There is some confusion around the language of startup support in general and founders easily get confused about the nuances of different program offerings. Before applying, be sure you understand the difference between incubators and accelerators. Both provide support to fledgling entrepreneurs, and many offer different perks from workspace to access to advisors and mentors. An incubator primarily offers workspace, administrative support and some may even grant access to community members who act as advisors or mentors. Most incubators, however, operate on rent. Most incubators have no selection process and house companies for anywhere between one and five years (Cohen, 2013).
Accelerators, on the other hand, work with cohorts over a fixed period of time (usually three months) and in most cases take equity in return for the program. Most accelerators recruit founders through a competitive selection process (nationally acclaimed programs accept as little as 1% of applicants) and expose them to a high number of mentors.
To learn more about the difference between incubators and accelerators, read What Do Accelerators Do? Insights from Incubators and Angels, Susan Cohen, 2013
The Lighthouse Difference: Lighthouse Labs is ranked among the top 25 seed accelerators in the United States. Unlike most other programs, we don’t take equity in the companies that join our cohort. “We provide seed funding of $20,000 per team, adaptive programming over the course of three months and focus on curating amazing connections for founders through our mentor community. In return, we expect them to work diligently and full time on their ventures while they’re in the program. We encourage founders to support each other as peers, leverage every mentor meeting and actively engage in our weekly sessions and deep partner learning opportunities.” says Todd Nuckols, Managing Director of Lighthouse.
Founders in the early stages of venture creation are the best fit for accelerators. Some programs require startups to be able to prove traction and an existing customer base, others will work with founders who apply with nothing but a promising idea. Founders who are willing to learn and re-evaluate their entire startup approach will gain the most from an accelerator. In some cases, this mean questioning their key assumptions about their idea, and making constant changes along the way.
The Lighthouse Difference: Lighthouse works with founding teams of at least two co-founders
- whose startup has the potential to scale their venture quickly in multiple locations (as opposed to local small businesses)*
- can already prove some traction with existing customers,
- want to leverage the perk and connection power of a global network through our relationship with the Global Accelerator Network (Gan.co), and
- are willing to relocate to Richmond, VA, for the duration of the program to work full time on their venture.
Each accelerator offers different perks and terms of participation. Make sure to familiarize yourself with the expectations and conditions of joining an accelerator before applying. Here are some general pointers to look out for:
- Many accelerators focus on a specific vertical like healthcare, education, financial technology and so on. The upside? They are able to tap into relevant industry networks that are strongly represented in their locality. Founders within the cohort, advisors and mentors work within the same industry and can share industry-specific expertise and contacts. It also means that the group is more homogenous than in industry-agnostic programs.
- The levels of investment and the conditions tied to participation vary program by program. Again, make sure to review these terms before applying.
- Most accelerators today offer access to mentors who engage deeply with teams throughout the program. These mentors do not only advise startups based on their expertise but can often open many doors to relevant networks, contacts and potential investors.
- Demo day or pitch night: Most accelerators culminate in what is referred to as a Demo Day or pitch night during which founders pitch their ventures to potential supporters and investors. During Demo Day startups showcase and celebrate their progress over the previous three months.
The Lighthouse Difference: Lighthouse Labs is industry-agnostic and accepts high-growth startups. As mentioned before, Lighthouse invests $20,000 in each team, as a participation award, without taking equity. “To kick-off the program, we host a Mentor Open House which is a speed pitching event between the founders and dozens of mentors. We want to make sure the founders find the right experts and seasoned entrepreneurs who can provide guidance and make critical connections. The more mentors they meet early on, the higher the likelihood that they will find allies who often become deeply invested in their startup’s success.” says Joanna Pheil, Program Manager at Lighthouse Labs. She adds: “Instead of hosting Demo Day in Richmond alone - which is an annual highlight in the community! - we take founders on a investor roadshow through Virginia and North Carolina to give them the opportunity to pitch to as many angel investors as possible.”
Lastly, before applying, founders should ask themselves whether an accelerator program can help them move forward in the specific phase their startup is in. Is the timing right for you as a founding team to spend three months in an intensive mentor-driven program? Does the city that you are potentially relocating to offer the right type of resources for your industry and an attractive target market? Most importantly, are you open to challenging the key assumptions of your business?
Hear from Lighthouse Alumni how they prepared for their application, and see what our selection committee looks for in an outstanding application: Inside Lighthouse: How to Apply for Lighthouse Labs
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