Startups have more funding options than ever before with the myriad of crowdfunding platforms, accelerators, angel investors and micro-VC funds. Determining the best option for your company is not easy but can be critical to success or failure in the early days.
I’ve spent a lot of time talking to companies about what goes into deciding if an accelerator makes sense for them and what factors they took into consideration when choosing between accelerators. The responses were invaluable for us and I thought would be helpful to a wider audience of entrepreneurs. You should seriously consider an accelerator if you fit into any of the descriptions below:
1. You are a first-time entrepreneur. It’s easier now than ever to start a business but really hard to scale a business.
2. You’ve started a business before but it didn’t work. Or your new business is different than your previous business, such as software instead of service or consumer instead of B2B.
3. You are not in an ecosystem that gives you access to good mentors, investors and talent.
If you fit into any of those, finding an accelerator that is right for your company is a potential game-changer. Based on the many conversations I had with early-stage startups that went through various accelerators, below are the top four factors I heard in order of frequency:
Brand: There are a lot of components to an accelerator's brand but certainly the success of companies that have gone through the accelerator is a major consideration. Y-Combinator is a clear example. The success of the brand is built on the amazing track records of the startups that came through the program, notably Airbnb and Dropbox, among others.
An accelerator's brand can help tremendously, in particular with funding and hiring, depending upon the credibility associated with completing the program.
People: If you are going to give up a chunk of equity for a small amount of capital, you want access to good people who have done what you are setting out to do and can move the needle for your business. Many accelerators have big names listed on their site. Drill down to find out how involved those people are and who will actually be spending time with you.
Focus: There are general accelerators doing very well (YC, 500 Startups and Techstars) but the reality is, the hands-on value of a general accelerator is diluted a bit when speakers and/or mentors are not relevant for your business. Many companies I spoke with said focus is import for them.
If you are building a SaaS company, you want to be surrounded by great people who have built and scaled SaaS companies. You benefit from working side-by-side with other B2B SaaS companies as they overcome similar challenges. The same is true in media or mobile.
Size: The size of the cohort can certainly impact the amount of tailored help and advice you will receive. Cohort sizes range from fewer than 10 to more than 70. You can assume the advice will be very high level rather than deeply tailored for your business if you are fighting with dozens of other companies to book office hours with key mentors or general partners.
Every business and accelerator is different. Take note of where you need help and leverage an accelerator that can help fill those gaps for you.