Intended Acceleration (Your Startup Isn’t a Corolla)

4 Questions to Consider Before Participating in an Accelerator

Sep 08, 2016

Over the last 10 years, one could say that the rise of tech entrepreneurship could be attributed to the increase in innovation houses, startup studios, incubators, and accelerators. The success seed stage programs such as Y Combinator, 500 Startups and Techstars has lead to the proliferation of accelerators. In 2015, Professor Susan Cohen estimated that there were roughly 300 accelerator programs in the US. All these programs strive to help cohorts of startups with the new venture process. However, it is important for entrepreneurs to understand that not all accelerators are created equal — each program has its own specific approach and focus (industry verticals or stage). Picking the wrong program can cause you to accelerate fast to nowhere or worst crash and burn to a quick failure. The following are a few questions that all founders should ask themselves (and answer) before participating in an accelerator program.

Q1. What is the current state of your startup venture?

All accelerators look to help ventures define and build their products solutions, identify target customer segments, and secure resources. But that doesn’t mean that every accelerator is a good fit for your startup. It is important for each founding team to have a clear understanding of what stage their venture is in. Is your startup an idea (pre-product) or have you defined the minimum viable product (or MVP). Or you could be a startup with a little revenue or a venture that has found product-market fit and is looking for help to grow in scale. Understanding what stage your startup is in will help filter and identify the right accelerator programs to participate in. Each accelerator — through its website, press coverage, and graduate company testimonials — should share the program’s sweet spot of stage and focus. You don’t want to commit to a program that doesn’t align with pressing needs of your startup.

Q2. What do you want your startup to accomplish at the end of the accelerator program?

Accelerators are generally programs of limited-duration — lasting anywhere between three to six months — that help cohorts of startups with the new venture process. They usually provide a small amount of seed capital, plus working space. But before participating in an accelerator it is really important for the founder(s) to think about what they want their startup to look like as an accelerator graduate. Founders should forecast where they want their venture to be at the end of the program. Do you envision your company will have secured all of your target seed capital? Or do you see your startup acquiring 3 large corporate partnerships that will lead to significant revenue growth? You have to think about your goals before starting an accelerator. This north star will keep you focused on your goals and continually push your startup to finish at the top of the cohort. Just achieving progress thanks to an accelerator program is ok, but all entrepreneurs should remember their companies won’t be compared to just their cohort colleagues post-accelerator.

Q3. What needs does the accelerator meet?

So you have completed a self-assessment of your startup and “vision boarded” what you want your startup to look like immediately following graduation of your accelerator. Now you need to determine what resources you need from an accelerator and if the prospective accelerator(s) have the specific resources and approach to meet your needs. My good friend, Aaron W. of Camelback Ventures always says that all early stage ventures need 3 things: Capital, Coaching, & Connections. This is so true and all accelerators attempt to provide these key resources. But it is important for founders to understand the nuanced approaches each accelerator takes to provide these foundations of success. Does the accelerator provide significant seed capital for you to invest in your product development? Or does the program feature an extensive network of mentors that have operated within your target industry? Who are the directors of the accelerator and do they have relationships with potential clients or investors that are looking for a technology in your sector? These questions can only be done by doing the necessary desk research and reaching out to graduate founders of the program.

Q4. What are the accelerator’s requirements and key performance metrics?

This is one question you do not want to forget to answer. Accelerators across the US have different approaches to providing early stage ventures with the tools to build a high growth startup. Some programs expect all ventures to move and work out of the accelerator headquarters for the duration of the program, while some programs are remote and feature periodic sessions. It is important for the founding team to understand if they have the time and capacity to commit to all accelerator expectations. Does just one member of the founding team need to participate in required events or do all founding members need to be present? Accelerators also differ on their success metrics associated with graduation. Does the prospective accelerator track follow-on capital, total users, annual revenue rates, or months of operations post-accelerator to determine success. This distinction can determine whether the accelerator is focused more on founder or venture development.

The perfect accelerator may not exist but taking the time to think about where you are in your life and what stage your venture is in will help you identify what accelerator aligns perfectly with the goals of your startup.

Thanks to Aaron and Elizabeth from Camelback Ventures for their input on this subject.

Earnest Sweat is an Investor in Residence for Backstage Capital and a Startup Advisor for Camelback Ventures. If you have any questions or requests please connect with Earnest through LinkedIn, Twitter, or AngelList.

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