Consider these 8 questions before joining an accelerator
8 Questions To Ask Yourself Before Applying To An Accelerator
Founders often ask the same questions to gauge whether an accelerator program is the right fit for their business. In short, the answer is I don’t know. There are several factors that come into play when founders evaluate whether an accelerator is the best next step for their unique business. To break it down into three categories, founder should consider: 1) Timing, 2) Goals, and 3) Type.
Is it the right time?
Have you launched your product?
Typically, startups that have launched their product, or are close to launching, get the most out of the program. In most accelerators, you will have weekly meetings to go over your KPIs that you set week 1. If you haven’t yet launched, these KPI meetings may be less helpful for you, as you will often be reporting on vanity metrics like page views or # of social followers. It’s much more impactful if you can come each week with charts showing actual growth by # of customers and revenue. This is important so you can track your growth early and be able to identify if there is an actual market for your product. One of the biggest value adds of an accelerator is helping startups find Product-Market-Fit, if they haven’t already. Tracking KPIs is a great way to identify if something isn’t working so you can quickly iterate and get back on track. If you haven’t yet launched and are nowhere near close to launching, now may not be the ideal time to apply for an accelerator, you may want to consider applying for the next cohort when the state of your startup better aligns with your goal for the program.
When did you start your business?
Historically, startups that are fresh and have been founded in the last 1-2 years prior to applying for an accelerator will get the most out of the program. Accelerator staff, mentors, and investors will be more likely to offer you feedback and advice you have not yet heard before and lift your business off the ground, if it’s still in the early days. If you started your business 3+ years prior to applying for an accelerator, without any pivots or traction, it may signal that you are struggling. Make sure you have a story and explanation for how you have been executing if you’ve been working on your startup for quite a few years.
Have you raised a significant round of funding?
If you have already raised a Seed round, think about the value of the investment from the accelerator, some accelerator programs can be expensive and take a lot of equity early on. Read the section on goals below and understand if your goals for the program make the fee worth it. Typically, startups that are bootstrapped or have raised a small friends & family round are the best fit. One of the larger value adds of an accelerator is help with fundraising, so if you’ve already closed a round on your own it may be repetitive content. However, joining an accelerator solely for that $100k+, is also not the right reason to join an accelerator!
Do you have a co-founder?
While it is possible for solo founders to be accepted into an accelerator program, it is absolutely a leg up if you have a co-founder, technical or non-technical. Between all of the programming, internal and external meetings, and running/maintaining your business day to day, you are pulled in many directions during the program. It can be helpful to have a co-founder to divide and conquer responsibilities. Typically, both co-founders will attend all core programming and then responsibilities will be split based on job function, i.e. CEO will spend more time in pitch practices and investor meetings while the COO may spend more time growing and running the business operationally day to day.
What Are Your Goals?
Is your main goal of the program to close a round of financing?
Accelerators focus at least one-third of the program on fundraising. Towards the end of the program, programming will shift to fundraising content where you’ll learn the various types of investment vehicles, how much you should actually be raising, how to build a deck, how to build your investor pipeline, etc. The program will wrap up with some type of a fundraising event to signal the end of the program, like a Demo Day or Open House. At Techstars we hosted Investor Weeks where we would invite 100+ VCs and Angels to meet 1-1 with up to five companies, curated by their investment thesis, verticals of interest, check size, and current portfolio. Make sure you understand the track record of the accelerator and its history in help its companies fundraise post-program, a lot of this information is publicly available or portfolio companies are a great resource.
Is your main goal of the program to grow?
Historically, founders that come into the program ready to hit the ground running with the goal of growing x% MoM by far outperform their peers. Coming into the program with a goal of crossing $X in revenue or Y in # of customers sets the precedent for the duration of the program. Each week, founders set a new micro-goal for the following week, i.e. grow 20%, acquire 20 new customers, etc. Having a cohort of companies to hold you accountable during the accelerator program can be tremendously helpful.
Is your main goal of the program to build your network?
Again, do your research on the program staff and mentors that you would be working closely with day to day. Are they a value-add themselves and do they have strong networks for you to tap into? Also spend time looking at alumni from the accelerator program. Often undervalued up front, but alumni are a large reason accelerators succeed. At Techstars, our alums were some of our best mentors. They have been in your shoes and genuinely want to help you by opening their own rolodex. During the program, you will meet hundreds of people between mentor meetings, workshops, investor meetings, etc. If you are new to the city or new to the startup ecosystem, accelerators can be a fantastic place to build your network.
Type of Business
Do you have a niche business?
While most accelerators are generally industry agnostic, there are several accelerators that focus on specific business models or verticals. For example Y Combinator, 500 Startups and Techstars city programs are all horizontal programs where they accept startups of all verticals and business models. Food-X, Metaprop, and Techstars vertical programs (in partnership with UnitedHealthcare, Barclays, Comcast NBCU, etc.) are all vertical-focused programs. Depending on your preference, you may want to be surrounded by other businesses in the same vertical where all mentors and accelerator staff have a strong background in your industry. Alternatively, industry-agnostic programs will expose you to a diverse set of mentors and programming that can provide different perspectives. The most important thing to consider here is the background of the program staff: Managing Director, Director, Program Manager, Mentors etc. Make sure they have a background and a track record that is relevant to your business so you can make sure they are able to help you and provide you with the connections you need to grow your business.
First Round’s 2019 State of Startups review found that 81.7% of founders that have gone through an accelerator or an incubator would recommend it to a fellow founder. Accelerators are a great option for founders that are looking to grow their network and startup in a condensed timeframe. With ~3 months and a set end date, founders have an obvious forcing function to help them grow fast and iterate early and often. Make sure to spend time evaluating these 8 questions and further identifying the type of accelerator that is the right fit for you and the current state of your business.