you ever gone without a salary?”  I always like to ask an entrepreneur this question.  As entrepreneurs in our own right, my partner and I understand the sacrifice and investment of that action first hand.  Going without a salary is extreme, but on occasion it is necessary for cash flow reasons. As an entrepreneur you should ask the same of your VCs.  It is important they understand the same sacrifice and investment when they require it of the entrepreneur. 
• The “Foxhole”.  Building a venture is hard.  It’s challenging and takes more than money.  If money was the only answer every venture would be successful.  When seeking VCs for co-investment I like to find those who will be in the Foxhole with us, and the entrepreneur when times are tough because inevitably they will be.  As an entrepreneur, you should do the same.  There is a school of thought out there that if things are going tough from the outset, its time to cut and run to the next venture.  I don’t believe that. I think that the VC owes it to the entrepreneur to give it all he or she has from both an investment and commitment to success attitude.  It doesn’t mean that more money should just be poured into a venture; it means that all avenues of thought strategy should be employed before the funding spigot is turned off. 
• Commitment!  Yes both the entrepreneur and VCs want success!  However, are the interests of the VC aligned with the entrepreneur when the initial investment round takes place?  Yes, much of this can be constructed in legal docs but it goes beyond that to philosophy and commitment.  Entrepreneurs are giving it their all, they are committed, and they are all in!  Too many large VC firms have established seed programs where they are investing tiny amounts into companies for the sake of “placeholders”.  The company engine is then primed and running.  The challenge I see with this is that the VC will always be more focused where substantial investments are made.  The entrepreneur feels great when they land a seed investment from a large well known firm.  However, make sure the VC is committed to furthering the company with regular meetings and available capital.  At our fund, we invest from an “all in” perspective. The amounts we invest are meaningful to our fund and are therefore committed!

So as you can see, here are a few thoughts about VCs that you as an entrepreneur should consider when seeking your venture investment.  Take the same perspective that the VC takes with you.  They should welcome that.  If they do not, then perhaps you should consider looking at others!

End Article

David's blog is a great resource for Venture Capital tips. If you're interested in researching Venture Capital firms, considering taking a look at these companies:

Early Stage East 

VentureFizz 

Have you found any successful tactics when searching for capital?