Startup accelerators are created almost at the same pace as new startups come on to the market. We are flooded with accelerator programs.
According to f6s.com, there are about 5000 startup accelerators around the world. 755 open for application at the time of this article. A number that gives everyone, everywhere, an opportunity to access capital to build their dream.
At the beginning there were accelerator programs without specific category focus. As the industry evolved, vertical specific startup accelerators (healthcare, hardware, gaming, etc…) have appeared in the market. These gave entrepreneurs with specific needs a better way to reach connections, clients and VCs.
Startup Accelerators have the ultimate goal to “accelerate” the startup to either an MVP stage or to a more defined product in a short amount of time, usually 90 days. Depending on the accelerator program, there might be different “targets” to reach. It is a “rush” to create, pivot, iterate and reach eventually as fast as one can product-market fit.
What To Look In Startup Accelerators?
With 5000 options in the market it can be quite complicated to find the right option. The first (and most obvious choice) is to look at the location.
Try aiming at startup accelerators having a presence in a market you want to enter or are in a market where it’s relatively easy for your startup to enter. If location is not important for your startup, check access to potential clients or investments.
Location is something important to take in consideration. “money is all that matters“is not the right mentality.
Do not focus only on money. Look behind the obvious. Considering purely the monetary aspect could make you look like a fool. Most of startup accelerators deals are not “great deals”.
2. Industry Focus
Industry specific accelerator programs are becoming more relevant for startup founders. Knowledge and connections in the industry become crucial in the early days of a startup. If your startup is tackling the healthcare industry, trying to get a place in a healthcare accelerator program, it’s a wise choice.
In industry specific accelerator programs, startup founders enjoy experienced mentors and potential clients introduction. DreamIt Ventures, an healthcare accelerator in U.S., gives startup founders exactly what they need.
These startup accelerators give startup founders the possibility to easily share experiences, challenges and findings with other startup founders operating in the same industry. Here’s when the community becomes incredibly relevant and useful to learn from others.
What if your startup doesn’t fit in any vertical-specific accelerators? Look at the type of startups the accelerator has funded. Is there a focus on B2B or B2C companies? Which focus seems to be more successful?
Understand Your Needs and Target Accordingly!
3. Program Structure
Each accelerator program has a different focus. Some will give basic workshops on marketing, product and sales for example. Some will have weekly meetings among founders or events with external clients. The aim is to create real and immediate value for startup founders.
Depending on the accelerator program, one can actually enjoy external visitors’ workshop. These are extremely useful when tackling specific topics. The accelerator I attended gave particular relevance to customer interviews. As a result, they invited Rob Fitzpatrick, author of “The Mom Test“, to tell us more about his findings.
Although difficult to check beforehand, make sure to critically assess the value of each meeting or workshop. These can become a waste of time, especially when 90 days is all you have to deliver a functioning product. Talking with other founders or alumni will help you out in this sense.
4. Investments & Success Rate
Yes, money. It’s good to have a look at this and understand what the terms of the deal are.
Startup accelerators, usually, work on standard terms with standard clauses. However, it’s a good idea to become familiar with the terminology beforehand. I found particularly useful Venture Deals by Feld and Meldenson to get my head around some topics.
Considering the number of investments made and how many startups are either successful or alive is a good idea. However, don’t be fooled. All that glitters is not gold.
A report by Fundacity analysed the European startup accelerators market. It evaluates how much money these programs invested and how many investments were done in 2014.
Is this a metric for success? No, I would say no.
It is surely something remarkable. Investments help founders build their dreams and create jobs in specific geographical areas. However, more than that, I would recommend to look at the track record of these accelerators. Be careful though. Do not necessarily look for exits, the “survival-rate” should be a good indicator of success.
Make sure to compare apples with apples and not with oranges. Don’t expect smaller (or generally local) startup accelerators to have similar results as YCombinator or 500 Startups. Make this comparison, only if you are looking at accelerators in the top league.
You could also look at how many graduated companies managed to raise additional funds from external investors.
I have already touched base on what mentorship should be about and what in reality sometimes this is.
When checking different accelerator programs have a deep look at the mentors list. Are they all coming from local businesses? Is there anyone relevant for your industry (in case of a general startup accelerator)? What type of people are listed as mentors? What experience with startups do they have?
Mentors are very important when building a startup. If this is your first time, you will need someone that helps and gives you some opinions on your action plan. Ideally mentors are experienced business people and/or entrepreneurs. Sometimes, however, mentors are simply people who like to have that title on their LinkedIn profile. How to spot them? Check their experience.
The last thing that you need to check is the network. Attending startup accelerators has the ultimate goal to expand your current connections.
Why? Because the network of people you get in contact with will be the starting point of extra connections once graduated.
Check what type of people are around the accelerator program. This include, of course mentors as well. You can also have a look at advisors or past alumni. Who are they? What could they add to your current network? Once you clarify these aspects, make sure to become friend with anyone relevant for you.
There are surely different factors playing a central role in your decision. Thinking about the value and impact startup accelerators can have on your startup, it’s crucial. It is important to have a full understanding of what you can achieve.
Have a plan. Think clearly before even applying. Make sure to do your homework. Talk with people who might be involved in either that particular accelerator or in the local community.
This is the future of your startup. You better play it well.
Anything else that you would look at? Share your thoughts with us!