Key Takeaways:
Startup accelerators are programs that support the growth of startup companies that are in the early stages of development.
Since the advent of accelerators in 2005 to the start-up market of 2021, where over 3,000 accelerators have now existed worldwide, research shows that startups backed by accelerators have a 23% better chance of survival compared to the 90% fail rate most startups face (1).
Since 2013, MACH37 has launched over 70 cyber companies - 83% of our graduates are still in business and 64% have raised follow-on investment.
What’s New?
Many of you probably know what a car’s accelerator is, more commonly known as the gas pedal. This pedal has a lot of power behind it, controlling how much gas the engine gets and therefore, how fast the car goes. The startup world is a fast-paced environment, one that no doubt has a definite need for speed. So, it is only logical that the commonplace term ‘accelerator’ carried over, hence the thought behind a startup accelerator. At VentureScope, MACH37 is our own in-house start-up accelerator dedicated to helping current cyber companies become the future in this field, especially in the cybersecurity space. However, we are not mechanics and we don’t expect you to be experts in the startup space. So, in this blog post, we hope to give you a clearer sense of what a startup accelerator does, how it functions, the best time for an accelerator to be a part of a startup’s journey, and how our own accelerator can help launch your startup to success.
Accelerator, Excelerator
Startup accelerators are programs that support the growth of startup companies that are in the early stages of development. These programs are often for a set period of time with specialized programming, mentorship, and a wide variety of other resources to aid founders starting their own company. In addition, these companies often graduate as part of a cohort of companies, with these other startups acting as sounding boards and peers to help advance the skills and development of other startups going through the program. The first startup accelerator was the famed Y Combinator, which was founded in 2005. After this model proved successful in the startup space, many more companies followed suit, and the rest is history. Since the advent of accelerators in 2005 to the start-up market of 2021, where over 3,000 accelerators have now existed worldwide, research shows that startups backed by accelerators have a 23% better chance of survival compared to the 90% fail rate most startups face (1).
One thing to note about accelerator programs is that they are often specific to a certain industry or space, which is why there are so many different accelerator programs out there. The reason for this is specialization. When companies focus on a specific industry or area, they can specialize and hone their skills such that the assistance they provide startups in their accelerator cohorts is the best it can be. At MACH37, our specialty is cybersecurity and other related technological-facing industries. Accelerator programs can be public or private companies, but most often they are private companies (2).
To join an accelerator, you must submit an application on the accelerator’s website and go through an often rigorous acceptance process. In fact, only 1.94% of startup applicants to accelerators are accepted into the program, with the average accelerator receiving more than five hundred fifty applications per cohort (3). For MACH37, less than 10% of all applications are accepted, and of the companies that are accepted and enroll in the program, only 25% of them graduate. Therefore, startups that graduate from an accelerator have demonstrated significant effort, traction, and viability, and earn the endorsement from the accelerator as a form of vetting for future investors. If accepted, you will have access to resources such as advising, guest speakers, and an often expansive network of alumni. However, it’s not just people connections startups gain access to - the accelerator course, content, and learning you’ll be doing is equally powerful. After graduating an accelerator, you’re prepared for additional growth and fundraising.
So, what’s the catch?
You may be thinking - as much as I would like to think that companies are just waiting to give me access to all the resources and connections they have acquired through their experience in a specific industry, what do they want from me and my company? Honestly, less than you might think, which makes the trade-off quite minimal for companies. Most often, companies that go through an accelerator program are required to grant around 3-8% ownership of the company to the accelerator (4). The reason for this is the ‘skin in the game’ scenario, which aligns both the accelerator and the startup with having the startup be successful. After-all, ownership in a startup is only valuable if the company itself becomes successful; so it’s in the accelerator’s best interest to help promote, connect, and support their portfolio companies throughout the formation, growth and scale phases. This is why well-established accelerators are trustworthy - their longevity is a testament to their commitment to your startup’s success.
Prime Time
Some companies may be too early or too late in their development to be ready for an accelerator program. In fact, it can actually hurt a startup depending on their stage of growth. At MACH37, we want to help companies that desire a structured program, want to learn best practices from others, receive constructive feedback about their idea, as well as receive introductions to other interested investors. Companies that are pre-seed that don’t have any market traction or a clear idea are better suited for a pre-seed or pre-accelerator program. Seed companies with a firmer grasp on their idea tend to be more primed for startup success since there is a foundation that accelerators can help the startup work to build upon. Companies that have gained initial traction, but are still in the earlier stages of their success are more likely to benefit from accelerators. The main reason for this is to learn from the mistakes and lessons learned by previous founders that were in their shoes to elevate their success. Later-stage companies in the growth and scale phases (Series A or later) typically benefit from a Growth Accelerator that specializes in teaching marketing, expansion, hiring, and other advanced concepts that early-stage companies don’t need to focus on quite yet.
What about MACH37?
MACH37 is a start-up accelerator designed to facilitate the creation of the next generation of cyber product companies. Our name ‘MACH37’ refers to “escape velocity,” the minimum velocity needed to escape earth’s gravitational field. We felt that this was an apt name for our accelerator, because newly launched technology companies must push past forces that inherently prevent their growth. Our unique 90-day program design places heavy emphasis on the validation of product ideas and the development of relationships that produce an initial customer base and investment capital - accelerating a founder’s path to a sustainable business model. Since 2013, MACH37 has launched over 70 cyber companies - 83% of our graduates are still in business and 64% have raised follow-on investment.
Our network consists of an elite group of cyber professionals, investors and community leaders focused on enabling the formation and growth of new cyber technology companies. The network includes over 300 active members from multiple industries including federal, state and local government, financial services, insurance, critical infrastructure and energy. Members of the Stars Network regularly meet and work with MACH37’s energetic innovators. Startups in the MACH37 accelerator program have the opportunity to engage with mentors in our network, with these individuals acting as advisors and sometimes investors for program participants.
MACH37 is founded on five key pillars - agile entrepreneurship, bridging ecosystems, problem solving, tech discovery, and wellbeing. Agile entrepreneurship includes fostering entrepreneurship and methods of innovation at the speed of business, with heavy emphasis on the Lean Startup methodology. Bridging ecosystems includes connecting partners across ecosystems, sectors, organizations, and people. Problem solving includes filling the critical need for viable solutions to the world’s most pressing problems. Tech discovery includes identifying over-the-horizon technology and trends in cyber sectors. Wellbeing includes building the wellbeing of our founders, teams, and community members to foster richer experiences, partnerships, and outcomes. These concepts lay the foundation for the MACH37 curriculum/program, which includes ten topics total - Business Assumptions and Hypothesis Testing, Customer Discovery, Value Proposition Design, Legal, Marketing & Branding, Product Development, Finance, Pricing & Sales, Raising Capital, and Wellness.
Conclusion:
Cars and the mechanics behind them can be confusing and difficult to navigate, and the startup space is no different. Startups are hard. There is no shortage of work, and first-time founders are often overwhelmed with what to do and how to do it. Just like how athletes benefit from specialized coaching, startups too benefit from specialized programs and mentors. That is why we have a devoted accelerator program for early stage startup companies who are developing cyber related products and services and are ready to take their business to the next level by expanding their networks, learning key business approaches and seeking investment. We encourage those interested in being part of the cybersecurity and technological startup community to apply here to be part of the cyber change that MACH37 represents. If not, we hope this post gives you a better understanding of the fast-paced startup ecosystem and how startup accelerators play an important role in early stage startup success.
Who Are We?
VentureScope works with creative entrepreneurs, venture capital investors, and large private and public sector organizations around the world that are trying to solve interesting problems. Our team has extensive and unique experience launching new business ventures, investing in promising startups, running startup accelerators, and providing strategic innovation and general management consulting services to large private and public sector organizations. We’re on the pulse of emerging and over-the-horizon technology and are tracking their growth and development against important industry problems to inform our deal flow and give you exceptional advice. MACH37 is our start-up accelerator designed to facilitate the creation of the next generation of cyber product companies.
References:
1 - https://thenextweb.com/news/many-startup-accelerators-fail-heres-how-to-find-the-right-one#:~:text=Research%20shows%20startups%20that%20%27graduate,estimated%2090%25%20of%20startups%20fail
2 - https://www.masterclass.com/articles/startup-accelerators-explained#how-does-a-startup-accelerator-work
3 - https://www.linkedin.com/pulse/what-accelerators-look-like-2021-pat-riley/
4 - https://www.techtarget.com/searchcio/definition/startup-accelerator
5 - https://www.microsoft.com/en-ae/p/need-for-speed-heat-deluxe-edition/bvh2r2sbwl51?activetab=pivot:overviewtab (Image)