Cred, Connections, Cash–The Workings of a Business Accelerator

There was an interesting post by Catherine Clifford in The Daily Dose about the workings of Business Accelerators, which is a subject that deserves further discussion.

Most major metro areas have one or more of these accelerators, whose premise is to accelerate your growth by networking, cash and connections. Incubators are another term for essentially a space that you can use to hang in, put equipment in, maybe some prototype manufacturing.

It may work in Silicon Valley, and several v.c. firms do run accelerators/incubators, but one questions how good the management advice is, in the first instance….note our prior post that about 3/4 of the venture capital backed firms failed in the first five years.

Cash, maybe, especially if you’re in a v.c. backed accelerator. Universities are fond of accelerators and can in fact help firms land government grants. Venture capital, not so much in our experience. There’s no evidence that I’ve seen that university management advice is any better than the v.c.’s, and we can cite at least one example where bad advice was given to an entrepreneur.

Better to get into a peer group of successful entrepreneurs in various fields, many of which are run by local chambers of commerce. Unless, of course, the company has a really gee whiz tech product or service, or it’s biotech. Then universities are a good fit.

Connections? Are the incubatees going to buy your product or service? In our experience, this networking aspect is probably overrated. Meeting together with other young entrepreneurs who may not know what they’re doing either? Where’s the benefit of that?

And yes, the accelerator does charge you for rent, a share utilities, etc. This runs at least $200 per month, possibly more. Or, they may waive rent in return for a portion of your company. One overlooked aspect is that man is essentially a social animal, and there’s a certain sense of well-being that comes from being around other people, at least for some people.

Is it worth it? We tend to think not, but here’s the link:


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