Jonathan Gosier, founder and product director for metaLayer, a cloud-based data visualization software company, attended the three-month Pennsylvania-based DreamIt Ventures accelerator program last year. Although metaLayer was making money and had earned more than $100,000 in revenues for 2011, the accelerator helped Gosier restructure the business and tweak his pitch to be more attractive to investors. Most importantly, it gave him access to a critical network of mentors.
“Some people have access to great networks, maybe because they went to the right schools or they live in the right city,†says the 31-year-old. “But if you’re outside those two environments, it really helps to go through a program where you’re mentored by people who have access to those networks and who can give you insight as to how investors look at companies that are trying to raise money.†Gosier and his team are now working on raising $1 million through venture capitalists and angel investors. So far they’ve secured $200,000.
DreamIt Ventures is a startup business accelerator with programs in New York, Philadelphia, and Tel-Aviv, Israel. It also has a minority startup track to provide brand building, business development, financial modeling, and customer acquisition. “We focus on working with early stage companies, and they tend to be technology oriented,†says William Crowder, a managing director at DreamIt. “In most cases we work with these companies to get them prepared to pitch to venture capitalists and angel investors.†Startups that are funneled through DreamIt receive company stipends of up to $25,000, and the accelerator takes a 6% equity stake.
Similar to a business incubator, DreamIt houses all the companies under one roof. Although both incubators and accelerators offer business support and growth services, there are differences. According to the National Business Incubation Association, an incubator’s primary objective is to help develop successful, financially independent startups by equipping them with management guidance, technical assistance, networking opportunities, and consulting services. Businesses can stay in an incubator for up to two years before graduating.
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Business accelerators offer similar assistance and services, but tend to provide an intense, shorter experience–a boot camp–to help startups launch faster. Some have angel investors and venture capitalists supporting the program in hopes of financing the next Google or Facebook. The best known are Y Combinator
in California, TechStars in Colorado (also Boston, New York, and Seattle), and Capital Factory in Texas.But not all accelerators are geared toward startups. For instance, nextONE Business Accelerator is a nine-month program that helps high-potential minority entrepreneurs achieve scale, create jobs, and generate revenue through contracting opportunities. The program, a joint venture between the Kellogg School of Management at Northwestern University and the Chicago Urban League, has graduated 47 entrepreneurs that on average have improved their profit margins by 10%.
Similarly, the Minority Business Accelerator 2.5+, a program of the Greater Cleveland Partnership, focuses on growing the size, scale,
and infrastructure of minority-owned enterprises that have annual revenues of at least $2.5 million. The program serves as a matchmaker, preparing minority-owned businesses for deals and procurement opportunities in the corporate and public sectors. Since 2008 the program has closed 135 deals with African American enterprises and 13 with Hispanic businesses, resulting in 272 jobs created, $2.7 million in lines of credit and bonding secured, and more than $1.2 billion in business opportunities identified.To find an accelerator program, contact your region’s small business economic development center. Visit www.asbdc-us.org.
Do some research before joining an accelerator. Make sure the program has a solid track record for helping participants get funding and form partnerships with other companies.