Business Accelerators: Does Your Tech Startup Need One?

Let's assume you're running a startup technology company. What if you could take a year of business experience -- the good, the bad and the awesome -- and condense it into three months or so? Moreover, what if during those three months you could minimize your errors, maximize your business progress and also score some funding along the way?

Sounds tempting. And thousands of startup companies are heading in that direction -- working with so-called business accelerators like Techstars (among others). The organization's pitch is short and sweet: "Techstars provides $118,000 in seed funding, intensive mentorship and an amazing network of mentors and alumni for 7-10% equity in your company."

Our latest podcast, featuring Techstars President David Brown, dives far deeper into the accelerator model -- and the implications for I.T. entrepreneurs.

Like An Incubator? (Not Really)

I've gotta admit. At first I was a bit skeptical of accelerators. In some ways, I viewed them somewhat like incubators -- where entrepreneurs share free or low-cost office space and infrastructure to get their businesses off the ground. In some (but not all) ways, the incubator model is somewhat antiquated. Office space and infrastructure are now commodities. A business can launch and work anywhere at any time.

The far greater need for most I.T. startups? Access to brainpower, knowhow, mentors, influential networks of people, and money. A case in point: Techstars has close relationships with Disney and other major entertainment, mobile and education companies -- which frequently trigger M&A deals or strategic partnerships between portfolio companies and the vertical market players.

I'm not suggesting that the accelerator model is for all entrepreneurs -- especially startups that know their industry well and already have strong networks for networking and funding.

Nor does an accelerator relationship guarantee success. But overall, some stats look impressive. Within Techstars' world, 374 companies (77 percent) remain within the organization's portfolio; 61 (13 percent) have been acquired; and 50 (10 percent) have failed, according to data from the organization's website.

So, are you willing to let go of a little equity -- in return for money, mentorship and rapid learning that squeezes a year of experience into a few months?