How Do Startup Accelerators Work?

Starting a business from scratch and building successful products or services take a lot of time and resources. So, naturally, many entrepreneurs seek external support to accelerate their growth and find their place in the increasingly competitive market.

Among the many support mechanisms for early-stage companies, startup accelerators have emerged as a powerful tool, offering a mix of funding, mentorship, and networking opportunities to help startups grow rapidly. But how exactly do startup accelerators work, and what are their benefits? 

Let’s navigate the accelerator ecosystem together and find the right accelerator for your business.

What are startup accelerators?

Startup accelerators are usually short-term, cohort-based programs designed to provide early-stage companies with mentorship, training, connections, and funding in exchange for equity. These programs typically last three to six months, starting with a quite competitive selection process and culminating in a Demo Day, where startups pitch their businesses to potential investors.  

The main goal of startup accelerator programs is to help startups validate ideas, refine their products, gain traction, and secure follow-on investment. There are currently several thousands of accelerators worldwide, with more than 10 planted in the Baltics.

How do startup accelerators work?

Startup accelerators normally follow a set model that may slightly differ depending on the size of the accelerator or its target industry. Unlike business incubators, startup accelerators only work with early-stage companies that already have a minimum viable product or early validation and, due to limited slots per cohort, require active participation.

Here’s what the FIRSTPICK Acceleration program entails:

1. Application and selection

The process of joining an accelerator begins with an application. Usually, only a small percentage of all the applicants get selected to ensure that every team can receive undivided attention, personalized guidance, and mentorship. FIRSTPICK typically chooses a group of 5-8 startups.

To increase your chances of getting into the accelerator, focus on highlighting the strengths of your team, your startup’s market potential, your unique value proposition, and initial validation. Expect interviews, video calls, and further due diligence.

2. Funding

One of the key benefits of joining a startup accelerator is access to funding. Many accelerators provide pre-seed funding in exchange for equity. For example, FIRSTPICK provides 50-250K EUR as an initial investment. 

FIRSTPICK’S program itself is free of charge and doesn’t require you to give up a portion of your company. Other accelerators are not free. They require companies to pay a fee for the program or take additional equity for it. 

The accelerator also helps you to secure follow-on funding. With over 100 venture capital funds engaged, startups gain direct access to future investors. In addition, you can join Ventury.app – FIRSTPICK’s proprietary fundraising platform.

3. Training and workshops

You don’t need an MBA to run a successful business. Accelerators offer fast-paced training sessions and hands-on workshops to equip founders with all the essential entrepreneurial skills and knowledge.

FIRSTPICK’s accelerator program runs 10-12 weeks and covers such topics as product and marketing-led growth, sales, and fundraising. Additionally, teams can participate in specialized workshops or mentoring sessions tailored to the vertical they operate in, for example, fintech or AI. Besides, participants can join the program on-site in Vilnius or follow the sessions online.

4. Mentorship

Probably the most important advantage of accelerators is access to experienced mentors who can provide guidance on go-to-market product development and business strategy.

FIRSTPICK organizes mentorship on several levels. First, you get individual mentoring sessions with a selected coach on specific topics, such as sales, product-led and marketing-led growth, hiring, legal aspects, or fundraising, during the entire program.

Then, there are individual sessions spread throughout the program where your team meets with various mentors to discuss everything from entering a new market to launching a product or validating monetization. These mentors are often founders who have been in the trenches of building a startup.

Finally, a speed mentoring day is organized, allowing you to meet successful founders, industry experts, and investors. These sessions can help you build important connections and gain valuable insights in just one day.

5. Networking

Networking opportunities are another crucial aspect of startup accelerators. Aside from meeting with experts and professionals through mentorship, it’s also important to connect with fellow entrepreneurs participating in the program.

FIRSTPICK fosters bonding and a sense of community by organizing on-site events, such as Founders Hike or fireside chats with successful founders. In addition, alumni and ecosystem members, such as investors or other founders, are involved in different events, especially on Demo Day, allowing participating startups to connect with the network and build relationships that last even after the program.

6. Demo Day

Demo Day is the highlight of the whole accelerator program. It’s where startups showcase their progress and pitch their business to a room full of investors, industry experts, and stakeholders. This is your chance to look back at the work done and, in case of a successful presentation, gain funding opportunities and strategic partnerships. 

At FIRSTPICK, we are organising a Portfolio Day – an event where not only accelerator participants present their ideas but also other companies from the portfolio that are fundraising. You’ll get to meet alumni, founders, investors, and partners at the event.

7. Post-accelerator support

Once the program ends, you become part of the extensive accelerator alumni network. In many accelerators, that entails continued support through different events, follow-on funding, and mentorship. 

At FIRTPICK, you also get to join a founders’ platform – a place where you can interact with fellow program graduates and entrepreneurs. This extended support helps startups sustain growth and navigate challenges when they’re on their own.

Why should you join a startup accelerator?

By now, you have an idea of what it means to join and participate in a startup accelerator program. But what is it that makes them so compelling and hard to get in? And what should you consider before getting on board?

Benefits

Participating in a startup accelerator offers numerous opportunities, from improving your entrepreneurial skills to connecting with early-stage investors. Here are the main benefits of joining a startup for your business:

• Access to funding: A great way to secure pre-seed capital either from the accelerator itself or private investors that you connect with during the program. This initial investment can be crucial to help cover your operational costs, develop the product, and market fit. Participation in the accelerator can also open doors to follow-on investment later on. 
• Mentorship: There’s no other place where you can gain hands-on expert guidance that’s tailored to your specific business needs. Seasoned entrepreneurs and industry specialists can help you refine your strategy, accelerate your learning curve, avoid common costly mistakes, and even save a headache or two.
• Networking: Accelerators are all about learning, testing, and making many, many connections. You get to network with key industry players, investors, and fellow entrepreneurs who share the same challenges. The relationships you make during the program often last for years and can lead to valuable partnerships in the future.
• Training and resources: In less than a year, you can get business education based on real-life situations, making it easier to apply the knowledge right away and improve your business model. Training also helps you become a better founder and develop essential soft and hard skills.

Increased visibility: Being part of a successful and sought-after accelerator means more people get to know your business, believe more in its potential, and trust the quality of your products or services. The stronger the accelerator’s brand, the more credible you will appear in the eyes of your future customers or investors. This can give you a significant competitive advantage and kickstart your growth.

Limitations

Every program has its flaws. So, even though startup accelerators present numerous benefits, you should also be aware of the potential limitations that may push you to look for other opportunities instead:

• Equity trade-off: Some accelerators require equity in exchange for the program. While giving up 7–12% of ownership may not seem like a big deal for some, you should consider the equity terms and how they may impact you in the future regarding decision-making and attracting more investment.
• Time commitment: Startup accelerator programs are intensive and require full dedication. Mentorship, training sessions, and community events take a lot of time and energy and may push some founders into burnout when they have other responsibilities to take care of at the same time. Think carefully about whether you and your team can commit to the demanding schedule and fully immerse yourself into everything the accelerator offers.
• High competition: Acceptance rates in accelerators are low due to a limited number of spots per cohort, making it tough to get in. Your application should be refined and engaging to stand out, and you should also be ready to face rejection. Startup accelerator scouts normally give you honest feedback and tips on what you could do to perform better next time.
• Limited customization: Even though different accelerators usually follow a similar structure, not all present equal opportunities and tailor their programs to each particular startup. For example, some accelerators may not have the specific industry knowledge or connections with experts you’d require the most, or they may not have many success stories and an extensive alumni network. Do your research before applying to any program, and make sure it can provide the value you desire.

How to choose the right startup accelerator for your business 

It might be tempting to apply to the first accelerator you see or the one with the most appealing website. However, it’s important to put more effort into selecting THE ONE, as your choice can significantly impact your startup’s future.

You’ll probably get only one shot to participate in an accelerator with the company, so take your time and evaluate critically how well your startup would benefit from each program.  Here are key factors to consider when making the final decision:

1. Define your goals: Understand what you want to achieve, whether it’s funding, mentorship, networking, or training and check how well these elements are represented in programs of different accelerators.
2. Research program focus: Some accelerators specialize in specific industries like hardware, SaaS, health tech, or deep tech. Choose one that aligns with your business sector the best.
3. Evaluate funding terms: Consider the amount of funding provided and the equity percentage required in exchange. Check investor involvement throughout the program and the possibility of building relationships with them. While many accelerators are free, some may ask for an enrollment fee.
4. Assess mentorship quality: Look at the mentors associated with the accelerator and their expertise in your industry. Check how many mentorship sessions are included.
5. Check alumni success stories: A strong track record of successful startups graduating from the program is a good indicator of its value and impact.
6. Consider location and network: Some accelerators provide better access to pre-seed investors and industry leaders in particular regions. If relevant, find out if there’s an option to participate remotely, FIRSTPICK has that.
7. Inspect the program: Ensure the program’s schedule, workshops, and events help reach your startup’s goals and the agenda is not too demanding.
8. Connect with alumni: Finally, speak to past participants to get firsthand insights into the accelerator experience. Remember that what might’ve worked for some might not work for you and vice versa.

If several accelerators seem like a great fit at first sight, create an Excel file and fill in all the details based on this list. Once you have all the information in one place, it should be easier to compare the options and pick the winner. 

Best startup accelerators in the Baltics

The Baltics are home to several top-tier startup accelerators that can help kickstart your startup’s growth. You can find an accelerator that’s just right for your industry and business, but some notable ones in the region include:

1. FIRSTPICK (Lithuania): Focuses on early-stage tech startups, offering €50,000–€250,000 in investment and a 3–4 month program on sales, marketing, and fundraising, plus a vast network of founders, investors, and experts.
2. Baltic Sandbox (Lithuania): Specializes in deep tech and impact-driven startups in life sciences. The acceleration program lasts 6 months, and you can get up to €125,000 in investment.
3. Plug & Play (Lithuania): A global accelerator with strong corporate partnerships, helping founders grow their entrepreneurial skills and attract venture capital.
4. Startup Wise Guys (Estonia, Latvia, Lithuania): Focuses on B2B SaaS, fintech, and cybersecurity startups while also occasionally opening new programs to new industries.
5. Tenity (Estonia): An accelerator with a strong focus on fintech and insurtech startups. It offers a structured program with investment opportunities, mentoring, and access to corporate partners in the finance industry.

Conclusion

Accelerators can be an important step in your startup’s success. There’s no other place where you could get funding, training, mentorship, and networking opportunities all packed into one program. In just a few months, you can scale your company to a level that would normally take several years.

However, when joining an accelerator, remember to carefully consider the trade-offs and choose the program that best fits your needs. But most importantly, once you’re there, make sure you fully immerse yourself and take everything the program has in store to maximize your chances of success and long-term growth.

FAQ

Are startup accelerators worth it?

Yes, for many startups, accelerators provide valuable funding, mentorship, and networking opportunities that can significantly boost their growth.

What percentage of equity do startup accelerators take?

Most accelerators take between 7% to 12% equity in exchange for the program Some accelerators, like FIRSTPICK, don’t charge for the program and only take equity for the investment

What is the success rate of startup accelerators?

Success rates vary, but many startups that complete accelerator programs go on to raise additional funding and scale their businesses. Some studies suggest that accelerator alumni tend to raise 50% to 170% more from investors, and their businesses are more likely to survive than companies with no accelerator experience.

How do you make the most of an accelerator?

To maximize benefits and make the most of your time in the program, actively engage with mentors, ask questions, participate in all training sessions, build strong connections with fellow founders, industry experts, and early-stage investors, and finally, work hard to refine your pitch.