How to choose the right startup accelerator for my business?
Over the past 15 years, 100+ startup accelerators have entered the investment sector posting a whopping $3.5B in exits. So there are gains. But are these programs suitable for your startup? As a founder, will you gain? How to choose the right accelerator program?
Maybe start by asking, why do you need an accelerator program? Since Y Combinator launched the first accelerator program in 2005, getting accepted into one has become a trend. This part of the startup industry has gained massively from this movement. Over the past 15 years, 100+ startup accelerators have entered the investment sector posting a whopping $3.5B in exits. So there are gains. But are these programs suitable for your startup? As a founder, will you gain? How to choose the right accelerator program?
Factors to consider when choosing the right startup accelerator
A startup accelerator is an intensive mentoring camp. Most of them are on-site. But the trend of online accelerators is catching up as well. They span over 3 – 12 months and operate in cohorts. They may or may not provide a seed fund on graduation. But one aspect is for sure. Every accelerator promises introductions to potential investors. Most have a designated 'demo day' at the end of the program, where startups present their accelerated business plan to a select group of investors.
Ultimately as a founder, you know that mentorship and training apart, access to the right investor network is precious. Isn't it?
However, proceed with caution. It is not as simple as it seems. To begin with, the competition levels are high. Only 1 – 3% of total applications are accepted. Without a well-researched detailed submission, chances of rejection are high.
Secondly, all programs demand 100% participation from at least one of the founders and the core team. Relocation is inevitable for the on-site programs. You should be ready to invest dedicated time and resources for the entire duration of the program. In the early stages of growth, this could be a challenge.
Finally ask yourself, if your startup needs an accelerator program. Does your business model require a growth spurt? Do the parameters of success used by the accelerator program suit your product or service? As a founder, these are some essential points to introspect. We have compiled a list of factors for you to check before choosing a startup accelerator thoroughly to make this process easier.
Start by research
One aspect is self-research. Why does your startup need an accelerator? Some great unicorns have come out of accelerators, but many startups have gone big on their own too. Are you aiming for the money alone? If so, are there more straightforward ways to approach this? Who is part of the accelerator's mentor/investor network? Will they introduce you to influential people you can't reach otherwise?
The other aspect is, of course, a background check of the accelerator. Most of them sanction a pre-seed fund in return for 6 – 10% equity in the company. They are your potential partners. Being mindful of this, gather as many details as possible in the lines of:
- Who runs the program and their industry expertise
- How does the accelerator describe itself – vision, goals, clarity
- How do they measure success and milestones
- What are their expectations from startup founders
- Who are their notable alumni
- Can you picture any of the accelerator's mentors/investor/representative as your board member?
The more informed you are, the better are the chances of your company making the most of these programs. Their schedules are tight. Unless you know what you are looking for and have clarity about the possibilities and limitations of the accelerator, these programs can become overwhelming, cumbersome, and an utter waste of time.
Fit with your startup stage
Accelerator programs are designed for early-stage startups. But as a founder, you know how nuanced 'early-stage' can be. You could be at your ideation stage or gearing up for an MVP or ready with the MVP and trying to attract early adopters, or you already have these and are ready to scale up. You get the picture. This is why, before applying for an accelerator program, make sure you understand where your company stands in the growth cycle.
Some accelerators support startups still trying to expand their ideas, while most of them accelerate the ones already ready to scale up. Their curriculum, mentor and investor panel, and funding possibilities are designed accordingly. Simply check their website and ask around in your network. Mentoring and funding needs vary with business cycles. Getting the fit right at this stage is important to make the best of any startup accelerator program.
Should fit with your industry
Industry-focused guidance is crucial for growing startups. Each sector is so diversified that unless founders like you keep up with market developments, your business will run the risk of irrelevance. Startup accelerators understand this aspect well. Only a small number of these programs are robust enough to cater to all industries. Most of them are targeted. All their contributors are chosen from a pool of experts qualified to channel the best industry knowledge into the participating startups.
The best example is a corporate accelerator. These programs are off-shoots of large corporate businesses. Startups chosen to participate in these make products or services that directly impact a process in the industry. Founders get access to business leaders in the corporate structure and learn the ropes while working on their business plan. These experiences are priceless. Startups graduating from a corporate accelerator come out with practical industry knowledge that launches them into market leadership.
Since all participants in the cohort belong to the same industry, most often, these startups get their early adopters within the accelerator program. If the business grows and demonstrates profitability, the corporate hosting the accelerator program may acquire the startup at a later stage. It is a win-win situation for both.
Connect with accelerator alumni
Accelerator alumni are your best source of reliable information. They have gone through the process and understand all aspects of it. Reach out to them, learn from their experiences, and adapt to your context. Here are some queries you may have:
- Were all mentors present and engaged throughout the program
- How did the curriculum help them grow
- Did they receive all necessary support from the accelerator as promised
- Were the investor connections worthwhile
- How is the support post-graduation
- How well connected and responsive in the alumni network
- Is there funding assistance/networking opportunities after passing out
Startup accelerator programs follow a bell curve in terms of support. As a founder, you are typically working in isolation with your team. That changes when you enter one of these programs, where you find yourself sharing space with 15 – 20 other startups. This creates a sense of camaraderie. You will spend the next few months learning, exchanging ideas, seeking support from mentors, and troubleshooting together. But this dynamics will shift once again when the program ends. In terms of 'having your back, you will be on your own. This transition can be hard to handle.
This is why after graduation, alumni support is important. Once you leave the program with all the knowledge, expertise, and seed fund, you will need ongoing support as the new phase of your business expands. Your cohort and accelerator partners ideally must be your long-term companions. So make sure you check with the alumni network about what happened after they passed out.
Accelerator program plans/Curriculum
Let's face it. The theoretical aspects of most accelerator curricula are similar. The principles guiding a startup business don't differ much. What varies is the way an accelerator program implements it. This is in the hands of mentors. The more experience they have, the better will be your learning. Check their curriculum for sure to know what aspects will be covered. But simultaneously match it with the profile of the team who will be handling your growth.
Besides, fact-check skills you want to learn. Being a startup founder is a grueling role. You have to multi-task and wear many hats at a time. You are the face of the company, and your decisions will impact business growth and the jobs of people who have come on board trusting your vision. So you must have a holistic view of startup operations. Make sure the accelerator program helps you gain this insight. The best ones provide a comprehensive overview of all aspects of a startup business, such as product development, operations, branding, market research, fundraising, equity management, business law, regulatory affairs, and the likes.
Choose right mentor
If you visit a startup accelerator website today, you will notice a dazzling panel of experts listed under their mentor/partner tab. Yes, these people are part of the program. But the question you must ask is, what is their level of engagement? Will you directly interact with them? Will they stay engaged in your growth? Or will you be left to young interns from their companies? It is quite possible because these mentors are busy people with their own companies to run. Mentor accessibility and engagement are thus non-negotiable. Make sure you gather first-hand information about what happens inside the accelerator program.
The other aspect is not to be put off by the list. Starting out, you may have a vision for an 'ideal' mentor. But proceed with a wide berth. You are just starting. What you want may not match with what you need. You might idolize some people. That is fine. But be open and flexible. Once into an accelerator program, your business may grow in a whole new direction you had not anticipated earlier. These changes are based on time-tested strategies. Maybe you will get to know a mentor you have never met before, but that person will have the best insights into your business and become an irreplaceable part of your journey. So trust the process.
The time you need to spend
We have stressed this factor earlier but coming back to it again. Make sure you are aware of the time commitments. 3 – 12 months is a precious time in a startup journey. The best ones in the industry move from Seed to Series A or from Series A to Series B within a shorter time frame. So you get the idea. In your startup journey, time is an important currency. Make sure you trade well because the last thing you need is to sabotage your stable organic growth for an elusive growth spurt.
As a founder, double-check your calendar before entering one of these accelerator programs. You have to be engaged full-time to make the most of this journey. So is your core team. If relocation is added to that, make sure you have accounted for every risk and trade-off.
Ready for the Startup Accelerator Ride?
Startup accelerator programs have made their mark in the industry. Airbnb, Doordash, Coinbase, Dropbox, Stripe, Instacart are some big names launched by accelerator programs. In fact, these founders are now part of mentor panels. So the path ahead is glorious. However, there is no denying the truth that a startup is your baby. You know what is best. You know when to give that extra push. So make sure you have learned all the pros and cons before applying for an accelerator program. These are designed to launch you. So make sure you are ready.