The startup ecosystem is booming. Every couple of weeks we read how startups of questionable value get investments of millions of dollars, while others struggle to survive. Together with the incredible need to match dissatisfaction at work and the ability to build a sustainable business, with entrepreneurship we have seen a side trend that has been taking the startup ecosystem spotlight, startup accelerators.
Building up a startup that turns into a profitable business is not an easy task. It seems that the challenge, however, is not stopping many to jump on the entrepreneurship wagon. At the same time, and probably at the same rate, startup accelerators are appearing in different cities around the world with the promise to accelerate your business and help you building the dream. Nowadays Silicon Valley is not anymore the sole center where these types of investment are available. Europe, Asia and also Africa have seen the raise of these incubators for startups.
A recent article by Chris Lynch, appeared on VentureBeat, (“Accelerators claim they are in it for the long haul — I call bullshit“) brought up some of the underlying problems that exists in the ecosystem due to the incredible number of accelerators available. Lynch questions the role (and the benefit) accelerators and incubators have in the startup ecosystem.
Startup accelerators, most of them at least, have become the easiest (and quickest) way for startups to access capital and network of both clients and investors. As first timers in the startup business, many are faced with the same decision: after coming up with a smart enough idea and having found a co-founder, the next move is to find connections and money.
What’s best than a hub where startup entrepreneurs work together, investors and mentors meet and potential clients wander around?
Lynch’s article screams out how most of startup accelerators think, like “compulsive lottery ticket buyers“. “Diversifying” their investment in several startups, without really following one in particular, hoping that one of the many will be a big hit. They are obviously looking at their own return (who’s not!?). If one of the many newly funded company becomes a success, accelerators will gain exposure as a result; hence more potentially successful startups will join and consequently more chances to hit again the jackpot in the future.
However, not all accelerators are the same, and that’s where Lynch is failing in his analysis. Like most things in business, there is a difference between the good, the bad and the ugly.
Pointing out that accelerators like Ycombinator, 500Startups or Techstars have a positive impact on startup activities (and connections) is obvious and it’s a little bit like saying that Google, Microsoft or Facebook will have a (visually) positive impact on your resume (and career).
Reality is that not all of us have the chance to access top players around the world and sometimes we need to take decisions on what’s best for our future and the people who decided to follow us in our startup adventure.
I won’t talk about my experience here. I don’t feel the need to either defend or attack anyone. If my startup didn’t succeed, is due to many factors. However, since my decision to stop working on my company and get back to a normal employee life, I have been thinking about what I have learnt in the 3-month program and what has been the result of this. Lynch’s article has given me the last push to write this down and share some of the things very few will tell: what the bad and ugly startup accelerators usually do.
Look for partners not investors
The same way you wouldn’t marry someone without spending a reasonable amount of time together, you shouldn’t join an accelerator program unless you are sure about what they can offer at all different levels. They are giving you some money, yes, but that’s not the only thing you should look at, because you are giving away a percentage of your dream for it.
One of the main thing that I have seen while applying to few accelerators back in the days is that it’s always about the startup, never about the accelerator. You need to convince them that you are a rockstar, but not viceversa and that’s fundamentally wrong, especially if your accelerator is not in the top league. Sure you should do your research, but how easily can you find all relevant information?
Once you let another shareholder in your startup, they will be there forever! Like any other partners you let in your company, from the co-founder to the last employee hired, make sure you have all the information available to make the best choice.
Accelerators tend to have a pool of 7 up to 12 startups per batch. What will you be getting aside the money? What will it be their involvement in your activities during and after the program? How will they help you getting in front of customers or investors? What other startups have to say about it?
Investors should be your partners. Investors need to be involved in your activities and understand your business. Startup Accelerators are not schools for startups; they are partners in your company and as such you should benefit from their network and expertise. If they have got none or still building it, they should be clear.
Make sure you are not letting in your house someone who will destroy your balance and dream.
Mentorship is broken.
Startup accelerators tend to brag about the number of mentors they have in their rooster. The more the better, usually.
The number of individuals around these institutions is incredibly high. For certain people, being a mentor at a startup accelerator is a little bit like trying to show off a badge on their LinkedIn or Twitter profile.
The idea of mentorship should be defined in a completely different way as it is right now. Why startup accelerators force mentorship sessions? Why do startups have to go through 2-week intense mentors meetings and waste valuable time meeting people who are not always interested in their businesses? Why isn’t there a pre-match based on reciprocal interest between startups and mentors?
Accelerators should help startup accelerate their business not slowing it down with useless activities. Mentorship sessions have no meaning, if there is no interest and both parties think of it as a waste of time. As a startup entrepreneur, I want to meet with people who are in my industry or can give me valuable insights on building a successful company.
Today, the average mentor you meet, read the “Lean Startup”, subscribe to YCombinator’s blog, visit TechChrunch over the weekend, and believe to have the truth in their hands. This of course if you are lucky. If you are not, you might find yourself hearing about Porter’s 5 forces… (true story!).
Startup mentorship, as of today, is broken in most cases. Everyone has tips and advices based on something they have read, but rarely done. Very few can give you real insights and make you think about how to succeed.
Why are accelerators bragging about the number of mentors they have rather than their quality? Why accelerators claim to have internationally famous “mentors”, when in reality you will only see their pictures? Why don’t accelerators focus on their internal strengths, rather than looking at something of questionable value?
When attending sessions at accelerators, try to meet as many mentors as possible. Make a clear request to meet only those who will then be involved in mentorship sessions later on in the program. Make a judgment about the people you meet before you join, don’t overlook anyone. You might meet someone suggesting you should pivot in the porn industry… (another true story!)
Let the show begin.
Demo Days are usually the program’s highlight. Startups gather and show off what they have achieved in 3 months and hope to find investors and clients.
Typically the Demo Day should be the door for startups into the real world. Meeting investors and potential clients or perhaps have some media exposure.
Startups live the Demo Day, dreaming of reaching the right exposure to take their business at the next level and keep building their dream. In reality, when you are not in the top league, the show is all about the accelerator and not the startup. Startup accelerators that don’t qualify to be considered the best, tend to spend their time copying what other more successful accelerators do, rather than reinventing the event to the benefit of their companies.
All the time spent reaching the final goal for that date, vanish immediately once the reality hits you in the face like a stone.
Not all startup accelerators are in the top league, and they better start realising that. Demo Days should not be the focus of the program, if the network is not substantial enough to ensure investments or client or anything interesting to happen. Why not looking at alternatives that make more sense for the strengths accelerators has? Why keep pushing for useless events which take away so much energy and focus from building a company? It’s a show and it shouldn’t be. We are building ideas, or at least we are trying, we are not in it just to show off.
Choosing the right partners when building a new company is one of the most difficult skills that an entrepreneur needs. We spend so much time looking for the right co-founder and then we might take such a light decision when choosing the startup accelerator, blinded by money and the false hope that once in it, everything will work out just fine.
Entrepreneurs, who don’t manage to get their newly funded startups in the top league, should start realising how a bad decision can influence the future of their company. They should start choosing wisely and love their startup more!