Is a Startup Accelerator Right for You?

Dive into our comprehensive guide to learn about their benefits, how to get selected, funding tips, and more.

Key points

• Startup accelerators offer structured programs that provide mentorship, networking opportunities, and seed funding to fast-track startup growth. 
• They focus on short-term, intensive support aimed at market readiness and investment, as opposed to the longer-term, more flexible support of incubators.
• When choosing the right accelerator, consider your startup’s stage, industry focus, and long-term goals, alongside the quality of mentorship and network.

Startup accelerators have become a cornerstone in the entrepreneurial ecosystem, offering high-potential startups a springboard to success. Like their name suggests, these programs provide fledgling tech founders with resources, mentorship, and funding to accelerate their growth and increase their chances of long-term success. 

In this article, we delve into what startup accelerators are, how they function, their pros and cons, and what you should consider when choosing the right accelerator for your company.

What is a startup accelerator?

An accelerator is a fixed-term, cohort-based program that includes mentorship and educational components and culminates in a public pitch event or demo day. These programs typically last from three to six months and are designed to fast-track the development of promising young startups through intense, bootcamp-like educational workshops, and access to a network of investors and industry experts. 

While the ultimate goal is to prepare startups for market entry and funding, Laith Shukri, RBCx’s Director of Early Stage Banking, says that accelerators also serve an unspoken, yet no less impactful function: validating an idea. “Their aim is to help a startup grow fast or fail fast so that the founder can figure out whether they should move on to something else.”

How do startup accelerators help businesses?

Startup accelerators can be useful in several ways: 

1. Mentorship and guidance: Startups gain access to seasoned teachers-cum-mentors who provide insights, advice, and guidance and generally serve as sounding boards. This mentorship can be crucial in navigating the early stages of business development.
2. Networking opportunities: Accelerators offer startups the chance to network with other like-minded startups, investors, industry luminaries, and potential customers. These connections can open doors to new opportunities and partnerships but, says Amanda Filipe, RBCx’s Senior Manager of Events and Partnerships, they also invite collaboration and a platform to solve problems together.
   “With an early-stage company, you might just have one marketing person to rely on but with an accelerator, there may be ten companies, so there are 10 marketers that can create a local cohort amongst themselves,” she explains. “These kinds of interactions otherwise might never have happened, but accelerators do that on steroids.”
   Shukri adds that being around other startups can be a social balm. “As a founder, you’re going to have highs and lows, but you’re around similar people who’ve had great days and bad days, too,” he says. “You’re all there together, commiserating about each other’s problems, propping each other up with the knowledge that they’ve got your back.”
3. Access to funding: Most accelerators provide seed funding in exchange for around five to seven per cent of their firm’s equity. This initial capital can help startups develop their products, hire key personnel, and launch marketing campaigns.
4. Educational resources: Accelerators often include workshops, seminars, and training sessions covering various aspects of business development, such as marketing, sales, product development, and fundraising.
5. Validation and credibility: Being accepted into a reputable accelerator can serve as a stamp of approval, making it easier for startups to attract additional investment and talent. For example, Y Combinator (YC), the first accelerator founded in 2005 and still the most successful startup school, went on to nurture Silicon Valley unicorns Airbnb and Dropbox.

How do startup accelerators work? 

Startup accelerators follow a structured process: 

1. Application process: Startups apply to accelerators by submitting detailed information through its website about their business, team, market, and product. Applicants are rigorously screened and the best invited for an interview.
   “It’s basically like a really intense job interview and pitch presentation where they grill you to see if you’re a fit in terms of the business, but also to determine that you’re not a jerk,” says Shukri (albeit with more colourful language). “They want to know if  bringing you in will make their place aggressively toxic or are you the type of founder who will boost up the other founders around you.”
2. Selection and onboarding: This final selection process is highly competitive, with only a small fraction of applicants admitted and then onboarded into the program. RBCx partner L-SPARK, an Ottawa-based accelerator focused primarily on SaaS (software as a service) and cloud companies, for example, accepts around five to ten per cent of its applicants, depending on the volume of submissions.
   “We’re a high-touch, low-volume program, [so] we only take about six to eight companies per cohort,” says Patrick White, L-SPARK’s Co-Founder and Managing Director, adding that companies should apply well before the deadline to give themselves extra time with the team, to get a feel for the program, and to prepare.
3. Program duration: During the program, startups participate in a series of workshops, coaching sessions, and networking events. They work intensively on honing their business models, product development, and go-to-market strategies.
4. Demo day: The program culminates in a demo day, where startups pitch their business to a room full of investors, potential partners, and other stakeholders. This event provides an opportunity to secure additional funding and partnerships. 
5. Post-program support: Many accelerators offer ongoing support and resources to alumni, helping them to continue to grow and scale their business. Support can come in the form of very specific touchpoints—YC, for example, has a robust private social network where founders can connect with alumni—while others will provide a standing offer. 
   “We always let our cohort and alumni know that we’re here for guidance and support for anything from acquisition support, navigating difficult sales, all the way to support on hiring and operations,” says White.

Criteria for acceptance into an accelerator

Vying for a spot in an accelerator requires startups to meet several criteria, typically including:

1. Team: A strong, diverse team with complementary skills and a record of execution is crucial. Accelerators look for passionate, committed founders who can drive the business forward. 
2. Market potential: Startups should address a significant market need with a scalable business model. Accelerators seek companies with high-growth potential and a large target market. 
3. Product: A working prototype or minimum viable product (MVP) that demonstrates the feasibility of the business idea is usually table stakes. Startups should also be able to show that they can build and deliver their products. 
4. Traction: Evidence of traction, such as early users, revenue, or partnerships, can significantly enhance a startup’s chances of acceptance. It demonstrates market validation and the potential for growth. 
5. Innovation: Accelerators seek innovative solutions with the potential to disrupt existing markets. Startups should have a unique value proposition that sets them apart from the pack. 

White says the most common reason L-SPARK rejects applicants from its program is they’re too early in their startup trajectory. “Because we only take six to eight per cohort, we’re really looking for companies we can drive value and impact for, [so] it comes back to finding the right program for the right stage,” he explains. ”That said, we stay closely connected with our applicants so we can see year over year growth and lean in when the timing is right for both our team and the founder.”

Are accelerators good for startups?

Accelerators can significantly benefit startups, particularly if they’re looking to scale rapidly and access resources otherwise out of reach. However, they’re not a one-size-fits-all solution. Startups should carefully consider their specific needs, stage of development, and long-term goals before applying. For some startups, the intense, high-pressure environment of an accelerator may not be the best fit. 

Neither is committing to one for the wrong reasons. “Accelerators can be a massive distraction and time-suck,” says Filipe. “Some companies sometimes jump from one to another because the prestige of an accelerator’s brand takes over and they lose sight of the bigger picture.”

“Accelerators can be a massive distraction. Some companies jump from one to another because the prestige of an accelerator’s brand takes over and they lose sight of the bigger picture.”

Yet, both Filipe and Shukri agree that accelerators play an essential role in the tech ecosystem, especially for early-stage companies. “You may be an amazing founder,” says Shukri, “but if you don’t know the taxonomies, the different sort semantics or some of the key elements to build a company, there’s a knowledge gap that a good accelerator can fill.” 

What makes one accelerator better than another?

The quality and effectiveness of accelerators can vary widely. Factors that make an accelerator stand out include: 

1. Track record and mentorship network: A proven history of successful alumni coupled with access to high-calibre mentors. “I would immediately look at who their graduates, mentors, and portfolio companies are, and what their track record has been,” Filipe says. “There are only so many sales playbooks and ways to build a company, so for me, it’s one hundred percent about the people.”
2. Resources, support and program structure: Comprehensive support services, including office space, legal assistance, marketing resources, and technical support, along with a well-designed program that balances educational content, mentorship, and hands-on support are crucial.
   “You need to know what they bring to the table; can they give you what you need?” says Shukri. “If I’m a founder—whether I’m sleeping, eating, travelling—I’m burning through cash. My time is extremely valuable so when I talk to you, is this the best hour I’ve had this week or is this just something that I could have googled?”
3. Funding opportunities: Strong connections with a network of investors who can provide follow-on funding is important but, says Shukri, it shouldn’t be the biggest draw. “You should go with an accelerator number one for the expertise and the mentorship that they’re giving you, and then capital should be a distant third,” he explains. “That’s not what it should be about. If you’re going to an accelerator for money, they’ve failed.”

“Go with an accelerator for the expertise and the mentorship that they’re giving you, not for the capital. If you’re going to an accelerator for money, they’ve failed.”

How to choose the right accelerator

Entrepreneurs should consider several factors when deciding which accelerator to join or whether they need one at all: 

1. Stage of development: Ensure the accelerator aligns with your startup’s current stage and growth objectives. Some accelerator programs focus on early-stage startups, while others are better suited for more mature companies. 
2. Industry focus and specialized programs: Look for accelerators that offer targeted expertise in your startup’s industry. Some accelerators specialize in specific sectors, providing resources and mentorship tailored to those fields. Additionally, there are accelerators dedicated to supporting founders from marginalized or underrepresented groups; for example Google has an accelerator specifically for women entrepreneurs. 
3. Mentorship and network: Evaluate the quality and accessibility of the mentorship network. Strong mentors, investors, or other experts who’ve seen it all before can significantly impact your startup’s success. 
4. Location: Consider the geographic location of the accelerator. Some require you to be onsite as proximity to key markets, industry hubs, and investors can be advantageous. 
5. Equity and funding terms: Carefully review the terms of the equity investment and funding. Ensure the deal is fair and aligns with your startup’s long term goals.

How to make the most of a startup accelerator

To maximize the benefits of an accelerator program, startups should adopt an engaged approach. First, founders should set clear goals for what they want to achieve during the program, whether it’s refining their product, securing funding, or expanding their network. 

For Shukri, that means avoiding distractions and not losing sight of your core business activities. “There is so much noise in the ecosystem so the best programs will coach you on keeping horse blinders on,” he says. “It doesn’t matter if you’re getting pulled to talk on this panel or go to this conference. The occasional one is fine, but you’re there to build a company and to achieve XYZ goals—not to win a popularity contest.”

Candice Ooi, Head of Operations for Nfinite Nanotech, a Waterloo-based seed stage material science company that went through three “cutthroat” accelerators, emphasizes the importance of being proactive and receptive to constructive criticism. “Making the most of a program,” she says, “requires your commitment, humility to learn from mentors, taking action, and creating a feedback loop with them.” 

Although an accelerator environment can be intense, White believes that it’s only when founders fully embrace the resources provided, that they can propel their startup to the next level. 

“The founders that do the best with their companies and who get the most out of our program, are the ones that work the hardest and are willing to jump in full force.”

“The companies we see get the most out of our program are the ones who lean in the most,” he says. “At the start of every cohort I say to the group we want you to ask for whatever it is you need and our job is to work to make it happen. What’s becoming more clear to me as we’re now 10 years in is that, without fail, the founders that do the best with their companies and who get the most out of our program, are the ones that work the hardest and are willing to jump in full force.”

For Filipe, it fundamentally comes down to both sides being proactive. “An accelerator and entrepreneur are both there to do a job,” she says. “At the end of the day, if those jobs are done well, you will find amazing results.”

RBCx backs some of Canada’s most daring tech companies and idea generators. We turn our experience, networks, and capital into your competitive advantage to help drive lasting change. Speak with a RBCx Advisor to learn more about how we can help your business grow.

Frequently Asked Questions about Accelerators

Accelerator vs. incubator: What’s the difference? 

While both accelerators and incubators support early-stage startups, they differ in several key ways: 

1. Duration: Accelerators have a fixed-term program (typically three to six months), whereas incubators offer more flexible, long-term support that can last for years. 
2. Structure: Accelerators are cohort based, meaning startups join and progress through the program together. Incubators provide more individualized support, allowing startups to join at any time. 
3. Funding and equity: Accelerators usually provide seed funding in exchange for equity. Incubators may offer funding but usually focus more on providing space, resources, and mentorship without taking equity.
4. Focus: Accelerators emphasize rapid growth and scaling, preparing startups for market entry and investment. Incubators, on the other hand, aim to help startups develop their business models and products over a longer period. 

What are the pros and cons of startup accelerators?

Some of the advantages and disadvantages of accelerators include: 

Pros: 

1. Mentorship and expertise: Access to seasoned entrepreneurs and industry experts who provide invaluable advice and guidance. 
2. Networking: Opportunities to connect with inventors, potential customers, and other startups.
3. Funding: Initial seed investment to help your startup develop and grow. 
4. Education: Workshops and training sessions covering various aspects of business development.
5. Validation: Being accepted into a reputable accelerator can enhance credibility and attract additional investment. 

Cons: 

1. Equity dilution: Startups must give up a portion of their equity in exchange for funding and support.
2. Time commitment: The intensive nature of accelerator programs can be demanding and require significant time and effort from your startup team. 
3. Pressure to perform: The fast-paced environment can create pressure to achieve quick results, which may not align with your vision or startup’s natural growth trajectory.
4. Selection process: Even after putting in a ton of effort, the rigorous, highly selective process means that you won’t necessarily be selected. 

What is the demo day in accelerators?

Demo day marks the culmination of an accelerator program, where startups present their refined pitches to a room full of potential investors, partners, and industry experts. It’s a high-stakes event designed to showcase a startup’s progress and attract further investment. 

To prepare, focus on crafting a compelling, concise pitch that highlights your unique value proposition, market potential, and traction. Rehearsing extensively is crucial, as is anticipating potential questions and preparing clear, confident responses. Visual aids like slides should be polished and professional, complementing the narrative without overwhelming it. 

Additionally, you should be ready to network effectively, armed with your contact info (e.g. LinkedIn QR code) and a solid follow-up strategy to capitalize on the connections made during the event. Emphasizing clarity, confidence, and preparation will help you make a strong impression and maximize the opportunities demo day offers.