To accelerate or not to accelerate. That is the question.
By this we mean whether an early-stage startup should apply to join one of the many accelerator programs across the globe.
Needless to say competition to join these programs has been growing steadily over the last 10 years.
But why do African startups have such a penchant for accelerators? Why not skip them out, retain the equity and bootstrap your startup from the get-go?
Well to date, getting access to startup capital on the continent has been challenging. There aren’t that many wholly African VC’s and the angel network across the continent is still in its infancy.
Layered on top of this illiquidity challenge are foreign investors who either don’t have the risk appetite or the requisite knowledge of the macro-environment to confidently invest in African startups.
This makes applying to an accelerator program is a very appealing prospect for an African tech startup.
So, what are the advantages of joining an accelerator?
Accelerators will usually have a team of industry heavyweights offering advice and mentorship which can prove critical in the first 12 months of launching a business.
These folk can be serial entrepreneurs who have been there and done it, investors looking for the next Uber or Airbnb, or c-level executives with expertise in marketing, business strategy or operations.
Mentors are not usually compensated. Their mandate is to share what they’ve learned from building a company and to give back to the community of startups. Therefore it’s up to the startups to extract the necessary advice and guidance from these mentors.
Accelerators typically have angel investors and venture capitalists embedded in their programs. These investors sometimes partake in the initial funding of cohorts, provide mentorship, and also help refine a startups investor pitch.
The introduction to these investors is incredibly valuable, particularly for those startups looking raise immediately after they’ve completed the accelerator program.
They’re able to hit the ground running, and are often able to close a Series A round faster than startups who haven’t passed through an accelerator.
In recent times the top accelerators have attained levels of prestige commensurate with Ivy League colleges. Get into one of them and the perception of your startup is changed for the better.
Startup founders will often list accelerator programs on their CV’s serving a proverbial stamp of approval. It invariably helps attract more attention from investors and enables them to attract better talent to their workforce.
Beyond that it’s also a piece of personal validation. The fact that a 3rd party is willing to invest in the founders startup is reason enough for them to fully commit to the pursuit of turning the startup into a flourishing company.
Accelerators are not going to be a great fit for every startup. Like investors conduct due diligence on startups they’re considering investing in, entrepreneurs too need to do their due diligence on the different accelerator programs before jumping in.
In the News 🚀
🇸🇳 Senegalese solar startup, Oolu, raised an $8.5 million Series B round.
🚕 Francophone transport platform Gozem has partnered with Asia Africa Investment & Consulting (AAIC) to launch a new health-based service.
💰 Fintech company Fundrr has been name SME finance company of the year.