By Janelle M. Lewis, Principal Attorney, The Law Office of Janelle M. Lewis
What are Startup Accelerators and what can they do for early-stage Startups?
The term “startup accelerators” is often used as a catchall phrase to describe startup support programs, such as, incubators and angel investor programs, but not all of these programs are actually accelerators. According to an article by the Brookings Institution – a U.S. nonprofit public policy organization – startup accelerators are institutions that, “support early-stage, growth-driven companies through education, mentorship, and financing in a fixed-period, cohort-based setting.” Broadly defined by Susan Cohen, a professor of entrepreneurship at the University of Richmond in Virginia, she states the following as the functions and offerings of startup accelerators:
- Startup accelerators help early-stage startups:
- define and build their initial products
- identify promising customer segments
- secure resources, such as capital and employees
Short in duration – usually only lasting a few months, startup accelerators usually provide:
- small amount of seed capital
- working space
- networking opportunities – with both peers and mentors, who may include: successful entrepreneurs, program graduates, venture capitalist, angel investors, and corporate executives
- An opportunity for startups to pitch their ideas to a large audience of qualified investors in an event commonly known as “Demo Day.”
Why should foreign early-stage startups participate in U.S. Accelerator Programs?
Following a previous post of mine regarding tips for internationalizing your startup, U.S. accelerator programs can provide opportunities for early-stage foreign startups that are seeking to scale to the U.S. market.
Startup accelerators can provide foreign startups with the opportunity to refine their product for the U.S. market, while simultaneously identifying customer segments within the U.S. market in which to target their products. They also allow foreign startups the increased possibility of securing funding from U.S. based investors, who tend to invest domestically, as well as the possibility of acquisition by a U.S. based entity. Moreover, company founders of foreign startups have the opportunity to network with key players within their industry in the U.S. market, which can provide the resources needed to build regional operations, create a landing team, and field test your product in the U.S. market.
Overall, if scaling to the U.S. market is the goal of early-stage startup founders, then participating in U.S. based accelerator program can be beneficial.
The views expressed in this article do not constitute legal advice and legal information provided in this post should not be relied upon as legal advice. Please contact an Attorney for advice on your specific matter.