Yes, in almost all cases. An accelerator that puts money and senior time into your company takes equity for it, commonly somewhere between 2% and 10%. The part that gets skipped is the mechanism, and in India the mechanism is different from what you will read on most sites that rank for this question.
How much equity do accelerators take?
It depends on which of three models the programme runs.
Equity for a fixed cheque. The programme invests a set amount for a set percentage, and a valuation is implied by the two numbers. This is the structure most international accelerators use, and the one most articles describe. Ranges sit around 5% to 7%.
A convertible instrument. The programme puts money in now and takes equity later, at a valuation set by your next priced round. The final percentage depends on terms agreed today, and it is not knowable on signing day. This is the dominant structure in India.
No equity at all. Government-backed schemes, university incubators and some corporate programmes take nothing. They also give little or no cash, and what they offer is space, mentorship, and sometimes a grant.
The first two change your cap table. The third is a different kind of programme and should be judged differently.
How accelerator funding works in India
Pricing an idea-stage company is guesswork, and the paperwork for a priced round at that stage is heavy enough that few Indian programmes bother. So they mostly use a compulsorily convertible debenture, or CCD.
A CCD is debt that must convert into equity. It cannot be repaid in cash. No valuation is set on the day the money arrives. Instead, you agree on two boundaries.
The cap is the highest valuation at which the money will convert. It protects the investor. If your next round prices well above the cap, they still convert at the cap and get more equity than new investors do for the same money.
The floor is the lowest valuation at which it will convert. It protects you. If your next round prices below the floor, the investor still converts at the floor, which limits what a down round costs you.
This is why “what percentage does the accelerator take?” is the wrong question in India. On a CCD, nobody knows the percentage on signing day. The number that decides it is the cap.
Convertible notes are the other option, and they come with conditions. Under Rule 2(1)(c)(xvii) of the Companies (Acceptance of Deposits) Rules, 2014, a convertible note escapes being treated as a deposit only if the issuer is a DPIIT-recognised startup and the investment is ₹25 lakh or more in a single tranche from a single investor. It has to convert into equity or be repaid within ten years, a window extended from five by an amendment notified in September 2020. A CCD carries none of those conditions, which is a large part of why it stays the default.
A worked example
An accelerator puts ₹1 crore into your company on a CCD, cap ₹30 crore, floor ₹20 crore. You own 100% today.
Twelve months later, you raise a priced round. Three things can happen.
Next round prices at | Converts at | Accelerator ends up with |
₹50 crore | ₹30 crore (cap) | 3.33% |
₹25 crore | ₹25 crore | 4.00% |
₹15 crore | ₹20 crore (floor) | 5.00% |
In the first row, your cap table reads founders 96.67%, accelerator 3.33%, before the new round’s own dilution. In the third, the floor saved you: converting at the ₹15 crore round price would have given them 6.67%.
Notice what moves the outcome. The cheque size changed nothing across those three rows. The cap changed everything. A founder who negotiates ₹25 lakh more on the cheque and accepts a ₹10 crore lower cap has made a bad trade.
What does a startup accelerator actually do?
Being honest about this is useful, because it varies a lot by programme.
It gives you cash. The obvious part, and the smallest part.
It gives you senior time. Someone who has built and sold a company before, available weekly rather than quarterly. This is where good and bad programmes separate, and it is hard to assess from a website. Ask to speak to two founders already in the portfolio.
It gives you investor access. Not a demo day slot. Introductions to people who have actually funded companies out of that programme before, which you can verify yourself.
It compresses time. The useful version of an accelerator removes months from your path to the next round by killing bad assumptions early, not by adding workshops.
What it does not do: find your customers, guarantee your next round, or substitute for your own distribution. A programme implying otherwise is selling something it cannot deliver.
What to ask before you sign
Ask all of these in writing.
What is the cap, and what is the floor? The two numbers that decide your dilution.
Is there an interest rate on the CCD? There often is. Find out if it accrues and converts.
What is the conversion deadline? CCDs have an outer date by which they must convert.
What happens if no priced round comes? The answer is in the agreement, and it is the clause founders most often skip.
Do they take pro-rata rights? Normal to give; worth knowing you gave it.
What information rights come with it? Monthly reporting, board observer seats, consent rights on hiring or spending. These cost you time, not equity.
Who has to sign off on your next round? A programme holding a consent right becomes a party to every future decision.
What do accelerators look for in applications?
Three things, in this order.
Clarity about the problem. You should be able to explain it better than someone who has read about the market for half an hour. If you cannot, you have not been in it long enough.
A first-hand reason to be the one solving it. Outsiders build good businesses, but rarely outsiders who have not yet done the work of becoming insiders.
Evidence of execution rather than planning. A prototype people use, a pilot that renewed, a waitlist that converts. Something that proves the idea survived contact with a customer.
Revenue helps. It is rarely the deciding factor at pre-seed, and revenue earned from the wrong customer can count against you, because it bends the product towards a buyer who was never the point.
When can startups apply for an accelerator program?
Most Indian programmes accept applications year-round rather than in fixed batches, so there is no window to wait for.
There is also no stage at which it is too early. Programmes investing at pre-seed generally want a working product and at least one customer who has paid, but applying before that gets you feedback and puts you on their radar for six months’ time.
Reapplying is common and is treated as a new application rather than a repeat. If you were turned down, the useful question is which of the three things above was missing. Most programmes will not volunteer it. Ask anyway.
Common questions
Do you need revenue to get into an accelerator?
No, though you need something real. A prototype in use, a pilot that renewed, a paying pilot customer.
Can you apply to more than one accelerator at a time?
Yes. Tell each one you are doing it.
Does the equity come back if the programme does not work out?
No. Convertible or priced, the investment is made, and the equity is theirs
