The 12 do’s & 4 don’ts of picking an aggressive Accelerator.
Viable, Mentor, Feedback, Accelerate, prep 4 Financing, Questions, Connection, Reputation, Terms, Intense, Compet & more
Accelerators are now an integral part of the startup eco-system. For some – especially 1st-time Founders, it is sort of becoming an important consideration: Should I go through an Accelerator for Growing a Business. Serial entrepreneurs, as a rule, would say they don’t need to, because they already know what to do.
Who needs Accelerators? Some people say that Accelerators are only good for new Startups – that haven’t yet raised financing yet. They argue that if the company has raised capital, then it’s too far along for an Accelerator and wouldn’t benefit from it. I don’t agree. None of the above statements is universally true. As managing director, I have plenty of success stories at Techstars (a mentor/Accelerator), with new Startups who raised funding, + plenty of Serial entrepreneurs who have gone through the program before. Increasingly, we see later-stage companies that already achieved product market fit really accelerate by going through Techstars. Here is a breakdown of why you would join an Accelerator, along with some tips.
A. Reasons to join an Accelerator
1. You “believe” that your Idea is a “viable” business. You will do that by testing it in the market, getting customer feedback, talking to mentors & Accelerator staff, and most important, by setting goals & dilegently measuring progress.
Why? You will do all of this with the goal to find product market fit, then step on the gas to get growth & prepare your business for financing. You compress what normally happens over much longer periods of time down to days & weeks. You essentially force yourself and your company through the process.
2. You want to be Mentored & get Feedback. Quality mentorship is the secret sauce behind a great Accelerator. Matching you with a network of top entrepreneurs, executives & investors who share their experience, provide feedback & guidance can really accelerate your business. Most often, the focus is the business itself: Is this the right product for the market? How do I achieve growth? What is the revenue model? Is this startup fundable? Do you need to be mentored to get feedback on your plan.
3. You want to Accelerate your Growth. If you already have traction & early product market fit, you may benefit from business acceleration. By leveraging an Accelerator’s network, you are taking a shortcut through the lengthy business development process and rapidly accelerating your business. If your product is great, you can turn introductions into customers & quickly grow your revenue in a matter of weeks & months, which normally would take months & years.
4. You are preparing for Financing. Whether you are first-time founder or a serial, raising money is never easy. A good Accelerator could prepare you for financing, not just by introducing you to investors (that’s the easy part), but by actually working with you to help ensure that you have an unique product with great opportunity.
5. What Questions will an Investor ask? What is the value here? Who are the customers? What is your traction & growth like? What’s competition like? What is the market opportunity? What are the costs and revenue projections? What’s your hiring plan? What does this business look like at scale?
6. You connect with the CEO & Team. If not, how are you going to spend more than three months together? Every VC would tell you how important the match between the CEO and VC is, because they get to work together in the Boardroom for years. Make sure you know and like the people you will work with to make it a enjoyable & beneficial relationship.
7. What reputation does this Accelerator have? Do the research to find out. The last thing you want is to go in, thinking you are going to get something and then come out “without” it. Be direct & specific — whatever you are looking for, ask during the interview process. Would I get X out of your Accelerator? Remember, any interview is a two-way street. If the Accelerator is not willing to answer your questions during the interview process, it’s probably not a good Accelerator for you. Check out their References. What’s the experience of some of their other startups. You will learn a lot from each other and have a more compete evaluation.
8. Do you understand their Offer Terms. The transactional part of going to Accelerator is really important too. What are the terms? What do you get. What do you give up? How much money are you getting? Is it equity or debt? What % of your company are you giving up? Is it common stock or preferred? What rights will preferred stock have? If the Accelerator does not take any equity, it’s fine, but it does create a looser relationship. On the other hand, some Accelerators ask for too much equity, and that makes it harder to further finance the business. Some Accelerators have aggressive preferred stock asks, including senior class of stock & control terms. That’s not really market, but you might decide that you are OK with that. The key point is to understand what you are getting and what you are giving up. If you’re unclear, get Business Lawyer.
9. Will you enjoy an intense Environment? Accelerator environments are typically really intense. At least at Techstars, the companies really Do More Faster, and it is amazing how much they accomplish in a short period of time. If the Accelerator is laid back, well, then it’s not likely to accelerate your company. Figure this out before you join. You want a super intense, fast-paced environment that will leapfrog your company. Who made the biggest progress this week? Who landed the biggest client? Who has the most users? Who has the best pitch?
10. Accelerators are a naturally competitive environment who are fighting to get your business. Use this fact to help you get the best for your situation.
11. Alumni say it is awesome. Do your research. Talk to the alumni. Did they enjoy the experience? If all of them say yes, ask what did they get out of it? Why did they think it was valuable for their businesses?
12. A long-term Relationship. An Accelerator is a place to make friends & business partners for life. Nothing else bonds founders like going through an Accelerator together. If most alumni said it wasn’t a great experience, save yourself time and find a better Accelerator.
B. Reasons to “not” join an Accelerator
1. You are looking for “immediate” funding. Better Accelerators give you around $100K , and while not a meaningless amount of money by any means, should not be the sole reason for going to Accelerator. It is like taking a job you don’t love, just to get paid — it’s fine to do it, but likely won’t make you happy.
2. You are looking to get into “any” Accelerator. It is a bad idea for all the reasons we talked about above. Any Accelerator won’t help you accelerate the business. Be deliberate, know why, do not settle for a mediocre Accelerator.
3. You are looking for co-Founders. It is very likely that you would be wasting the opportunity – unless you have the right team already in place. Of course, things happen, teams fall apart, then you deal with it. But it’s different from deliberately going to Accelerator to just find a co-Flounder.
4. You are looking for “free” Space & Beer. This is not a great idea (although I hear you on free beer.) LoL. You won’t be maximizing the value of the program without having a specific set of goals & objectives. So do it now !!!
Comments: What has been your experience picking & working with an Accelerator?
from Entrepreneur.com 22 April 15 enhanced by Peter/CXO Wiz4biz