What Is A Seed Accelerator? Seed Stage Venture Capital Financing
Startup accelerator also referred to as seed accelerator, is a form of a business incubator that is chasing profit by usually acquiring a part of a business and then helping the latter to grow. Its main purpose is helping high potential business ideas with mentoring, office space, know-how, education, and of course seed capital in exchange for a piece of the equity of the new business. The support is for a certain period of time ranging from 3 to 18 months and it is usually provided at the very beginning of a start up. Business incubators are different from seed accelerators because they are usually non-profit, government-funded organizations that don’t take a stake in the business and are focused on broad types of ventures. Seed accelerators are usually, but not only, focused on high technology companies and businesses that could be scaled relatively quickly broadly, usually companies already having their own successful product/service that could be widely spread with the help of the accelerator.
The main advantages of seed accelerators are:
* application procedure open to anyone with a cool business idea – however, the acceptance criteria are usually high and the startups that make it are usually 1%-4% of all that apply for seed financing.
* investment in the new company is made (usually around $20k – $50K but the amount may vary widely) in exchange for equity
* target companies are these founded by small teams, not single entrepreneurs
* the accepted companies have to graduate in a predefined period (3-18 months), in which they receive mentoring, training, know-how and other help.
* the training support happens in groups of many founders
Benefits of seed accelerators
There are many benefits that come from these organizations. Some of them are:
* mentoring and receiving professional know-how – this is a big help for a person who has an awesome technical idea but lacks the knowledge about how to turn it in a business – a very common case among tech entrepreneurs.
* meeting new entrepreneurs and making new business connections – in business networking is very important.
* start-up funding – the money that is so important for the taking off of a great business idea.
* access to special technologies and resources – usually seed accelerators have sizable experience with starting companies and know what works well and what does not. Such knowledge can often be a big boost for a starting company.
* further support and a sound partner – by getting a part of the equity, the startup accelerator, that is usually a serious enterprise, becomes a formal and official partner in the business. Thus, the seed accelerator is very interested in the success of your business as they actually co-own it.
Where To Find A Seed Accelerator?
There are not too many seed accelerators, because this is a relatively new conception. The first one of them was launched back in the year 2005 and its name is Y-Combinator (the accelerator that initially invested in Dropbox, AirBNB, Docker, Coinbase, and many others). In was started not elsewhere but in Silicon Valley taking advantage of the wonderful business climate there. In 2006 was launched the accelerator TechStars and a year later SeedCamp opened doors in Europe. Currently, there are more than 300 startup accelerators around the globe and their number hasn’t stopped growing.
Here is a constantly updated list of almost all startup accelerators in the world:
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