Accelerator for startups

The Ukrainian IT community has always had plenty of ideas and the desire to create cool startups. We've alreadythey toldAbout domestic junior companies and the record volume of investments attracted. Many successful projects received significant support from accelerator programs.

Let's look at why startups need accelerators and provide a list of the most reputable ones.

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How to speed up the implementation of a business idea

Ukrainian startups are persistent, but the country lacks a balanced ecosystem. Businesses should understand that every investment in the ecosystem (when a successful startup provides a newcomer with production, an investor, or a mentor) helps build a foundation that makes it easier and faster for both newcomers and established businesses to grow.

Building an ecosystem is a long and arduous process. To accelerate the implementation of promising business ideas and avoid annoying mistakes, newcomers seek the help they need. This can be found in accelerators.

For example, thanks to the Estonian accelerator, the domestic IT startup CallPage increased its income 20-fold and attracted $5,000,000 in investments.

Why do startups need accelerators?

The acceleration program is a project that brings together startups, investors, corporations, and the public sector.

Its goal is to help a fledgling business gain a foothold in the market and become a company capable of developing, scaling, and attracting as much investment as possible.

Startups typically have a creative idea but lack the necessary resources to develop and/or test or market their technology.

The accelerator helps the startup:

• avoid problems associated with lack of experience;
• to compensate for the lack of expertise in their field.

Participation in the accelerator program helps startup founders gain basic skills related to:

• search for sponsors;
• recruiting;
• testing the business model;
• product refinement;
• conclusion of contracts;
• launching a project on the market.

The accelerator supports the startup with various resources:

• organizes training;
• provides mentoring support in various areas of business activity;
• provides effective networking and the opportunity to exchange experiences.

How to choose an accelerator?

Not all accelerators are tailored to the specific company's goals: they are often focused on a specific area of ​​startups or a specific region.

When searching, pay attention to important details of the selection conditions:

• Diverse Teams

Some companies (such as Baltic Sandbox) prefer Diverse Teams, as European and American studies show that the return on investment of mixed teams is 33% higher.

• Global Mindset

The global mindset is especially valued, that is, the ability to think not only within the boundaries of one’s own (home) market, but also to have ideas for scaling to international platforms.

• English

Knowledge of English can be a decisive factor. A great startup might be rejected because the founder doesn't speak English and plans to communicate with investors through a translator.

Some accelerators provide grants to startups. These aren't direct investments, but rather a gift in the form of financial support.

What is special about how acceleration programs work?

• Accelerators usually come into play when a startup team's product is at a high stage of readiness.
• They help the team for a period of time until it is ready to independently search for and attract serious investments.
• The accelerator is primarily focused on improving the startup and accelerating its development.
• If a startup already has a team, but still needs professional advice on how to effectively enter the global market in a short time, it is worth looking for an appropriate acceleration program.
• Support for the startup after the program's completion, during the project's further development stage

Where do accelerators get the money to finance startups?

Firstly, they make money from projects: a startup gives up a share of the business when it joins an acceleration program.

Secondly, funds come from private (local or foreign) investors, as well as in the form of grants from the state.

Depending on their structure and goals, investors in acceleration programs may be:

• venture capital companies;
• powerful corporations;
• state.

Unfortunately, the Ukrainian Startup Fund (USF) has suspended funding for new projects. This is due to the large number of startup founders defending our country on the front lines, serving in territorial defense units and the IT army of Ukraine.

However, the fund promises that funding will be resumed immediately after the victory.

Average investment size 

• In the US, accelerator programs invest an average of $20,000 to $50,000 in a startup.
• In Europe - from £10,000 to £50,000
• In Southeast Asia - from $10,000 to $30,000
• In Ukraine – from $5,000 to $50,000

These are approximate figures, and the investment amount depends on the specific situation. For example, the Ukrainian accelerator RadarTech raised €250,000 from a Polish investor for the domestic IT project Hideez in March 2021.

The main disadvantage of accelerators

Investments in startups are typically made in exchange for a portion of the company's equity. This means that most accelerators take a percentage of the profits of the startup they "nurture."

We will discuss the differences between accelerators, business incubators, venture builders and venture funds in more detail in one of our next articles.

How accelerators select startups

Typically, the accelerator works as follows:

• Accepts applications for participation (the accelerator's introduction to the team and the project).
• Conducts a preliminary screening of aspiring entrepreneurs and invites the most promising businesses for interviews.
• If the interview is successful and the startup proves its capabilities, it becomes a team participating in the accelerator project.
• Launches a special educational program with training courses (during this time, entrepreneurs can continue selling the product to customers)
• Supports the most successful graduates after completion of their studies and assists in attracting potential investors.

Who has the best chance of getting into the accelerator?

Typically, accelerators are interested in small, newly established companies that are already operating and have significant potential for rapid growth.

To apply for participation in the acceleration program, you must have at least:

• Business plan
• Minimum Viable Product (MVP)
• An effective team
• Ideas for entering foreign markets
• Entrepreneurial spirit and drive

Getting into top accelerators is quite difficult. For example, the acceptance rate at Y Combinator or TechStars ranges from 1% to 3%.

Some entrepreneurs apply up to five times. For example, the Ukrainian startup Petcube only got into Y Combinator on its fourth attempt, but already received $125,000 in seed funding.

Ukrainian and international accelerators are known

Ukrainian

1. YEP!— a network of academic startup accelerators. Creates an ecosystem of youth entrepreneurship in Eastern Europe that provides opportunities for personal and professional development.

The most successful participants– IOON, Elomia, CamTouch

2. Ukrainian Hub– a company created at the initiative of the Ukrainian-American Coordinating Council (UACC) to support entrepreneurs through training, consulting, mentoring, and connections to international startup ecosystems.

The most successful participants— Agro Bi, Esper Bionics

3. POPCORP accelerator program— a joint project of Radartech and UkrSibBank, focused on the development of innovations in the field of banking technologies.

The most successful participants— Intelsoft, Opendatabot, You Score, Geologic Group

In addition, the following accelerators operate in Ukraine: ISE Group, EO Business Incubator, 1991 Open Data Incubator, Sikorsky Challenge, Uno Pitch Competition, Founder Institute, Lviv IT Arena, Center 42 and others.

Authoritative international

1. Y Combinator (USA)

Silicon Valley's most powerful IT startup accelerator, selecting the most disruptive and promising tech companies from around the world. More than a thousand companies have graduated from Y Combinator, including giants like Airbnb, Dropbox, Coinbase, Reddit, and many others.

The combined valuation of Y Combinator's leading companies exceeds $300 billion as of 2021. The accelerator program is held twice a year.

On June 27, 2022, Y Combinator launches Startup School 2022. The course will last 7 weeks (until August 10).

The most successful participants from Ukraine — GitLab, People.ai, Petcube

2. TechStars (USA)

The second most powerful accelerator in the world after YC. The program attracts new participants six times a year and lasts 12 weeks.

The most successful participants from Ukraine— Property Mate, Go To-U

3. Demium (Global)

Entrepreneurs receive mentorship and assistance in scaling their business projects. Demium invests up to €100,000, and the company's partnership fund can provide up to €500,000 to promising startups.

The most successful participants from Ukraine— elKYC, Recoshelf

Conclusion

If you want to learn how to create a world-class startup, look for an accelerator program. If you already have a working business and are developing it, in particular with the help ofwebsite, order a reliable one for himhostingand purchaseSSL certificatefor the safety of your customers. Also onNIC.UAyou can find a suitable onedomain.