The past decade has seen an explosion in startupland, and we have witnessed the institutionalization of entrepreneurship. Following this phenomenon, startup accelerators have emerged in seemingly every community and market niche across the globe. The more established startup accelerators like Y Combinator (launched in 2005) have the same or higher admission standards than most Ivy League schools.

An invitation to a startup accelerator presents several positive opportunities for young companies and particularly young entrepreneurs: a stamp of credibility; access to a plugged-in network of mentors and eager angel investors; seed capital; intense strategic, team, and product development support; and colocation alongside dozens of similar-stage businesses experiencing the same highs and lows that come with a newborn startup baby.

Startup accelerators also present some challenges, however, and are not for every business. Most importantly, you as a founder need to weigh the equity dilution that comes with joining anaccelerator against the capital and services it will provide.

To determine if a startup accelerator is right for your business, answer the following eight yes/no questions:

  1. Have you started a business before?
  2. Have you worked in your space for more than threeyears?
  3. Have you already built out your early-stage management team?
  4. Do you plan to go more than 12 months without raising significant outside money (>$250,000)?
  5. Have you already found product and market fit?
  6. Are you plugged in or have access to a strong network of local entrepreneurs and potential investors?
  7. Do you plan to hold onto a significant majority (>65%) of your company's equity in order to build your long-term upside?
  8. Are you willing to move your business to the same city as the startup accelerator? [Note: this is not always a requirement, but oftentimes, if you seek outside funding from local investors after launch day, pressure may mount to stay located close to those capital sources]

If you answer 'No' to at least four of the questions above, then you should consider applying to a startup accelerator. As we were launching NuLabel, we were starting our first business, were new to the space, needed outside funding and a strong network of entrepreneurs and potential investors, and we had not yet found product and market fit. As a result, we decided to apply and join Betaspring. Five years later, the equity we gave upto join the program has paid itself back several times over in mentorship to management, expansion of our network, and connections to what became the key early investors in our company.

Published on: Jul 31, 2014