Equity Term

An accelerator is a limited duration program designed to assist young high potential companies. Accelerators are offered to a cohort – a class that goes through the program together – with usually 8 to 15 companies per cohort. Accelerator programs typically run three to five months but some run up to a year.

Most accelerators offer modest equity investment in return for ownership in the company.

All accelerators have mentors that assist the companies. Some but not all offer training and curriculum alongside mentoring.

Some but not all have a shared workspace in which companies can reside for the duration of the accelerator program. This “workspace optional” feature, plus the limited duration of the program, distinguish accelerators from incubators. However, there are some incubators that also offer accelerator programs.

Most accelerators conclude with a big event, often called a Demo Day, that introduces the accelerated companies to a community of investors and other interested parties.

The most well known accelerators are extremely selective, often harder to get into than the most selective universities. These include Y Combinator, TechStars and 500 Startups. And these top accelerators often have investment funds, so they blur the line between entrepreneur support programs and venture capital firms.

Don Gooding

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