A growing number of ambitious entrepreneurs are looking to supercharge their startups' growth by working with a business accelerator or incubator program. These highly competitive programs can be valuable beyond the investment of their backers for their mentoring offered by experienced investors and entrepreneurs.
We spoke to startups at the Triangle Startup Factory, a three-month accelerator program in Durham, N.C. for an inside look at some of the top -- and most common -- tips accelerator graduates took with them after going through the “entrepreneurship bootcamp” intensive:
1. Disprove your assumptions as quickly as possible. Anil Chawla really surprised his boss at long-time employer IBM when, shortly after getting a promotion, he quit to work full time on his startup dream. In May 2011, Chawla launched Archive Social to help businesses capture and preserve their social media activity so that it can be referenced in legal disputes or in order to prove regulatory compliance. The startup “graduated” from the Triangle Startup Factory in June.
Without any business history to work from, a startup founder is constantly making predictions and assumptions. “One thing we kept hearing was think about what you are assuming and find the fastest way to disprove it,” says Chawla.
For example, initially, Chawla thought one of his primary clients would be large universities. To test his theory, Chawla spent two weeks talking to university officials. He learned that most universities do not have to comply with the same laws prescribing public record as do businesses and government offices. In other words: universities would not likely be the big revenue-driver that Chawla once thought.
2. Build your business one step at a time. Deepak Gopalakrishna launched Science Behind Sweat, a web application that helps CrossFit athletes track and record their training and provides individualized fitness recommendations based on the analysis of large amounts of data. Gopalakrishna’s more long-term goals for the company, which he launched in April, involve analyzing large quantities of data to come up with personalized recommendations for a broad range of health care decisions, thereby improving the efficiency of the health care system and individuals’ ability to get fit. Like Chawla, Gopalakrishna attended the Triangle Startup Factory.
Mentors hammered home the idea to create bits of your company at a time, testing those and then coming back to the drawing board to analyze your results before building more features. Often, this is called the “iterative process of building” a company. “Build, test, build, test, build, test,” says Gopalakrishna. “That was something that was pretty common between the different mentors.”
3. Spend your money to make aggressive changes, not just to stay alive. Primarily, the way accelerators work is that once accepted, a startup will be granted a sum of cash to spend during the three month period of the program, in addition to the office space, networking and mentoring. At Triangle Startup Factory, accepted companies get an initial investment of $50,000 in seed money with the potential for additional funding at the end of the 12-week session. In exchange for all of the resources, entrepreneurs give 7.5 percent of their company to the Triangle Startup Factory. Chawla says that one typical piece of advice he got was to spend money on things you can do to grow your business, don’t just use the money for founder salaries.
“You want to figure out how to use that money to truly accelerate your progress,” says Chawla. “Apply that in a way that will help you test your assumptions.” Even if you don’t have the benefit of a instant cash infusion from an accelerator, think about doing more with your cash reserves than just to buy extensive survival supplies of ramen noodles.
4. Make money ASAP. “Generating revenue early was definitely pushed a lot,” says Gopalakrishna. Part of that has to do with where the Triangle Startup Factory is located, he added. In Silicon Valley, there is more tolerance of and patience for startups that haven’t yet generated revenue. Case in point: Instagram. Facebook bought the photo-sharing social network for about $1 billion in cash and stock before Istagram was generating any revenue. “Revenue is definitely a huge priority here as far as investors are concerned,” he says.
Related: How to Find Your Money Zen
5. Pick up the phone. It sounds simple, but it’s one of the most valuable pieces of advice Chawla got when setting up the framework for his company, Archive Social. “Sometimes the fastest way to get an answer is the most basic.” In particular, spend time on the phone with your future, potential target customer. Before you have spent time and money creating a website and a way to sign up for a product or service, talk to your desired customer and see if they are interested in what you are selling. “It sounds very simple and intuitive and most people don’t do it,” says Chawla.
What is the best piece of advice you have ever gotten from a business mentor? Leave a comment below and let us know.