Business Accelerators: Key to Unlocking Africa’s Startup Potential?
If you’ve been following the startup ecosystem for the past few years, you’re likely no stranger to the roller coaster ride of highs and lows this space has recently experienced.
After nearly a decade of year-on-year growth, 2023 saw a decline in African startup funding and heightened investor scrutiny toward potential new ventures. However, despite lackluster venture capital funding in 2023, experts were optimistic about the future of Africa’s startup industry — predicting a rise in funding over the next 12 to 18 months alongside a continent-wide GDP growth of 3.5% throughout 2024.
If you’re running an early-stage startup, finding your first (or next) source of capital can be daunting, especially in the uncertain economic conditions we find ourselves in today. With more startups vying for less and more stringent venture capital investment, joining a business accelerator programme could provide the key boost you need to grow, scale up, and gain a crucial advantage in today’s competitive startup landscape.
This article will cover everything you need to know about African business accelerators — what they are, how they’re used, and how you can best leverage them to grow your business.
What is a Business Accelerator?
Business accelerators (also called startup accelerators) help early-stage startups sharpen their business models and strategies for scale and success through intensive mentoring, training, and financing over short periods, usually lasting 3-6 months. These intensive boot camp-style programmes offer entrepreneurs like yourself access to seed funding, hands-on mentorship, and vital connections, catalyzing the growth of your startup and “accelerating” your path to profitability.
In recent years, startup accelerators have proliferated across Africa, providing critical infrastructure for early-stage startups throughout the continent and a platform for investors to identify promising businesses to fund and support.
Business Accelerators vs. Incubators
While business accelerators and incubators both aim to help new companies survive and grow during the difficult early stages, they utilise distinct models. In general, accelerators provide intensive mentoring and funding over a defined period to rapidly advance startups. Incubators take a longer-term approach to providing support services and guidance. Here are a few key differentiators between the two programme types:
Duration: Accelerators typically have short, intense programmes of 3-6 months while incubators tend to have longer programmes of 1-3 years.
Goals: Accelerators aim to provide exponential growth quickly over a short, defined period. Alternatively, incubators aim to provide long-term support for gradual growth.
Funding: Accelerators usually provide a small amount of seed funding to participating startups in exchange for equity. However, incubators generally do not directly fund startups.
Mentorship: Accelerators connect startups with mentors and industry experts for intensive coaching. On the other hand, incubator mentorship tends to be more casual and less structured.
Demo days: Most accelerators culminate in a demo day where startups pitch to investors. Incubators do not organise demo days.
Structure: Accelerators have cohort-based programmes with milestones and deliverables. Incubators are generally more flexible with startups working more independently and setting their own goals.
Post-programme support: Once the programme ends, accelerators typically move on to new cohorts while incubators continue supporting graduated startups through alumni networks.
Selectivity: Accelerators have a highly competitive, selective application process while incubators are generally less selective in choosing the startups with which they work.
Types of Business Accelerators for African Startups
When it comes to choosing an accelerator, there are various accelerator models to choose from based on your industry and your startup’s specific needs.
Corporate accelerators such as GreenHouse Capital, African Mobility Initiative, and Google for Startups are sponsored by larger companies looking to support burgeoning tech startups and provide sector-specific mentorship in specific areas like artificial intelligence, transportation, agriculture, and financial technology.
Conversely, (pre)seed accelerators such as MEST and Startupbootcamp Afritech are industry-agnostic and provide early-stage funding to startups, usually in exchange for equity.
The Role of Business Accelerators in the Startup Ecosystem
By connecting startups like yours to capital, knowledge, and networks, accelerators play an integral role in nurturing businesses in the early stages of growth.
Through intensive mentoring, structured curriculum, networking opportunities, and educational resources, accelerators contribute to professionalising nascent startups and preparing them for future growth.
The Benefits of Participating in a Business Accelerator Programme
Business accelerators provide a wealth of benefits for early-stage startups. Here are the key reasons to consider joining an accelerator programme:
Accelerated learning
The intensive 3-6 month timeline compresses critical learning into a short period through rigorous mentoring and training. Thus, you quickly gain the skills needed for the next stage of your business.
Access to seed funding
Accelerators offer access to much-needed seed funding to startups, usually in exchange for equity in your company. This investment allows you to shift your focus away from securing capital and towards advancing your product development, hiring, inventory, marketing, and other growth needs.
Expert mentorship
Accelerators connect your startup with successful founders, industry veterans, investors, and other experts for hands-on mentorship.
Accelerator mentors aid in critical areas such as product development by providing feedback on design, features, and technology choices, as well as connections to technical specialists. In addition, these startup veterans can help guide effective customer acquisition through recommendations on marketing strategies, influencer partnerships, pitch refinement, and optimizing the sales process.
Having access to experienced mentors and a robust community shortens the learning curve for your startup and amplifies the chances of building a successful, high-growth business.
Resources
Accelerators often provide coworking spaces, legal and accounting services, tech support, access to servers, software licenses, and more. These resources help optimise your startup’s operations and amplify your efforts in the early stages of your business.
Rapid growth
Because accelerators compress years of learning into months, the rigorous timeline, accountability, and support structure compel your startup to rapidly gain traction and demonstrate viability and momentum to VCs. At the same time the in-depth mentoring, training, and financing help your startup rapidly mature — priming you for significant venture capital investment once the programme has ended.
Check out our latest case study to see how AFI helped Amitruck recognise technical gaps and boost investor visibility after four accelerator programmes to secure a $5 million raise.
Potential Drawbacks of Business Accelerator Programmes
So far, we’ve mostly discussed the benefits business accelerator programmes can offer your startup. However, these services are not without their share of potential drawbacks. Here are a few key points to consider before applying to an accelerator.
Equity investment
Accelerators typically require somewhere between 5-10% equity in exchange for the seed investment they provide to your startup. As the founder, this dilutes your ownership and control over your company. When considering an accelerator programme, it’s important to understand the exact equity investment required and consider whether the equity tradeoff is worth it for the experience and services gained.
Standardised curriculum
While accelerators offer vast educational resources that provide vital knowledge of how to scale your business, most programmes offer a standardised one-size-fits-all curriculum for all participants. This means that the content covered may or may not fit your startup’s unique needs and challenges. Fortunately, AfriFindInvest (AFI) offers bespoke solutions to ensure your startup receives the personalised support it needs to thrive.
Full-time commitment
There’s no way to sugar-coat it, accelerator programmes are demanding. These programmes require a full-time, immersive commitment for the entire duration. This takes significant time away from focusing on developing your startup’s products, services, and customers. When selecting a potential accelerator, make sure you understand (and are prepared to handle) the time commitment required.
Highly competitive application process
With the rise of the African tech industry over the past decade, startup accelerators have become increasingly selective and discerning. Acceptance rates at top global programmes can be as low as 1.5-2%.
When choosing startups, accelerator programmes look at several criteria such as scalability potential, impact on society or a particular industry, a clear and viable business model, and a compelling value proposition. To have the best chances of being accepted into an accelerator programme, make sure you carefully review the criteria outlined by each accelerator and tailor your application accordingly.
Limited post-programme support
Due to the time-constrained nature of accelerator programmes, much of the intensive support and access to resources drop off sharply once your startup completes the programme. Without the assistance of the accelerator environment, you may find yourself struggling to maintain sustained growth. To combat this, you must be prepared to rapidly adapt to the challenges of what comes next, including finding additional sources of funding, talent, mentors, etc.
Tips for Startups to Leverage Accelerators
With a myriad of opportunities and resources available, joining an accelerator programme can play a pivotal role in your startup’s success. Here are some strategic tips to help you make the most of your accelerator experience and set the stage for a thriving business:
Craft a robust business plan:
Begin with a comprehensive business plan that outlines your vision, mission, and a detailed strategy for achieving your goals. Clearly articulate your value proposition, target market, and revenue model. A well-thought-out business plan not only serves as a roadmap but also demonstrates to investors that you have a clear vision for your startup.
Hone your pitch:
Condense your business plan into a captivating pitch deck. Accelerator programmes often culminate in pitch sessions, where startups present their ideas to potential investors. Practice and refine your pitch to convey your startup’s value succinctly. Highlight the problem you’re solving, your unique solution, and the market opportunity.
Leverage investor access:
One of the significant advantages of accelerator programmes is the access they provide to a network of investors. Actively engage with these investors during networking events, pitch sessions, and demo days. Be prepared to articulate your business proposition clearly and demonstrate how their investment can fuel your growth. Develop relationships with investors who align with your startup’s mission and vision.
Make the most of mentorship opportunities:
Take full advantage of the mentorship provided by the accelerator and focus on building strong relationships with mentors who can offer ongoing support even after the accelerator programme concludes.
Collaborate with cohort members:
Accelerator programmes often involve cohorts of diverse startups. Collaborate with fellow entrepreneurs, sharing experiences, insights, and potential synergies. Networking within your cohort can lead to partnerships, shared resources, and a broader understanding of the startup landscape.
Adapt and iterate:
Accelerators provide a platform for constructive criticism and improvement. Be open to feedback and willing to iterate on your business model. Use the insights gained from mentors, peers, and industry experts to refine your product, strategy, and overall business approach.
Maximise educational resources:
Take full advantage of the educational resources provided by the accelerator. Attend as many workshops and expert sessions as you can to gain industry insights, acquire new skills, and stay updated on market trends.
Build a robust network:
Networking can open doors to partnerships, customers, and opportunities for further funding. Accelerator programmes introduce you to a diverse network of professionals, investors, and potential collaborators with whom you can build and nurture mutually-beneficial relationships.
Focus on execution:
While strategic planning is essential, successful startups are built on effective execution. Use the accelerator programme as a platform to execute your plans with precision. Focus on demonstrating progress and achieving significant milestones to instill confidence in investors and stakeholders.
Plan for post-accelerator growth:
Accelerator programmes move fast, but it’s important to keep your eyes on the horizon and begin strategising for the post-accelerator phase early on. Develop a roadmap for sustained growth, additional funding rounds, and market expansion. Consider how you will continue to leverage the network and resources gained during the accelerator to fuel ongoing success.
How AFI Catalyses Startups
Whether actively engaged in an accelerator programme or working to push your startup to the next level, AFI aims to empower you to achieve the best outcomes at every stage of the fundraising process. AFI provides tailored business solutions to help bridge technical and informational gaps, educational resources to foster ongoing learning, and access to capital through an active investor network.
While accelerator programmes will help you get a holistic view of your early-stage startup as you think about building and executing, AFI will guide you through the last mile of your investment journey and help you focus on the crucial funding conversations that will propel your business into its next phase.
Closing Thoughts
Business accelerators provide a unique opportunity to fast-track your company’s evolution. The educational resources, mentorship, networking opportunities, and access to (pre)seed funding available through an accelerator provide the tools to gain a competitive advantage in a fierce market and transform your early-stage startup into a success.
However, when deciding if an accelerator is right for you, it’s crucial to consider the time and equity cost, curriculum restraints, and the highly-competitive nature of these programmes. While the benefits of accelerator programmes often outweigh the costs, you should rigorously evaluate if an accelerator aligns with your startup’s immediate needs and long-term vision before applying.
By carefully selecting and navigating a programme, crafting a compelling business plan, and leveraging resources strategically, you can position yourself for ongoing success. With the help of AFI, you’ll be perfectly positioned to turn your accelerator experience into the launchpad for unlocking the knowledge and networks that will help your venture to secure its future.
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