How can we start a startup accelerator?
This was actually something we explored back in 2014, so I have some experience here.
We bought the domain http://gostart.it (looks to be owned by someone else now, and is a secure site) and secured some space in a local business centre, so that people could visit a physical location and have access to computers, free internet, free coffee, and networking opportunities.
What we discovered, during our initial research, is that the number one most important resource that small businesses and startups are looking for is investment capital.
So, to prioritise the first few steps in setting-up an innovative startup accelerator, they would be:
- Incorporate the company and setup the legal/financial infrastructure (this includes any legal agreements for members of the incubator ie if an equity-share arrangement is in-place, etc)
- Secure at least 1 physical location, to provide the resources and space for entrepreneurs to work from (we partnered with a local, Council-owned business centre, so there were no costs associated with this offering – the council were more than happy to support an incubator that could potentially contribute to local business startup rates and success)
- Establish a standardised startup ‘funnel’ to provide structure to startups – guide them through the various steps involved in getting started, including a funding module where you can guide them through the process of gaining investment and/or grant funding to grow (again, partnering with an existing organisation will work well here – think grant search organisations and angel investment groups)
- Partner with local educational institutions (colleges, universities, schools) to encourage regular feed-in of new individuals and businesses to the accelerator program
- Think about your own source of funding – how will you sustain offering the resources to your members? Equity-options are usually taken with members, meaning any businesses spawned through your accelerator, you will then own a share in those businesses. But shares in small, growing companies don’t generate fast returns – even if the companies are fast-growing, it’s hard to liquidate equity in small businesses, and it often pays to hold on to it for long periods of time, rather than trying to liquidate your shares in successful startups in order to sustain your model. Obviously, partnering with organisations that won’t charge for bundling their offering into your accelerator program, is a great way to minimise overheads, but what about your own wage, and your partners’ wages (if you have any)? You’ll need some other form of revenue-generating activities that can cover basic overheads from the outset (think paid-for, premium services for entrepreneurs to purchase from you, or earning referral fees from investors and other sources of funding)
Those are the basics to cover-off when asking the question, how can we start a startup accelerator?
And by the way, the idea didn’t progress due to me and my partners’ commitment to other projects – we simply did not have the available time to focus on this project properly. So make sure you do – it’s definitely not a passive form of income, and takes a huge amount of work to establish at the outset, and ongoing input.
Best of luck!