5 Things to know when choosing an Accelerator for your Start-Up

If you’re running your own startup, it can often seem like a huge burden to be simultaneously responsible for product strategy, engineering, operations, sales, marketing, hiring, and of course financing.  That’s why many entrepreneurs look to accelerator programs to help them “accelerate” their strategic, commercial, and financial prospects. Entrepreneurs also like making connections with mentors, investors, and advisors who can help open doors both mentally and commercially.

Fortunately there are literally thousands of options for which accelerator to choose to fit your needs. There are bigger internationally known programs like TechStars or Y-Combinator; there are national-level programs like Gener8tor or Boomtown; and there are thousands of local programs ranging from groups of smart successful founders working informally to university-operated or corporate-run programs or non-profit programs and many others.  They all have their strengths and weaknesses.

Having watched hundreds of startups go through accelerators (many of whom went through 2 or more) and gathered their feedback on the experience while gauging the differences I saw in them pre- and post-accelerator, there are a few learnings that stand out for anyone wondering which program to choose.  They are:

First, know what you hope to accomplish… not just generally, but specifically. Write down the very specific things you hope to get out of such a program and discuss those goals with the program leaders.  Talk to your cofounders and other key team members. Talk to your friends, your advisors, your investors. Make sure there is 100% clarity in your mind on what you consider the right success metrics to be.  It might be more around maturation of your product strategy, developing a better go-to-market plan, thinking more clearly about capital requirements in relation to key value-inflection milestones, or possibly just a faster path to potential customers or introductions to more investors more quickly.  Write it out.  Going in with “fuzzy” expectations is the surest way to dissatisfaction later. If the program you’re considering isn’t helpful at framing those goals with you in mutually attractive ways, then keep looking. Alternatively, if they say “yep, we can help you with all that” too quickly, be suspicious. Each accelerator is better at some things vs. others and it’s common that those most desperate for your participation will oversell their capabilities. Ask which of your goals might be the most difficult for them to meet.

Second, check the track record. What history do they have at helping companies not just raise money, but actually grow and succeed? Raising money is par for the course these days. Nearly anyone can do it. But creating commercial traction and beginning to scale… those are the true hallmarks of success. Ask about how many companies have achieved clear product-market fit post-program. Ask about how many have found scalable economics. Ask how many have gone on to raise up-rounds of double the post-money valuation they earned just after the accelerator. If you don’t get a clear sense of anything beyond helping raise just the next round, keep looking. And be wary of programs with just a handful of prior startups. Your business is too important to be part of someone else’s experiment in how to run an accelerator.

Third, ask to review the program curriculum in detail. What are the modules? What are the expectations for you from each? Are the modules clearly relevant to the goals you articulated above? Will they help you in the specific areas you need most? How will they be pursued… on your own or with the active engagement of peers or mentors/advisors? How much time are you likely to need to commit to the program and how much time is being committed by the mentors/advisors? A good accelerator is more than just co-locating with other founders for a few months.  Look for world-class education in topics you need most.

Fourth, ask about who the mentors/advisors will be.  Expect specific answers… e.g., “Diane Jones is former CFO of Advantacorp where she helped finance the company’s growth from $1M to $500M in revenue”. Don’t accept blind profiles or generalities. A good accelerator creates value through not just curriculum, but through the network effect of the combined experience and innovative filters of the participants – including peers and mentors.  It might feel good to brainstorm with other entrepreneurs in the program and learn from their successes and failures, but you really want to connect with people who have been successful multiple times before and people who can open those mental and commercial doors. If the program managers and mentors are primarily people with lots of large corporate or financial-only experience, maybe think twice. Those people can add value too, but you really want to learn from people who started where you are now and found the path to success in the resource-constrained and entropy-rich world of the founder.

Fifth, know what you’re paying and shop around.  Most of the top-tier accelerators offer you $100k +/- on day 1 in a very friendly convertible note or SAFE, out of which you will likely pay your living expenses and possibly some program fees. Then they look to share in your success by taking 4%-8% of equity or warrants or options in your company.  Some of the terms differ, so shop around for a deal that seems fair to you – and have your lawyer look at it too. But there are other programs that predominantly make their money off startups by charging fees, or by offering to deliver services in exchange for fees, or by taking fees in exchange for helping you raise money. And many of those also ask for options or warrants too – sometimes in ways that can come back to haunt you later (like notes or SAFES with very low valuation caps or without mandatory conversion criteria on reasonable terms). In general, you want an accelerator where your interests are 100% in alignment… they don’t make ANY money until you succeed. If that’s not true, you need to wonder how confident they are that they can really help you achieve your goals.

Finally, don’t ignore the increasing number of programs out there that don’t charge anything… they just truly want to help.  This might be the best option if you are still pretty early and just need some time and outside perspective and closer collaboration to find your way to a stronger sense of having the right vision and plan.

The right accelerator program for your needs can really rocket you forward.  But that’s not the experience that most founders have because they don’t pay enough attention to the five things above.  If your do, you’ll increase your odds of getting not just what you want, but what you really need to be successful beyond the next round of financing.

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Pat LaPointe is the Managing Director of Frontier Angels in Bozeman MT.  He is also a member of the Board of the national Angel Capital Association and a 3-time successful founder.