Studio Or Accelerator? Choosing The Next Step For Your Startup
By Zachary Morin ’27, Principal
Many individuals find the avenue of entrepreneurship attractive at a glance. Owning your own business, growing from the ground up, and being the underdog are some of the perks typically advertised. In reality, only 10.0% of startups succeed in the long run. Common reasons for these failures include improper cash flow management, team relationships, and poor product-market fits. Given these statistics, one may ask how an aspiring founder can mitigate these issues in hopes of creating a successful venture, yielding a vague, yet critical answer: support.
Gaining assistance in your startup can be challenging for many entrepreneurs due to the wide array of options and their very limited time to decide on an avenue to pursue. Two common forms of support reside in startup studios and accelerators. Both organizations provide an immense amount of mentorship, resources, and networking opportunities; however, some key differences between the two could be the deciding factor on where to take your venture. Let’s take a closer look at each to ultimately decide what your choice should be.
WHAT IS AN ACCELERATOR?
Startup accelerators target early-stage companies, providing them with financing, mentorship, and education. Accelerators accept large “cohorts” of companies, typically ones that already have a strong basis and/or a minimum viable product (MVP), to then facilitate a fast-paced course intended to expedite growth and scaling strategies. These programs culminate in what is known as a ‘demo day’, where companies within the cohort will present their achievements to their mentors and potential investors. In exchange for their services and capital, accelerators gain anywhere from 2–10% equity in each participating company. Overall, accelerators are a great option for startups looking for diverse networking opportunities, overall guidance, and assistance in growth.
WHAT IS A STUDIO?
On the other hand, startup studios take a more nurturing approach to their services, investing in companies much earlier than accelerators. Studios accept much fewer companies than an accelerator, but will often invest in the idea the applicant is trying to solve and help bring that idea to fruition. Additionally, studios are comprised of individuals with extensive entrepreneurial experience and use such to build teams and frameworks to launch a startup from as early as the ideation stage. By providing funding, manpower, and industry experience, studios demonstrate a more hands-on involvement than accelerators and are typically tied to startups for longer periods to ensure each company grows and develops in a sustainable manner. Due to their increased involvement, studios usually inherit larger equity stakes in their companies, allowing for more control over the entity’s strategic and directional actions.
WHAT SHOULD YOU CHOOSE?
So, what avenue is the best? The answer depends on where you’re at in terms of the stage of your startup. It’s important to keep in mind that if your venture hasn’t materialized too much, a studio is likely your best option. Your equity contribution may be larger than an accelerator, but the vast number of resources and extensive involvement the studio offers might be more beneficial to you than an accelerator’s education. In contrast, if your company is young, but quite progressed in terms of development, an accelerator’s growth and scaling tactics may be a more attractive investment of your equity than a studio’s services. Although a successful venture is never guaranteed, both accelerators and studios provide invaluable resources for founders to achieve their goals.
Zach is a sophomore from Westerly, RI, pursuing a degree in Finance, Information Systems, and Sustainability. This is his second semester in the Fund, his first as a Principal. Zach is excited to take the skills he learned in his first semester and continue to refine his knowledge of the private equity space. This past summer he worked for General Dynamics Electric Boat as a supply chain organization intern, learning valuable tactics for communicating and operating in a professional setting. Outside of the Fund, Zach plays an active role as President of the Entrepreneurship Club and a Marketing Associate for UNH’s Marketing and Advertising Club.
