Role of Accelerators and Incubators in the growth of a startup

The boom in startups and venture capital in recent years has coincided with the emergence of startup incubators/accelerators. From about 585 accelerators in India in 2017, the number of accelerator programs went up to 900 in 2021. The top five start-ups in India have been nurtured at accelerators and raised an aggregate of $10 billion. About 8 percent of the 91 unicorns created so far in India were part of accelerators at some point in their journey. (1)

What do they do?

Startup incubators/accelerators support early-stage, growth-driven companies through capacity-building sessions and mentorship,  

Startups enter accelerators for a fixed period and as part of a cohort of companies. The accelerator experience is a process of intense, rapid, and immersive learning aimed at accelerating the life cycle of young innovative companies, compressing years’ worth of learning by doing in just a few months.

When matched with a comparable group of companies that didn’t participate in accelerator programs, those that graduated from such programs saw an acceleration in reaching key milestones-  time to raise venture capital, exit by acquisition, and gain customer traction. 

There is significant evidence demonstrating the potential of accelerators to improve startups’ outcomes and for these benefits to spill over into the broader startup community. (2)

Some reasons why your startup should join an accelerator:

1. Provides an ecosystem of support 

Accelerators often come with additional support systems such as law firms, patent attorneys, key industry experts, advisors, regulatory experts, and CFO services interested in advising early-stage startups. These services are often rendered free of cost or at a reduced price. The founding team also gets to interact and learn from other startups in the cohort facing challenges unique to the industry.

2. Develop skills for the founding team

 Accelerators help founding teams build critical strategy documents such as a business plan,  financial forecast, sales and marketing strategy, organization culture, team-building, and a technology roadmap. Accelerators also help the founding team identify gaps in critical skill sets and build a hiring strategy.

3. Helps build the first iteration of your startup

Most accelerators end with a “Demo Day” where participating startups pitch for follow-on investments from local or global VCs.The founders and the first few employees come together to define a target customer, identify their pain points, and a potential solution.

 4. De-risks future investors

Angel investors feel that “graduating” from an accelerator de-risks the business plan, sales and marketing strategy, and technology roadmap. It raises the credibility of the founding team as they have spent three to six months in an accelerator and can show that they can work together towards a common goal. (3)

5. Corporates are keen to collaborate with accelerators due to the following reasons:

• Funding incubators is a Govt. approved CSR activity
•  Startups represent lucrative revenue streams and a cradle of new tech
• Indirect promotion is a sales and marketing technique that helps.

The collaboration with corporates is beneficial to the startups, too, as they gain investors, credibility, and opportunities to scale.

In recent years, the Indian startup ecosystem has taken off, and come into focus on its own, driven by factors such as massive funding, consolidation activities, evolving technology, and a burgeoning domestic market. However, a considerable gender gap is a problem yet to be solved. A mere 5.9 percent of the participating startups were founded by ‘only females’ as compared to 55.5 percent by their male counterparts, showing a long road ahead for women entrepreneurs to catch up. (4)

There is an urgency to have more incubators promoting women-led startups to lessen the gender gap.

STEP is an incubation program for women-led startups creating social impact. We aim to move the needle towards gender balance through our initiatives.

Women- focussed incubators /accelerator programs are beneficial to women entrepreneurs in the following ways:

• Understand a female founder’s journey and support and adapt to her needs.
• Introductions to funds directly focused on female founders
• The lack of unconscious bias
• Confidence building
• A supportive community 

STEP is in between a pre-incubation program and currently, 27 women ideators are gaining the STEP experience. To break the language barrier that hinders the entrepreneurial journey of many womenpreneurs, STEP has started India’s first acceleration program in Hindi. Applications for its fourth cohort are open now. The program is available in both Hindi and English.

48 startups have been incubated at STEP in the last 3 years and these Shaktipreneurs have achieved recognition in their respective fields.

The following table represents the journey of some of them: