So you want to join an accelerator? Here's how

January 16, 2014: 3:37 PM ET
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NEW YORK (CNNMoney)

Startup accelerators are nothing new, offering intensive programs that promise to help young companies grow faster and smarter. The latest twist? Niche accelerators that focus on a particular industry or mission -- whether it's healthcare services or building sustainable products.

"We've seen our application numbers triple over the last three years," says Wes Selke, founding director of Better Ventures, a San Francisco accelerator that caters to environmental and social startups.

In the past two to three years, 200 to 300 new accelerators have opened worldwide, says Patrick Riley, executive director of the Global Accelerator Network, a Boulder for-profit that provides member accelerators with standardized curriculum, guidelines and services.

"I'm approached by at least two or three people a week who are thinking about starting an accelerator or who have just launched one," he says.

Related: 9 hot startup accelerators

A specialty accelerator surrounds entrepreneurs with like-minded people, offering access to top experts, early clients and introductions to investors in their field. But joining any accelerator -- especially a niche program -- can be risky, as focus areas within an industry can be wide ranging. So an entrepreneur who built software for a health insurer might wind up sitting through talks on topics like regulatory drug approvals.

What's more, industry-specific programs could scare off some investors and can limit the ability to pivot. "You could get pigeonholed," says Riley. It could be tough to switch gears mid-way through the program if you find your future is in a different industry, he says.

Picking wisely is key, since an accelerator that's a bad fit can wind up being a big time sink and an expensive way to finance your business, since most startups give up a portion of equity to enter an accelerator. The Global Accelerator Network offers an online database to search for programs by region, graduates and focus. Here are some tips to find the right fit:

Know what you need: Understand exactly what the accelerator is offering, whether it's advice, funding, investor introductions or office space. Be clear about the value you expect, and make sure it has a realistic chance of delivering.

Investigate their track record: Ask about an accelerator's past performance and talk to other graduates. Directors should be qualified to offer startup advice and have credible connections. Check out the number of graduates and their progress. Do they have momentum?

"If they're not the kind of people or companies you respect and would like to be like, then it's probably not a good idea to join that accelerator," says Sam Chaudhary, co-founder of ClassDojo, an education software startup that joined ImagineK12, an education-oriented accelerator in San Francisco. If the accelerator hides their results, Riley says, it's a bad sign.

Related: What's the deal with crowdfunding investments?

Consider the terms: Most accelerator programs take an equity stake for their investment. If they want undiluted shares and ask for a board seat, that's a red flag. Undiluted shares, in particular, can complicate follow-on investments and turn off new investors.

Analyze the mentors: A strong accelerator program should have 40 to 60 mentors, says Riley. Look to see if their expertise matches your needs and what kind of time you'll get with them. Is it quality one-on-one or do the mentors appear for an hour-long Q&A session?

Some programs rely solely on guidance from mentors, while others follow a startup curriculum much like going to school. Neither is "right," it just depends on which is a better fit for your company, says Riley.

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