Accelerator
What is an Accelerator Program?
An accelerator is an investment and business advisory service provider that offers programs to startups designed to accelerate their development. Accelerators can take many forms. Generally, they accept a group of new startup companies into its program, sometimes referred to as a class, once or twice a year. Startup companies will participate in the accelerator’s program for a time period that can range from three to six months. Accelerators can offer an upfront capital investment to its participating companies that ranges from $10,000 to $50,000. In exchange for the capital investment and for the advisory services provided as a part of a program, an accelerator will typically take a minority equity stake in the participating companies. An accelerator may take other forms of securities in lieu of equity, including debt and convertible debt.
Within an accelerator’s program, new businesses and startups are offered a bevy of business advisory services including advice regarding product design, go-to-market strategy, investor pitches, workplace and human resource management, growth and scaling, and entity structuring. Accelerators can also provide networking opportunities with potential investors, industry leaders, and other startups. Generally, accelerators will maintain a physical location where participating companies can maintain an office and receive business advisory services. Accelerators will usually have a stated focus area (e.g. certain types of products or a geographic region).
As an investor in the participating companies, accelerators typically only provides generic guidance on legal matters and will refer participating companies to independent legal counsel.