What Is a Business Accelerator Fund?
If you’re looking for access to capital for your advanced technology startup, a Business Accelerator Fund (BAF) can provide the support you need. These accelerators mentor startups and structure investments as real options. And you can rest assured knowing they have a strict conflict of interest policy. But what exactly is a Business Accelerator Fund? Read on to learn more. Founded by a former venture capitalist, the BAF has the resources you need to grow your company.
Business accelerators provide access to capital
While business accelerators aren’t necessarily the best way to secure venture capital, they can be an excellent option for those seeking guidance, access to expert advice, and access to peers. If you’re considering becoming an accelerator tenant, make sure to review all of the fine print and get an attorney’s opinion on the contract before signing on the dotted line. Moreover, it’s critical to determine a cohort based on the availability of your team and the strength of your business plan.
One example is the Michigan Rise Pre-Seed Fund III, which invests in startups in the state. To qualify, companies must be for-profit and based in Michigan. Funding amounts range from $50,000 to $250,000 per portfolio company, and they may be equity, convertible debt, a combination of equity and loans, or SAFE investments (substantial alternative investment). SAFE investments provide an incentive for founders to remain in the company and do not lock them into an early valuation.
They mentor startups
Business Accelerator Funds are a way to help entrepreneurs start and grow a business. The program helps entrepreneurs build a business plan and marketing strategy. The programs assign entrepreneurs to a learning circle of other startups, where they share information and hold each other accountable to achieving their goals. The RTP-based First Flight Venture Center is a leading startup incubator that offers a number of different accelerator programs, including the Figure Your Sh*t Out program. Startups can also apply to the program’s DRIVe program, which mentors health technology startups. The program was recently selected by the Department of Health and Human Services and is based in RTP.
Startup accelerators give entrepreneurs access to mentors and funds. Y Combinator’s program, for example, matched Zach Dixon with seasoned, industry experts and angel investors to help him bring his startup idea to life. The program helped Dixon navigate personnel issues, fundraising issues, and scaling. It was like attending college again. The program allowed him to learn everything he needed to know to create a successful company. And Y Combinator has a reputation for being a great experience for startup founders.
They structure investments as real options
Angel investors invest in businesses through business accelerators. These accelerators vet the companies that participate, so that angel investors don’t have to waste their time sifting through duds. These accelerators structure investments as real options, meaning investors have the right to invest more in a startup at a future date, but are not obligated to do so. The investors also get equity and other forms of investment in the company.