Some readers may be unfamiliar with the concept of a startup accelerator, sometimes mentioned by new 3D print companies.
I’ve been reading a press release by 3YOURMIND in which they announce that they’ve been accepted by a US-based startup accelerator, Stanford’s StartX accelerator network. That’s great for them, but what does this really mean?
It turns out there are a number of distinct phases a startup company must pass through to become a successful, long-term viable company. One of them may involve what’s called an “accelerator”.
In the initial stages of a startup, it’s a bare-bones operation. You’ve heard the stories of a pair of talented individuals putting something together in their basement or garage, and that is often literally true. At this initial stage a company has virtually no funding and can’t afford anything they don’t already own.
They may obtain small amounts of startup funding from government grants, their own pockets, family and friends, or “Angel” investors. These are well-funded individuals that prefer to invest in promising startups as their first “external” investment.
These steps simply get the company off the ground. It’s then up to the company to prove that their idea really works.
During the next stage the company transforms from “a group making something” into a real company, with the addition of proper financial accounting, corporate governance and other housekeeping aspects that are necessary for corporate existence.
The company must also sell products. This is the most important step at this stage, because if people are actually buying product, then you’ve proven that it could be a viable business.
The company then faces a big problem. If it has a good product, it has to sell it to a much wider market to grow. But this requires money to hire sales and marketing staff, work with distribution networks, advertise, get promotional assistance, grow manufacturing capability and much more.
Many times it is extremely difficult for a small company to do this. They would have to save up small amounts of money on each sale to gradually fund those additional activities, but it could take years, sometimes many years to do so.
And during that time they could be caught and passed by a competitor.
Enter accelerators. These are operations that specialize in providing access to financing, marketing expertise and networking connections to achieve all of the above. They “accelerate” the growth process by providing all the required elements.
Of course, accelerators don’t do this for every company. They pick and choose the companies they wish to support carefully, and usually only the ones with the highest probability of success are accepted. And they’re usually quite good at selection, as they’ve done it many times in the past and know what to look for.
That’s what an accelerator means.
And that’s what 3YOURMIND has hooked into. The implications are clear: they are viewed as a potentially huge company, at least by this accelerator.
Sure, it’s part of their US expansion, but there’s more to the story than just that.