Keeping Up With the Times: Insights On How Accelerators Can Expand Their Capabilities
There is a need today more than ever for accelerators to expand their capability and deliverables to stay relevant
Accelerators have proven to be an excellent solution for startups to connect with investors and potential mentors. With mushrooming events and social media platforms such as Twitter and Clubhouse providing direct access to investors and mentors, and increasing options available with the accelerators, questions are being asked about the differentiation and value propositions accelerators deliver.
Reports suggest 66 per cent of all accelerators have deal flow challenges. In "corporate accelerators", lack of quality deal-flow and absence of measurable impact are posing challenges. In a nutshell, there appears to be an imminent need for accelerators to improve the value proposition to startups and create long-term sustainable business models.
There is a need today more than ever for accelerators to expand their capability and deliverables to stay relevant. Physical workspaces are no longer suitable. There are too many events happening online. The value of mentors who have not built and scaled actual startups on their own was always a challenge. In these challenging situations, this article provides few insights on how accelerators can stand up, shape up and scale up based on our experiences gained by running cocreate ventures for accelerating business pivots and PESU Venture Labs for accelerating early-stage startups.
Show commitment in terms of capital: Lack of financial commitment and rewards are often sighted as the reason for underperforming accelerators. Putting reasonable capital behind startups can attract startups, send a stronger message to external investors looking at companies, and thus, a lot better returns in the long run. In fact, for most accelerators, putting together a micro fund with the help of experts is quite an affordable activity.
Invest in expertise internally: Some of the expertise inbuilt into the accelerators can deliver much better value for entrepreneurs. While external mentoring does not cost much, internal expert mentors can add more value with a bit of investment. Our investments in mentors around DevOps, User Experience, Supply chain and vendor management have helped entrepreneurs to learn and adapt a lot better.
Mentors with skin in the game: Entrepreneurs tend to take accomplished mentors with skin in the game more seriously, resulting in a better win-win scenario. Enabling mentors to invest in their mentees at a lower valuation can strengthen their commitment. While pro-bono mentorship has its own merits, it may be more practical to have mentors with skin in the game.
Infrastructure beyond the workspace: Most accelerators limit their propositions to the availability of workspace and meeting places. They can consider making available ready-to-use IT and testing infrastructure. Such investments can also be monetised by asking startups to pay their part of the share. Our investment in deploying opensource apps for customer relationships, version management, collaboration was of immense help to our cohorts. Equally valuable were the more significant investments around servers, devices and tools required during development cost distributed amongst teams.
Essential resources to build: Some resources like designers, brand, PR, legal documentation, etc., are perceived as nice to have in startups. But what is evident is that startups that invest in these aspects go a long way to build better products, experience and business. Our in-house resources around growth hackers, designers, digital marketers, content developers, product photographers, etc., are adding new dimensions to the incubated companies. We were also able to extend some of these resources to some other accelerators for better collaboration.
Be flexible with the timeline: Not all startups can be slotted and accelerated in a 3-6 months window. Some of them require more capital and longer gestation. Accelerators need to appreciate the timelines and stay flexible with the same. Playbooks need finetuning for each cohort/domain.
Don't force-fit corporate objectives: Many corporate accelerators tend to see accelerators as HR /people-building activities. To provide insights to senior/midlevel managers on what's happening in the startup world. While there are also sincere efforts to help the startups, one can't ignore the misalignment of interests. Corporates accelerators should stop forcing startups to align with their business roadmap to avoid negative impact and bandwidth loss for the founders, which will ultimately hurt the intake for accelerators
Better execution and imagination: Accelerators can also improve the way they function within the existing scope of operations. Encouraging early experiments with the quick pivot-around products, early connections to customers and mentors, enabling entrepreneurs to share the ideas and skills amongst themselves need to be implemented more structurally. Standardising the kind of companies one takes at the cohort level, not just based on the domain. Still, the variety of activities involved in building a startup would be more helpful.