This post is by Jeff Carter from Points and Figures
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This is a question that is asked all the time by entrepreneurs. It’s a very tough question to answer. It really comes down to each individual company asking that question of their company and answering it for their company.
There is no right and wrong answer.
There are companies I have invested in that have turned down accelerators that I felt should have gone through them. There also is the opposite in my experience. Did the company fail or succeed based on the decision? Probably not. There are too many other factors involved.
Accelerators and Incubators have proliferated all over the US. Right now, we have one of our interns, Connor, on a mission to find all the financial accelerators across the country. It’s taking him quite some time because there are so many of them. That’s just in finance/insurance/capital markets. When he gets done, I will try and publish entire list.
Accelerators and Incubators promise a lot. Many of them under deliver. After a company goes through one, I always ask the CEO if it was worth it. Often there is some confirmation bias loaded into that answer because they made the choice to go through it. Some say it was, some say it wasn’t.
What I have found is that post program, it’s all about the network. Does the accelerator/incubator have a network of people that you can tap into that will propel your company forward or not? Will they embrace “give before you get” and make introductions or not? Will they help you?
Often times, the answer is no. However, it’s all dependent on the entrepreneur’s assessment of where the company is at the time they apply.
Accelerators take time. They can be a huge distraction and take you away from executing the business. But, if you don’t exactly know what your product market fit is, they can be incredibly beneficial. There are mentors that will change the direction of the company. Others are a waste of time.
We mentor at several accelerators. My mentorship style has evolved over time. I used to think I needed all of the answers. Now in a mentorship session I mostly listen. I ask a lot of questions. In the background, my brain is working overtime to see if there is anyone in my network that I can connect this person to that might help and make a difference. Usually it’s a resource or customer introduction.
The reason is the accelerator is more about the accelerator than it is about the company. Some cities have accelerators and it’s more about creating jobs and benefitting the city than it is the companies that go through the accelerator.
If it’s not about the company, not worth going through.
Many times, it’s a way for people who want to interact with the startup community to get some interaction. It’s about their resume. It might even be a paid position where they can grab some income. It’s not about the company it is about them. It can be good marketing for that person. It can be good marketing for a company to have corporate mentors headlining an accelerator and it might be good internally for that person when it comes to corporate politics. Can’t you hear it in a corporate meeting, “I was a mentor at XYZ.”. Played like a trump card.
If it’s not about the company, stay away.
Accelerators often charge a pretty high price to companies to go through. Techstars charges 6%. Of course, they give you a $100k note and office space, legal, accounting in addition to the program. I am not picking on Techstars, but I find that all accelerators/incubators tend to over value office space, legal and accounting.
I really think that great accelerators are run by people who have absorbed the punches of being a startup CEO. It doesn’t matter if they exited or not, but that they led a company through the early stages and stuck with it for a few years. I have been offered the position of “Managing Director” of accelerators and I have turned them down because I haven’t had that experience. Managing people, getting the company focused, growing, selling, dealing with all the stuff that rains down on the startup CEO is something you really have to experience to be able to help others figure out how to organize it. I am an investor and have been a solo practitioner for virtually my entire life. That’s not a startup CEO and so while I am a good mentor and investor, I am not the right person to run an accelerator. I think it’s important to be emotionally intelligent about that because of the price startups pay.
I have seen companies go through accelerators and come out on the other side ready to launch and lift off. Others, not so much.
There is certainly some ego involved. Getting into YCombinator or Techstars is sort of like getting into a top school. They get a lot of applicants. It’s not easy to get into.
I wonder if it’s the accelerator, or the internal drive/moxie/determination of the entrepreneur. Without the fire in the belly and the competitive will to do anything it takes to succeed, it doesn’t matter if you go through an accelerator or not.
The one thing I do know about startups. When you have a very good idea, the places that it looks like it will work seem to be infinite. The startups that win concentrate on one very small area. They own their own harbor and dominate it. Then they start to sail out into the ocean to conquer new places.