What are the negatives of participating in a Startup Accelerator, as opposed to raising capital independently?


2 Answers

Tim O'Shea Profile
Tim O'Shea , Angel Investor & Incubator Advisor, answered

A startup accelerator provides many more benefits than just the funding, so it is best to consider this when weighing up the pros and cons of participating.

To answer the question, there are a few minor negatives, which in my view, still don't beat the advantages provided by a good startup accelerator.

If you have traction already, the chances are you'll be able to raise money on a slightly-better valuation from private investors than from an incubator. But only if you have a network of investors already in place.

Another slight negative is the pressure to have built (and be ready to present) a product to pitch on demo day. This is a positive process in that there is finalised point for product delivery, but by publicly-backing an idea, it makes teams finalise on a product that they may not have had a chance to validate with customers yet. The startup Genome report backs up the theory that scaling should not be attempted until your product is verified.

Let's not forget some of the positives of startup accelerators:

  • Access to capital
  • Mentoring and training
  • PR
  • Support from fellow startups
  • Momentum
  • Networking

Raising money is a time-consuming process, so any help in making that more efficient makes a big difference.

Karl Sagan Profile
Karl Sagan answered

As it was already mentioned there are not a lot of negative aspects. If you are an entrepreneur then it's necessary to use as many tools as possible. Even some smartbooks are useful to read. Which? Take a look at a list of the best startup books for entrepreneurs in 2019.

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