The startup market is hot. According to Thomson Reuters, startups around the world raised over $88 billion in funding in the first nine months of 2015. Approximately $25 billion of that amount went to startups in Asia. Last year, Asian startups raised $17.5 billion over a full 12 month cycle. The increase in funding points to a growing class of entrepreneurs, more mature startups and emerging hubs across Asia which are supporting ecosystem growth.
Most entrepreneurs would agree that the very early stages in a startup’s lifecycle are fraught with doubt, pitches for capital, experimenting with business models, writing business plans and seeking advice. Startups look for validation, security and assurance. Accelerators are ready to provide it in the form of community, advice and funding. A quick search on F6S.com shows 239 accelerators across Asia. Corporate accelerators make up 14 of these programs.
A good program can boost a company’s chances of success, but joining the wrong program can be fatal. Entrepreneurs need to choose wisely. Here are five considerations they should bear in mind before applying to an accelerator.
Is the accelerator a potential customer?
Entrepreneurs should weigh the costs and benefits of accepting financing from a company that could also be a potential customer. While it’s great to have a large corporation test pilot your new technology or gadget, giving up equity for a mere few thousand dollars this early might preclude your ability to secure a hefty recurring revenue contract with the same entity down the road. Distinguish between financiers and customers early in the assessment.
What are the competitive dynamics?
Accepting money from a large corporate backed program may deter other companies from doing business with you, especially if they view the corporate as a competitor. It may be unavoidable in certain sectors, but make sure that the accelerator program doesn’t align your startup so tightly with the corporation backing it, that other companies begin to view you as an extension of an arch rival. Venture firm or seed accelerators might be a safer option in these situations.
Does the accelerator have qualified and dedicated mentors?
- Forbes
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