A common question we hear from startup founders is, “Should I apply for an accelerator?”
The short answer is: Probably no.
The longer answer: Maybe yes, it’s complicated.
Let’s unpack it.
After mentoring in dozens of accelerator programs, designing dozens of them, and supporting hundreds of founders who have gone through various accelerators, I’ve gained a depth of experience and perspective about these kinds of programs globally.
If you’re a founder, I hope you’ll find this valuable to help decide if an accelerator is right for you.
1. Accelerators have a lot of potential value to offer founders.
- Connections to potential co-founders and team members
- Peer connections to other founders (it can be a lonely journey)
- Education and training
- Mentoring and coaching from subject matter experts
- Industry partner and customer connections
- Investor connections and investment
- Structure and accountability
- Facilities and more
2. While accelerators can offer value, you can also self-serve everything an accelerator has to offer without being part of one.
In fact, you’ll need to learn how to self-serve all the things listed above whether you decide to join an accelerator or not.
The journey to build a successful startup demands that you will need most of these things on an ongoing basis.
Plus, while accelerators can offer startups value with what’s listed above, as a founder, you’ll need to develop sharp discernment to know what’s for you and what isn’t.
Not everything recommended to you or offered to you by an accelerator will be in the best interests of your individual situation.
3. You need to find Accelerator-Founder fit.
All accelerators are different. Not every accelerator is for every founder.
In fact, you might not fit any accelerator and that’s ok. Make a choice that’s right for you.
As a founder, you need to run your own race.
Startup cohorts (groups of founders that move through an accelerator program together at the same time) are convenient for those running programs, but not always for startups that need flexibility.
4. You’re likely to overestimate value.
If you’re an early-stage founder, be conscious that the Dunning-Kruger effect will be a big factor early on in your journey and you’re likely to overestimate your ability to spot “quality startup support.”
It’s common for founders to be impressed by those even with just a little more experience than themselves, or to gravitate to the wrong kind of experience.
(For examples, see the section below on support quality).
5. Be “eyes wide open” about the accelerator business model.
a) The accelerator sponsor is the economic buyer and its primary customer
b) The startup is the secondary customer (like searchers on Google)
c) The primary value proposition of most accelerators is their “filter mechanism.”
They offer high value to sponsors if they’re able to find and engage high-quality companies.
For investors, this helps generate returns. For the government, this helps create jobs and stimulate economic growth.
d) The secondary value proposition is supporting startups to succeed. Good-quality startup support is both very rare and very expensive.
6. What to seek from an accelerator program.
a) A tier-1 brand. Tier-1 programs like Y Combinator and Startmate are generally a good choice. If you can get through their filtering mechanism, you’ve already established some value in your startup.
Tier-1 programs are a self-fulfilling prophecy. Top investors (those that can spot great companies and add real value) come for the top companies and the top companies come for the top investors. It’s a great model.
But here’s the thing – it doesn’t scale. Billions of dollars are wasted each year trying to copy these tier-1 accelerators, which doesn’t work.
b) Programs that don’t take equity. These programs are generally a good choice if you have the time/runway.
They can help you get your bearings in the startup ecosystem and learn the ropes.
If you’ve taken investment, though, or have limited runway, it might not be the best idea as more specific, strategic, tailored advice will be needed for you in those situations.
7. Things to avoid from an accelerator program.
a) Programs that offer cash for equity. These are generally to be avoided because the equity is often expensive. Support quality is often poor unless it’s a tier-1 program.
b) Programs that offer “demo days” which promise investment. These are generally to be avoided because so many of these programs do not live up to their promises of “filling the room with investors” – in part because they can’t deliver the startup quality unless they are a tier-1 program.
c) Programs with volunteer startup mentors. These are generally to be avoided as the advice could be coming from anywhere and be of greatly varying quality. Would you use a volunteer GP if you were sick? Probably not. You probably shouldn’t rely on volunteer mentors either.
d) Programs that offer sweat equity to volunteer mentors. These are absolutely to be avoided. Like the above, but much worse because now you’re stuck with your volunteer mentor on your cap table.
e) Programs that offer training from professional service firms. Most professional service firms exist to serve established businesses and just repurpose their established business experience for startups.
It’s very rare to find firms with specialist startup-building experience.
A marketer compared with a startup marketer are vastly different people with vastly different knowledge and skills.
A software developer and a startup software developer are vastly different.
Just because a firm has startup clients, doesn’t mean they have startup expertise. There are exceptions here, but be careful.
f) Beware of technology-specific programs. These programs tend to over-invest in the solutions side and under-invest in the problem side of your startup. This usually ends badly.
There are exceptions, though (hardware startups come to mind). Look for long-running programs with a track record of success.
g) Beware of industry-specific and corporate-run programs. These programs tend to be biased support for projects over products.
Startups need to build standardised products for markets full of many customers that have the same needs and want the same solution.
Having ready access to customers can be a mixed blessing that needs to be handled with care. Again, look for long-running programs with a track record of success.
Lastly, we need to look at the quality of startup-building advisors (the people who give advice to founders).
1. The quality of most startup building advice is exceptionally poor.
95% of startups fail and overwhelmingly for avoidable reasons. Namely, capital is used poorly as a result of poor advice.
Vinod Khosla – one of the most respected VCs in Silicon Valley – highlights the point when he said, “90% of startup investors add negative value to their startups.”
This is not easy news to deliver because:
a) Most startup advisors are typically very well-meaning.
b) Most startup advisors are often very generous with their time.
c) Most startup advisors are often highly respected and experienced subject matter experts in their field (or successful small business entrepreneurs).
d) Unfortunately, most startup advisors are not subject matter experts in startup building, they’re experts in something else.
There is a misconception that established business experience or small business entrepreneurship experience translates to startup business experience. It doesn’t.
2. Good startup-building advice comes from advisors with lived startup-building experience.
Successful founders with an exit are probably the de facto industry benchmark for quality advisors. Few accelerators can access such good quality advisors.
3. Great advice comes from advisors with serial lived startup-building experience.
Individuals who have been involved with dozens of startups over many years can offer the highest quality advice. Even fewer accelerators can access these great-quality advisors.
4. Even with access to good and great-quality advisors, accelerator programs struggle to deliver quality startup support.
a) Most programs lack the structure to manage their own quality. They struggle with:
- Weak or lacking startup-building process to track company progress.
- Weak or lacking startup-building language so all advisors can understand each other to collaborate efficiently and with precision.
- Weak or lacking startup-building diagnostics to repeatedly identify which specific issues need to get priority resource allocation.
- Weak or lacking startup-building guidance on how to overcome specific issues.
b) Education curriculum typically lacks depth, lacks breadth, is generic, and is not fit for specific startups. Plus, the delivery is mistimed relative to the need.
c) Startup mentors generally have no training in startup mentoring. It’s mostly lived experience shot from the hip.
d) There is often no coordination between mentors, creating confusion and conflict.
e) There is rarely QA of advice given (i.e. senior mentors educating junior mentors).
f) There is often no feedback loop. Bad advice is often not identified or systematically removed.
g) Support for founders is time-limited.
I hope this comprehensive rundown of accelerator programs and startup-building advisers helps you to be more discerning about where you take advice from as a startup founder.
To address the elephant in the room – doesn’t LeapSheep run accelerators?
Yes we do, and we run them very differently to avoid all of these problems.
If you’re a founder considering joining an accelerator program but you’re not sure if it’s right for you or not, we can help.
Fill out this short questionnaire to tell us about your situation, and we’ll get in touch with your next steps.
Whenever you’re ready, here’s how we can help you.
If you’ve got a startup idea, or you’ve already embarked on your journey – you might be facing one or both of these situations.
- You’re struggling while going it alone. Worse, you’re wading in the muddy waters of some not-so-great advice.
- Perhaps you’re trying to raise capital for your startup and you’re hitting a dead end. Raising capital is a notoriously difficult thing to do. Globally, only 0.74% of startups manage to raise capital at Seed stage. Despite this, 16% of startups we’ve worked with were able to raise capital at Seed stage.
If you’re ready to step up and get the help you need, our Startup Builder™ program was created especially for you.
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