There is a huge difference between launching a startup and building a lasting, lucrative company. The alarming truth is that about half of new businesses fail within their first five years. The vulnerable early stages of a startup are the most crucial in getting a new business off of the ground, and achieving success takes a lot more than just a great idea. That’s where startup accelerators come in.
What’s the Big Idea?
The startup accelerator concept was created in 2005 by Y Combinator in Silicon Valley to help entrepreneurial teams transform their breakthrough ideas into successful, scalable companies. Their undeniable success, with a community of more than 700 startups that have a combined valuation of $20 billion plus, inspired the creation of similar programs across the United States and abroad.
In an article in Mashable, Associate Editor Dani Fankhauser describes a startup accelerator as the “perfect storm of mentorship, access to technology, office space, and an innovative community, packed into a short time frame.”
Bridging the Gap
Startup accelerators, like SparkLabKC, were created to give highly motivated startups the fuel to get to the next big milestone by solving fundamental problems in the early stages of development. Even with groundbreaking business ideas, there’s a particular point where even the most promising new businesses begin to flounder.
Business ideas fail to thrive due to two major problems: lack of experience and lack of capital.
Startup Accelerators close that gap by allowing early-stage businesses to quickly get past these stumbling blocks to become viable, profitable companies. But how exactly is this done?
The Experience Gap
Collaboration is key in an accelerator program. It’s an invaluable aspect of the accelerator program design. We believe that there is profound value in having mentors around regularly to deliver sound advice in the early stages of building a startup and beyond.
At SparkLabKC, we have 80 knowledgeable, experienced mentors from every industry available to our startups throughout the accelerator process and afterwards. This group of mentors is made up of successful business leaders as well as seasoned entrepreneurs who are excited by the opportunity to assist and support growing startups in the entrepreneurial community. Many have Internet startup experience, and others come from a wide variety of major corporations and universities in the Kansas City region.
Our mentors assist the startups across all fields. From crafting their product to developing marketing strategies, to giving legal and financial advice, they leverage their knowledge and past experience to give our companies the boost they need. The startups in our program have gained insight and built lasting relationships with our mentors that they will take with them for the rest of their professional lives.
The Capital Gap
Another vital factor in building a startup into a prospering company is access to capital – the initial money investment needed to get the company off the ground before significant revenue can sustain growth. Most early stage companies do not have the capital resources they need to survive in the initial stages of development. Creating new technology, building the perfect team, and finding space to work in all require cash at a time when most startups have more ideas than money.
The typical accelerator offers a small cash investment and a free place to work in over the course of the program, lasting usually three months. The participants in our 90-day boot camp receive up to $18,000 in seed capital and free access to our collaborative workspace, with Internet access and lots of space for work and play (check out our new downtown space, featured in a previous post).
This seed funding helps startups in the early stages build their companies to the point where they have a refined, augmented product to introduce to later stage investors and raise money on a larger scale. For three months, our 10 startups are pushed to be the best they can be for their “Demo Day” pitch to investors.
The Win-Win of Acceleration
By solving the most fundamental problems in early stage startups, new businesses are accelerating to new heights and the entrepreneurial community is growing rapidly. The 20 startups that have completed the SparkLabKC program as part of our first two classes have exceeded our expectations and are now creating their own success outside of the accelerator experience.
In the words of Brad Feld, co-founder of Techstars, one of the most successful startup accelerators in the world,, “The mentor-driven accelerator model is clearly working.” This is why the concept has expanded to major cities around the world.
We believe that by bridging the experience and capital gaps for our startups, we are driving them to success. We are cultivating a community of exceptional entrepreneurs that are surrounded by great mentors and strong funding sources. There is no better time than today to build a startup in Kansas City!
Do you think your startup has what it takes to be a part of the next SparkLabKC class of visionary entrepreneurs? We will be accepting applications for our Class of 2015 this fall!