A startup can be founded in many different ways, and each of them is chosen in a certain stage of the startup. Today, we are going to talk about what is a startup accelerator, whether it’s the perfect match for your business, and last but not least, how you can get funded by one.
What does a startup accelerator do?
Businesses can be hard, especially when they are at an early stage. You may have an amazing business idea, but no funds or experience to turn it into a reality.
[ Photo credits: Mashable ]
A startup accelerator is basically a mentoring program where entrepreneurs are guided towards accomplishing their dream. The mentoring usually lasts for a few months. During this period of time you will get advice from the most talented business people, you will get the chance to meet some important investors, provide you with courses on online business and marketing, and you also get seed funding for your idea, which is a small investment. This will give the accelerator a small equity in the form of a common stock.
Accelerators are kind of picky with the startups they want to work with. If your startup was accepted by one, this will be in your advantage, because it will increase the chances of attracting investors.
[ Photo credits: Andrew Hyde’s Flickr ]
TechStars is the number one accelerator in the world, it is highly selective, and provides seed funding from the top VCs and angels. Y Combinator is the most well-known accelerator, and has funded over 700 startups so far, which have developed into big companies (Dropbox, Reddit, or Scribd). AngelPad is an accelerator that carefully selects hundreds of applicants. Seedcamp offers access to thousands of mentors, and has succeeded to launch some of the best startups in Europe. 500 startups works more as a hybrid between an accelerator and a seed fund, and it is a promoter of the lean startup movement.
You can read more about other accelerators here.
What does an accelerator look for in a startup?
Most of the time, a startup accelerator will accept startups in all stages. First of all, you need to have a great idea that will intrigue the accelerator. Then, your team should have a few members who have previously worked together, and have different skills.
An accelerator wants to make sure that it can transform your idea into a successful business. Also, they will need to know what their benefits will be, and whether you’ll be able to attract investors. It is in no one’s advantage to waste time on mentoring, and not get to any good results.
Sylvia Brune, co-founder of Nigerian startup accelerator 440, wrote an article in which she talked about how can later stage startups get into an accelerator’s program. There are several aspects she pointed out that she finds important for a late stage startup: peers, focus & growth, and mentors.
What to consider before applying to a startup accelerator
Accelerators may be a good idea if you’re new in the entrepreneurial and startup world. However, “each accelerator has something different to offer”, so before applying to one, you need to think about a few aspects, and then decide if it’s the right fit for you.
First, you need to know what are the terms of the accelerator program. Do some research and see what they have to offer. It’s important to choose a program that will ensure you will have access to the expertise of the best entrepreneurs and leaders.
Mentors are basically the reason why you are attracted to an accelerator program in the first place. Make sure that will actually get you some one-on-one time with an experienced entrepreneur or mentor that has expertise in the industry you’re interested in. Marc Nager, CEO of Startup Weekend, says that “it can be a cheap and misleading tactic to just post pictures of the top names after getting an email response in support of a program’s existence [from a potential mentor]”.
Go big or go home! Apply to the best startup accelerator out there. Browse through the list I’ve made above, and take a shot at it. Though the acceptance rate is really low, you have nothing to lose, if you try. Marc Nager advises that a second option would be to apply to a local accelerator, but only if “the mentors are high quality”.
More and more accelerators have begun to differentiate themselves, and started to specialize in a certain industry. There are accelerators for healthcare startups, civic startups, for women that have an idea in mobile technology, or even the ones that focus on social problems. Depending on the industry your idea is headed to, you should consider applying to an accelerator that has experts for your specific market. You can read this article to see why location matters for your startup.
Startup accelerators often define success on whether the applicants managed to get funded or not at the end of a program. In most cases, this “may serve the program’s interest more than the ultimate vision or ability of the team”. You may consider a success the fact that the accelerator was able to get you on the right track. Don’t apply to an accelerator that will pressure you to get funding, if it’s not what you need.
Below is an infographic that shows you where are the best accelerators and incubators in the world.
How do you get an accelerator to choose your startup?
OK, so you have an idea. With so many startups applying to an accelerator, and such a small percentage being chosen, how do you increase your chances so that you get into a program?
- Get to know some of the people that work for the accelerator you want to apply to. Find out who they are, spend some time with them, ask their opinion about subjects that lay in their area of interest, and in yours too. Prove your points, let them know what you accomplished in the past. When it comes to selecting participants, it will be easier for an accelerator to make a decision, based on its previous interaction with you. They are people too, so if you establish a connection between you and them, your chances of getting into the program will increase.
- Choose the startup accelerator you want to apply to wisely. It may not be the best idea to apply to as many accelerators as you can. You’re not gambling here. The point is you need to go straight to the accelerator that best fits your interests, and your field. You need to be the best match for the program you want to get into.
- Forget the idea, come up with an actual product or service. Everybody has plenty of ideas, but not all of them are materialized into a product or service. Before you think about applying to an accelerator, make sure you have something solid to pitch. The purpose of an accelerator is to provide you the space, the mentoring, and the supplies you need for you to work on your product and turn it into a business. Simon Jenner, CEO of Oxygen Accelerator, says that “It’s got to have a prototype, so something that is being built and tested (so it’s beyond the idea phase)”.
- Your team should consist of a few members who have different skills. Your team is your second best asset after your product or service. “Knowing that you have an incredibly functional team that has experience working together, aligned interests, and complementary, but not identical skill sets, [is key]”. Also, your team needs to show passion, and willingness to adapt to different scenarios.
- Make the pitch short and concise. During the pitching session, you have a limited amount of time to present your idea. I recommend you first pitch the idea to a friend that does not know what it’s about, and ask for his/her feedback to see if you made your point and explained it well enough. If he/she understood, then the accelerator’s team will too. Think about what member of your team will make the presentation. Confidence is key here. Choose the person that will easily explain the idea you’re pitching. Ely Greenberg, the founder and CEO of Credential Cabinet, wrote an article in which he talked about what his startup learned from pitching. Also, here is a more in depth story on pitching.
- Prepare your answers, and keep them short. Make a list of potential questions you might be asked. Formulate the answers as straight to the point as possible. This will prove the fact that you are able to communicate efficiently, and will make the jury trust you.
- The presentation matters. It’s always a good idea to include some visual content in your presentation, like graphics or videos. Keep it interesting and entertaining. The presentation is also a good opportunity to show the actual product you envisioned. Still, don’t take risks by showing it in action, if the product is not quite finished. Instead, show some screenshots.
- Come up with a unique and original idea. It may be hard to find something original, and creative, but this will definitely differentiate you from the other teams. Nick Summers, technology journalist for The Next Web, says that “many businesses thrive by delivering an existing product better than their competitors, but to stand out in an application form or pitching session, it’s hard to forget an inventive, wonderful idea”.
- Do some research on your competitors. You need to have some knowledge on who are the competitors on your target market. If you are clueless on this particular topic, the accelerator will know that you haven’t done your homework.
Startups accelerators are tricky. Since only a few of the startups that apply for one are being accepted in a program, it may look like a hassle to invest your time into preparing an application for one. Still, one of its great benefits is that it can open up lots of doors, and connect you with a network of the most experienced entrepreneurs and investors.
Now, these are my guidelines on how you can maximize your chances of being accepted by a startup accelerator. Don’t be discouraged if you’ve been rejected. From each experience you’ll learn something new, and you’ll definitely get better at it.
So tell me, have you ever considered joining one or have you ever been accepted by one? What would be your tips for preparing the pitch? Let me know in the comments.