tech-company, mobile-apps, lean-startup, acceleratorsBackground:
The startup in question is an early stage mobile software business that has been validating an idea using lean methodologies. A beta MVP is in the works, with the goal of launching it small and using Lean Analytics to test which features will add the most value to customers.
Currently, this company is applying for a startup accelerator. It is looking good in terms of being accepted because of previous positive relationships with people in the organization, but an interview will be conducted soon to determine if the fit is right for both sides.
The Question:
I am looking for the opinions of people who have had experience with startup accelerators, from any one of the many angles (startup, coordinators, mentors, VCs…).
What would you be looking for if you were trying to determine whether a particular startup accelerator is worth the time and money (or equity)?
I believe that I have a good grasp of what an accelerator is looking for in a potential startup, but I am more concerned about what a startup should be looking for in an accelerator program.
A few thing I can think of to get the ball rolling…
Equity stake - anything below 9% is good. Equal or greater than that is bad.
Mentors - their bio is available at their website and you should read it as first thing - but take it with a grain of salt.
VC Firms - this is one of the best advantages an accelerator program could give to you and your startup: to introduce to the guys with deep pockets. But not only that, they’ll refine your pitch and help on legal advices (when discussing contracts and etc with VCs firms).
However, it is totally possible to get introduced to VCs without them and also learn about contract terms paying to a legal firm by yourself (This would cost you money, but probably less than 7% of your equity).
Hands down the best way to evaluate an accelerator program (their mentors, methodology and even infrastructure) is to talk with graduated entrepreneurs.
You have to do that BEFORE joining their program and/or signing any contract.
You can easily find the founders on Google/Twitter/Facebook and drop a honest e-mail saying something like
“Hey, Congrats on doing such an awesome job with your startup. I’m trying to achieve the same with mine. But you know, I’m a bit unsure about joining an Accelerator program. What do you guys think? Specifically about XYZ Accelerator, did it worth the time (and equity)?”
So, I’m not telling you GO or NO GO with an accelerator program. As you’ve mentioned already, it will cost you time and equity. But certainly an accelerator program will lower legal, management decision and resources risks. But to make sure it worth the trade, you have to get feedback specifically about the institution you’re talking to.
(I hope you’re not talking about 500 Startups or Y Combinator - in that case, you should just GO . It’s a no brainer decision once vast majority of startups that graduated with them greatly succeed)
What would you be looking for if you were trying to determine whether a particular startup accelerator is worth the time and money (or equity)?
This highly depends on the specific market you are in.
Personally I’m involved in a fintech startup and we need to cooperate with a bank. So we’ve only looked to apply with accelerators that are organized in cooperation with a bank. We have now participated in one accelerator program and we have move forward a lot thanks to participating in the program. Before the program I was still a little bit sceptical about the entire accelerator concept, but now I can say:
If you don’t require a specific cooperation and none of your founders team has been through an accelerator before I can highly recommend joining almost any accelerator.
Even by being accepted in an unknown accelerator you are already more successful than 80% of the startups. And by going through a program as a founder you increase your knowledge, value and network in ways that are hard to achieve outside an accelerator.
Note that a big part of it is team building. Ideally you will do a program in another city and you are required to live together with your cofounder(s). Living together even for a couple of weeks is a huge part of building your company.
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