One of the key decisions you must make as a startup leader is whether to seek funding or to bootstrap your business
BEAM24 Feb, 2017
The startup craze is global. In 2015, the U.K. brought 608,100 new companies to life, while Silicon Valley alone gave birth to more than 23,000 startups and China created a mind-boggling seven businesses a minute. If the founders of these companies have just one thing in common -- other than a love of kale shakes and ping-pong tables -- it is the drive to succeed.
One of the key decisions you must make as a startup leader is whether to seek funding or to bootstrap your business. Accelerator programs offer a middle ground and are often a go-to choice for those looking for new networks, mentorship and investment.
But it’s far from a cut-and-dried decision. You need to invest a lot of time into the program. Sometimes you will need to relocate to take advantage of a specific accelerator. Then, of course, you may have to give up a significant chunk of equity -- for not very much investment.
Nevertheless, many top companies have graduated from accelerators. Airbnb, Dropbox and 9Gag are three famous examples.
I spoke with Franco Iovi Vollbrecht, who is the Latin America Program Manager at YouNoodle and also works closely with the Start-Up Chile accelerator, managing its evaluation and postulation process. He told me about the four things startup founders should consider before, during and after participating in an accelerator program.
Before you apply to join an accelerator, Vollbrecht says, you must be sure your company is at the right stage.
“You need to take into account what phase of development you’re currently at,” he says. “While it’s true that some ... accelerators accept very early-stage startups with just a concept, most require a prototype or MVP (minimum viable product) at least.”
When asked what factors startups should consider before they sign up for an accelerator, Vollbrecht was very clear: Founders should read the terms and conditions, and they should leave plenty of time to prepare.
“Often accelerators will ask you to provide certain things, like video presentations, documents, business plans and so on," he says. "So, make sure to read the terms carefully. That way you know what you’re facing before you apply. Perhaps you need to travel abroad, give an opening-day presentation or even give up a certain amount of equity.”
Preparedness is essential. Don't leave your application until the last minute.
Once you’ve decided to take the plunge, you’ll want to make sure you’re accepted into the program. And when it comes to meeting the requirements of an accelerator, mission is key.
You need to be sure of what your startup’s goals are before you apply. Without a clear plan, you certainly won’t impress the people evaluating your application.
What’s more, many startup accelerators have their own distinct missions. It’s a good idea to make sure that your vision gels with that of the program to which you're applying.
“Most programs you travel to are looking for people who intend to build the local ecosystem," Vollbrecht says. "If you’re applying to Start-Up Chile, for example, you have to be committed to the ecosystem."
A knowledgeable, flexible team is also extremely important. Although there are many accelerators all across the globe, most prefer to work with groups of people, rather than lone founders.
An ideal startup has a number of different skillsets at its disposal, with flexible team members willing to jump in at the deep end and try new things. You’ll be at an advantage if you have a tech-savvy person, a marketer and a sales person, as well as a firm handle on finances.
Even if you’re outsourcing much of your work, it’s good to have someone on board who understands the technology well enough to know how things function. It helps with managing contractors and also makes sure there’s no wool being pulled over your eyes.
To be accepted into an accelerator program, you need to be able to show progress -- how you have taken your idea and built a product, for example. Without this aspect, it’s hard for most mentors to see your skills and vision play out.
There are a few big mistakes that startup founders make when pitching their products. The first is trying to be too technical when selling a solution. Algorithms and dashboards are fun (if you’re a developer), but for the more business-minded audience, what counts is the value your startup is bringing to the table.
The reality is, too much jargon will make your product opaque: Your pitch should be tailored to the audience you are speaking to.
“Maybe you’re really tech savvy and you’re trying to explain to investors how important your product is," Vollbrecht says. "You should never take for granted they have the same level of understanding as you. It’s going to be hard for investors to interpret what you’re saying.”
Another factor is how you position your product within the market. While it’s hard to be totally unique, you should be able to differentiate yourself clearly and also show how you will target your section of the market.
“If you can’t differentiate your startup, you won’t stand out,” Vollbrecht says.
Although it might sound strange, experience doesn’t really matter. You could have more than 20 years working in your field or have just started out. If you demonstrate vision, commitment and progress in your pitch, you are far more likely to be accepted into a program.
One of the most valuable aspects of a startup accelerator is the network it connects you with. You are going to meet a host of extremely experienced and keyed-in people. It’s often tempting for founders to hang on their mentor’s every word, but it’s also important, Vollbrecht says, to pay close attention to your peers.
“You have a whole generation of people in the same spot as you. Maybe not in the same market space or field as you, but you come to understand that you’re not the only one facing these situations, getting new customers, developing products and so on. You can learn from and support each other during and after the program.”
Founders should be willing to listen to feedback -- and be very aware that not all of it will be positive. You should also be aware that while advice and criticism are valuable, you need to develop a filter. Not everything you hear is going to be great advice, and not everything will help you move forward as a company and grow.
When you enter an accelerator program, you’ll meet a lot of mentors who work in many different areas. The same goes for your fellow alumni. So, ensure you keep in touch, because you never know what these new connections will mean for you in the future.
If you do decide to put your foot on the gas and participate in a startup accelerator, remember that mission, progress and connections are all key ingredients to your startup’s success. If you put in the work and cultivate the right relationships, there’ll be no stopping you as you overtake the competition.
This article was first published on Entrepreneur
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