Zero-equity accelerators in Boston and Berlin show us how acceleration is one big marketing tool:
There’s still a lot of confusion over just what exactly acceleration is and how it helps a young business. What largely goes unnoticed is that joining an accelerator doubles as a marketing activity for your business and the stuff it is selling.
What exactly is an Accelerator?:
An accelerator is a cohort-based support program that runs for a fixed time period. By joining an accelerator program, startups are offered benefits like mentorship and educational workshops. At the end of it startups often compete in a pitch event or demonstration day (otherwise known as ‘Demo Day’).
The experience for founders is that acceleration provides a process of intense, rapid and immersive education aimed at “accelerating” growth by compressing years’ of learning into just a few months. For those that compete in a pitch event, cash prizes in the form of funding can be won.
The application process for most startup accelerators is open to anyone but it tends to be highly competitive. The biggest misconception about acceleration is that all startup accelerators will take equity in return for the support they provide. That simply isn’t true. Many accelerators will take equity but not all of them do.
The location of your business is a marketing tool:
Using the 7P framework, ‘Place’ is where your target customers shop. But if you think outside-the-box, being in an accelerator as your location of business for a few months can be a tremendous marketing exercise that no generous advertising budget could buy.
Acceleration is really all about marketing:
For any young business looking to join an accelerator this can be the decision that cements future success. In addition to all the support perks, acceleration also inadvertently helps early stage startups with marketing activities.
For example, joining an established accelerator as a ‘Place’ of business for a few months helps develop brand equity. This is because when you join an accelerator, your company is on display as a member of a specific cohort. The accelerator will often talk about you in their press. But you’ll also talk about being in that credible accelerator in your own marketing materials. Future customers and partners will know that you’ve ‘done your homework’ and thought about how to operate a successful business because you went through a quality accelerator program.
Being a member of a cohort also puts products and services on display in front of all the other accelerator members — past and present — and could lead to sales or partnership deals. Additionally, startups get to network with various people for investment opportunities. And for those founders who built their business with the intention to sell into a larger corporation, acceleration can also help get you in front of that corporate buyer so the acquisition of your dreams can take place.
What’s different about acceleration?
Various studies all agree that an accelerator has four qualities that make them uniquely special. Accelerators are:
* fixed term,
* end with a graduation that includes a pitch event or demonstration day.
No other early-stage institutional resources including incubators, angel investors or seed-stage venture capitalists provide these collective elements to startups.
Zero-equity acceleration in Boston and Berlin:
As mentioned, a common misunderstanding is that startups must give-up significant equity to join an accelerator. To further demonstrate how considering acceleration can support startups, let’s take a look at two zero-equity boutique accelerators both founded by friends who are passionate about entrepreneurship.
In the United States, MassChallenge is headquartered in the long established startup city of Boston. Historicially speaking, the American industrial revolution was fueled by texile technology developed just north of Boston and don’t forget worldcass universities like Harvard and MIT are in its backyard. Boston is also a great location for those wanting to do business with Silicon Valley and Europe as it falls somewhat in the middle.
Meanwhile, the German Tech Entrepreneurship Center (GTEC) Lab is an accelerator based in Germany and headquartered in the hot European startup hub of Berlin. Geographically speaking, Berlin sits at the heart of Europe making it a fast strategic location to reach other major European cities within 90 minutes by plane. It’s also a good location for doing business with the Middle East and Africa.
Let’s start with MassChallenge. It was founded by John Harthorne, a Massachusetts Institute of Technology (MIT) MBA and Akhil Nigam, a Harvard Business School (HBS) MBA in late 2008 while they were working as strategy consultants at Bain & Company. They had discussed launching a startup together and the financial crisis gave them the inspiration they needed.
The recession was driven in-part by large companies on extracting short-term profit, instead of focusing on sustainable, long-term profit. John and Akhil saw the entrepreneur as the ultimate value creator and driver of change in the economy and built a business model that put the entrepreneur at the center. MassChallenge is a global not–for-profit startup accelerator that supports high-impact and high-potential, early-stage entrepreneurs for zero equity.
The pair launched their first accelerator program in Boston, Massachusetts in 2010. Since then, MassChallenge has expanded to five global locations including Israel, Mexico, Switzerland, and London U.K. and maintains its not-for-profit status in each of these locations. Additionally MC hosted Bridge to MassChallenge in Poland for Central & Eastern European startups this year for the first time ever. MassChallenge awards up to $2 million (USD) in cash prizes each year. To be clear: prizes come with no–strings attached.
This is an important difference to highlight. While many accelerators will take equity for the resources and funding facilitated for a startup, MassChallenge takes nothing from the founders/startup. Instead, it is supported by a community of global and local partners. MassChallenge connects participants to, an established international community of startups, world-class mentoring from industry experts, tailored programing and unrivalled access to corporate partners.
According to MIT research, MassChallenge startups are 2.5x more likely to raise more than $1M in funding and hire at least 15 employees than startups who do not participate (Dr. Daniel Fehder). Additionally, last year, TechCrunch conducted the first comprehensive study on women in venture capital and their impact on female founders and named MassChallenge as the number one seed investor in the world for female-founded startups.
To date the team at MassChallenge has accelerated 1,211 startups, which have together raised $1.8 billion (USD) in funding, generated over $900 million in revenue and created over 65,000 direct and indirect jobs around the world.
To find out more about MassChallenge and see if their zero-equity, early-stage, high impact program is the right one for you, visit the MC website.
GTEC Lab Accelerator:
The largest startup hub in Europe is London but that may change because of Brexit. Berlin is in second place but with the UK voting to leave the European Union, its set to become the biggest spot inside the EU’s desirable single market after the UK makes its exit. So let’s take a closer look at a popular accelerator in Europe’s rising star, Berlin. The German Tech Entrepreneurship Center (GTEC) was founded in Berln during 2015 by friends Benjamin Rohé and Christoph Raethke. Previously the pair had been serial founders and angel investors.
GTEC is the first private-sector, open campus for entrepreneurship in Europe and its connecting an international network of companies, universities and startups along with the public. They have offices in Berlin and Frankfurt that support all types of digital startups. Under the triad of “Inspire, Guide, Grow”, GTEC promotes entrepreneurship on a global scale through a diverse set of offerings beyond its accelerator: from education programs and innovation awards to meetups and workshops.
If you’re early stage with an operational concept, German Technology Center offers the GTEC Lab accelerator for zero-equity. Participation provides startups with co-working office space in the heart of Berlin or Frankfurt for three to 12 months. Startups also receive light support from the GTEC team. Similar to MassChallenge, the GTEC Lab is able to accelerate startups for zero-equity because of its network of key partners.
Since it was opened, GTEC has been home to over 60 startups from over 15 countries that moved to Berlin to grow their company in the Lab or refine their ideas in the Startup Academy. GTEC has also worked with over 3,000 founders, managers and experts from leading international corporations and institutions to learn more about the the startup mentality. Among them are Bosch, Airbus, Energy Australia, Statoil, Mercedes-Benz and the European Union.
GTEC’s ‘Demo Day’ for 2017 was recently held and 10 diverse technology driven startups presented their hard work to a room full of potential investors, partners, customers, collaborators and future employees. The event was also live streamed so anyone around the world could join.
To learn more about the German Technology Entrepreneurship Center and their wide variety of programs include the early stage, zero-equity Lab, visit the GTEC website.
The biggest benefit of acceleration is marketing:
Don’t overlook the fact that joining an accelerator helps a startup market itself by exposing it to endless business opportunities. These opportunities happen because a founder’s chosen to be creative and put the business in an accelerator as their place of business for a fixed period of time in order to springboard to the next stage of growth.
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