From the course: Foundations of Raising Capital

Accelerator programs

From the course: Foundations of Raising Capital

Accelerator programs

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- When I joined my partner Alex at Tixers in 2014, he was just finishing the UpTech accelerator program in Covington, Kentucky. Alex told me that being accepted into that Accelerator was the moment that tipped the scales and convinced him to quit his job and start building the company. Without the UpTech accelerator, Tixers may not have existed and I probably wouldn't be talking to you right now. Accelerator programs are a specific length of time, often three to six months, and offer some combination of education, mentorship, working space and investment to young startup companies. Most accelerator programs accept companies that may be pre-revenue or even pre-product, meaning that even a napkin idea may be able to find support from an accelerator program. Accelerator programs will typically invest anywhere from $20,000 to $200,000 in the companies they accept in return for somewhere between two and 10% ownership in that company. In fact, accelerators are often the first investment that companies receive. One of the first and most well-known accelerator programs is Y Combinator or YC, which is based in Silicon Valley. Y Combinator started in 2005 and has invested in over 2,000 companies, including Airbnb, Stripe, DoorDash, Dropbox, Instacart and Coinbase. Y Combinator is one of the most sought after programs and invests $150,000 in return for 7% ownership in a company. At the end of Y Combinator, as with most sought after accelerator programs, is a demo day event where the startups in the program are given a few minutes to pitch an audience that includes investors from all over the world. Pitching at a demo day for a top tier accelerator like YC is often a quick way to find follow on investment. But not everyone can get into YC, and that's okay too. According to PitchBook, the number of accelerator programs in the United States increased from just a handful in 2005 when YC started to nearly 175 a decade later in 2015. When Tixers went through UpTech, we were part of their second class ever. They didn't have much of a track record, but we had a fantastic experience. Of course, the $50,000 investment was great, but they had fantastic mentors who helped us a ton in our early days. And because they didn't have the successes of other major programs yet, they were really invested in helping us to be that success. With the help of UpTech and their network, we were able to raise a $250,000 seed round soon after graduating the program. If you're looking to find initial support for your company, there are now hundreds of accelerator programs who may be just the support that you need. I recommend visiting seedrankings.com or the Global Accelerator Network at GAN.co to get started.

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