The New York Times article, "Help For a Small Business Trying to Catch a Fire", about small businesses looking to expand and scale, highlights the role of business accelerators. As the number of accelerator programs have risen in the last several years, the article provides some interesting facts:
- Over 230 accelerator programs exist worldwide (160 are US-based) that have provided $19 billion in funding for more than 6,000 companies to date
- 40 percent of companies at accelerators raise $250,000 or more in angel or venture capital funding — an indication that the programs are giving entrepreneurs a leg up
The takeaway? Startups have a better chance than ever to find success. In a way, accelerators have helped to democratize the process of finding investors and necessary funding, as well as providing a "mini MBA" for founders. For cannabis startups, it can be even more daunting to find A. an environment that understands the industry's unique challenges, and B. investors who can see the long-term opportunities in cannabis.
Another interesting number included in the NYT article:
- Of the companies emerging from these programs with significant funding, only “2.1 percent of companies have had a meaningful exit” - 'exit' meaning a sale, merger or initial public offering
In regard to exits, it's far too early for most accelerator programs and their alumni to think about sales or IPOs - 5-7 years is more realistic for those scenarios. And as a highly-regulated industry still in its youth, cannabis companies may be even further away.
Matt Maloney, co-founder of food-delivery service Grub Hub - a startup that has enjoyed 37 percent year-over-year growth and went public two years ago - explains how an accelerator program helped develop his business idea:
“I knew I had something,” he said. “But I didn’t know what it was. I met a lot of smart, hyper-educated people trying to solve the same problem.”
“The mentoring is the linchpin,” Mr. Maloney said. “The key benefit of the program was being able to model and communicate the power of the business.”
The most important qualities when considering an accelerator for your small business are the fit between your personality and the accelerator support system - program managers, mentors, investor network. Make sure you're comfortable with the program's pace, the personalities involved and its vision. Professor Yael Hochberg of Rice University (and managing director of the Seed Accelerator Rankings Project) sums it up best in a quote from the article:
“The top two qualities of the best accelerators for you are fit and experience of the mentors and managing directors. Making sure the accelerator is a good fit is the key.”
Considering an accelerator for your seed-stage cannabis company? Canopy offers:
- $20,000 in seed capital upon acceptance to the program
- Chance for $50,000 in follow-on investment at the mid-point of the 16-week program
- Mentor-driven structure - experienced mentors help navigate murky marijuana startup waters
- Direct access to the cannabis industry's largest group of investors in partnership with The Arcview Group
- As part of the Canopy ecosystem, participants in the program and alumni companies enjoy benefits such as greatly discounted cloud storage, marketing automation tools such as Hubspot, CRM/CSM platforms, co-working space, Amazon Web Services and more
Want more details on applying to the CanopyBoulder Winter 2020 Cohort? Click on the Apply button to find out more.