The startup scene has dramatically changed in recent years – with seemingly every up-and-coming city replete with networks of young companies eager to raise capital and grow. Some startups might still start in the dorm rooms of old, but the resources available to young companies today go far beyond the campus library.

Having more resources is, inarguably, a good thing, but it also means there’s a lot more to learn. One type of resource young companies should come to know is the startup accelerator, which can provide important business and legal counsel as young companies grow, and, sometimes, grow quickly.

Here are some key tips for startups that are considering joining an accelerator:

What are the benefits? Accelerators can offer valuable perks like workspace options, on-site legal counsel and structured programming to learn new skills. Sometimes they have established networks of clients and business partners. The perks may be valuable, but startups should work to understand the people they’re doing business with and ensure that their values are aligned.

Do your homework: Well-known accelerators can give companies a branding benefit, but that might not be enough if they don’t provide quality work. Companies should look into the accelerator’s reputation and history. Have they run into any litigation? Are there any concerning rumors about their work?  Do they require the company to enter onerous agreements?

Look for success stories: With upward of 300 accelerator programs in the U.S., startups should evaluate an accelerator’s track record. Have other companies gone on to grow with the accelerator’s help? If multiple companies have graduated from an accelerator only to fall apart afterwards, it may not be an effective program.

Check the numbers: An accelerator may be counseling anywhere from a dozen to hundreds of companies at once. Make sure you would get the attention, resources and time you need, understanding that there’s a fine balance between size and quality.

What is the monetary cost? You have to spend money to make money, but it’s important for startups to not give up too much to be part of an accelerator. Many take between 5 percent and 7 percent of a startup’s equity, but some take much more. Is this cost of valuable equity worth the benefit?  And some deals can jeopardize a startup’s ability to make money or sell equity later.

Consider the cost, beyond money: Joining an accelerator also costs valuable time that could be spent building the business. But if an accelerator expands your network or provides resources you otherwise couldn’t access, it might be preferable to going alone for a few months.

Know what you’re signing up for: Will the accelerator be hands-on when it comes to the work companies are producing? Or will it be more of a library of resources, there to offer capital, a second business opinion or other counsel when needed? Startups should thoroughly research accelerator programs they’re considering joining, as some may be better suited for particular industries. What are the exact deliverables you will receive and is it worth the time and equity they will demand?

And read the fine print: Startups should closely examine accelerator contracts before signing anything binding and consider bringing in legal counsel to wade through the paperwork. Founders need to understand if they’re giving up more than just equity. Some accelerators require board seats or observer rights, side letters or other covenants and rights. That isn’t necessarily a bad thing, but startups should ask themselves how these issues will affect their ability to do business in the future.

Receiving an offer to join an accelerator program can seem like a golden ticket, but startups need to take a step back and thoroughly evaluate the terms, benefits, costs and track records before diving in. Accelerators can be a great way to grow a young business – but it’s up to startup founders to determine if a particular accelerator is right for their company.

As an early-stage investor, I’m fortunate to work with entrepreneurs as their companies are just forming. Our firm has invested in nearly 100 businesses, and many have gone through one or more accelerators. We’re proud to call Memphis home to nationally ranked ZeroTo510 Medical Device Accelerator, as well as Global Accelerator Network member Start Co., and several of our startups have gone through Y Combinator, 500 Startups, Techstars, and Plug and Play.

When evaluating accelerator programs and offers, the most important factor is the startup’s need. While they provide access to hundreds of accelerator options, platforms like f6s.com have made it perhaps too easy for entrepreneurs to apply to several programs without giving it too much thought. That would be a mistake, as all accelerators are not created equally, and it’s important for an entrepreneur to first understand what their goals are for acceleration. Do your homework, as this choice is critical to your company’s success!

Curriculum Offered by the Accelerator

Based on your startup’s stage, or the founder’s experience, you should evaluate the curriculum, or programming, offered by the accelerator. Many accelerators teach some variance of the Lean Startup model. It’s a great methodology, and you can read about it in a book, but if this is your first startup, there’s no substitute to being led through the materials by experienced facilitators and entrepreneurs. In addition to the standard textbook methodology, effective accelerators also have sessions on the practical side of developing a go-to-market strategy, business development, and sales strategy. These will typically come in the form of workshops that allow you to immediately apply the theory to your startup.

Recommended Action: Ask the accelerator for a detailed overview of the curriculum, ideally in the form of an actual calendar from a previous cohort.

Good accelerators also will tell you that Demo Day is not the finish line — it’s a ticket to enter the race that’s just getting started. What resources are available after Demo Day? The first 30 days after Demo Day are critical, as you will lose a lot of the bootcamp energy and momentum. At that point, it’s all up to you. But a quality program will still be there to help guide you by setting milestones, providing office hours, reviewing investor decks, etc.

Recommended Action: Ask the accelerator what specifically they do to assist companies after Demo Day.

Cash Offered by an Accelerator

Cash offered by an accelerator ranges from $0 to $250K typically. More is better, right? Well, that all depends on the terms. Whether the money comes as a SAFE, convertible note, or as common stock, there’s typically an implied valuation. Make sure to talk to an experienced advisor, lawyer, or investor to ensure you understand the implications and strings attached to the cash. There might be follow-on investment rights, share price protection, etc. In addition to equity for cash, many accelerators also ask for a small piece of your startup for being part of the accelerator. To evaluate the fairness of that ask, you need to look at all factors described in this article. If the program scores high on many factors, expect to give up 5-10% for being in the program.

Recommended Action: Ask for both the cash and in-kind investment terms.

Connections, Introductions to Startup-Friendly Executives 

One of the hardest things for a startup to obtain is the first paying customer. This is especially true if you’re in the B2B world. Many of the most successful accelerator programs have strong connections to the established business community in the region. They can provide safe introductions to startup-friendly executives in large enterprises that will be able to help you navigate the copious amounts of red tape that is between you and the first sale. While many accelerators have an impressive list of logos of corporate partners, and a lengthy page of mentor mug shots, don’t expect all those folks to be actively involved.

Recommended Action: Get in touch with some of the founders of previous cohorts and ask them how easy it was to get connected to potential customers. Ask for concrete examples.

Besides customer connections, it’s also important that a program provides capital connections. A program should readily volunteer stats on the average amount of capital raised by its cohort companies. Note that I said “capital raised,” not just “number of investors present at Demo Day.” Demo Days are fun to attend and easily attract investors, but that’s not necessarily beneficial to you as a startup unless these investors have historically written checks at the accelerator stage.

Recommended Action: Review the past cohorts and look the participants up in Crunchbase to see if they raised capital. Make sure to not be blinded by the outliers that raise multi-million rounds the week after Demo Day. See if the startups raised at least a couple hundred thousand dollars to reach the next milestone. How many are still around and have active websites?

I hope this post gives you some idea on what critical questions to ask of an accelerator program. You should do this both before you apply, as well as after being offered a spot. Should you be so fortunate to be accepted into multiple programs, it’ll be even more important to make a pros and cons list to help you make a decision. Pick what’s best for your startup; that may not always be the highest-ranked program.