US firm AngelList matches start-ups to suitable investors and employees. In 2005 it operated just one business accelerator. Now it has almost six hundred on the go. Why the increase?
What is a business accelerator?
Business accelerators provide advice, guidance and support to businesses at the start-up stage. They can shorten the start-up timescale considerably, in line with today’s digital expectations, acting very like a business boot camp.
Accelerators give new start-ups mentoring, capital and access to investors. In return they get an equity investment. A bit like Dragon’s Den online, they deliver a better-than-ever way to finance and manage start-ups with lots of potential in today’s digital world.
Why are they a good thing?
- They encourage diverse investors, including small ones
- Investing in accelerator funds means people own shares in the start-up companies being funded at a relatively low cost
- They structure investments as real options including the right, but not the obligation, to make more investments in the future
- It’s easier, and costs investors less, to pin down businesses in multiple locations, even in places they don’t have a local contact network
- They make finding out about a potential investment easier, with the chance to meet with and talk to the founders of start-ups and identify those with the most potential
- Accelerators let investors become actual mentors to portfolio companies
- They support fast growth in new companies, experts at working through the problems faced by organisations in the early stages
- The structure breeds collaboration and friendly competition among start-ups, both of which drive faster development to everyone’s benefit
Business accelerators improve the start-up financing process, and they’re not likely to go away any time soon. They’re incredibly valuable to successful early stage venture finance, the contemporary alternative to old-school venture capital.
Find out more
Want to find out more about local business accelerators? There’s plenty of information here at Entrepreneurial Spark (click here for link). The world’s biggest free business accelerator for early stage and growing firms, they’re dedicated to developing entrepreneurs who have a can-do attitude, focusing on individuals and offering mentors, ambassadors, supporters, workshops, pitch practice and full time entrepreneurial enablers.