There is a famous story about Frederick W. Smith, who got C grade from a skeptical professor at Yale University for his paper outlining the idea of an overnight-delivery service. Notwithstanding the professors’ skepticism, the idea saw light of the day and it is today popularly called as FedEx.
The point is, sometimes it matters whose advice one takes. In a connected world where tech startups are changing the world as we know it, right mentors matter a lot, and increasingly the concept of helping startups grow and succeed through providing robust mentorship is being done by incubators and accelerators. But, how does a startup choose the right one? Read on get a perspective.
One of the differentiating factors between a corporate and a startup is the speed at which things happen. Average life span of a multinational, Fortune 500 size corporation is between 40 to 50 years today. But in the world of startup, a quarter is an eon, and a year could be a lifetime.
A startup may go from formation to attaining the revered unicorn to going bust, all within a duration of year or two. The role of an accelerator is to expedite a holistic growth.
Startups come in all sizes and shapes and we can see a vibrant ecosystem mushrooming to support entrepreneurs and cheer entrepreneurship. From governments to quasi-government bodies to large corporates and industry associations, a swarm of initiatives have emerged. Accelerator is one of the hottest areas in the business of startups where a lot of action is happening.
By definition, an accelerator is a fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo day (usually VCs have a front row seats on a demo day). Most often, accelerators are a hybrid of sorts and do not fit the above definition. Some accelerators offer a rolling program (Zone Startups India has no fixed duration) while some intake sector specific startups (Barclays Rise focuses on Fintech) and some programs are run by investors to majorly nurture their own portfolio (GrowthStory by K Ganesh).
For the lack of a strict public policy on who can be called an accelerator, they have become dime a dozen, mushrooming around the corner, and with every other co-working space masquerading themselves as one, it is gullible startups who take the hit by wasting their precious time during formative years by associating with the wrong accelerators.
It is imperative startups learn to differentiate a good accelerator from a lousy one and choose the best one. Here is what to consider before making the deal.
Idea and build stage startups
If you are at idea level or yet to build a fully functional prototype or a minimum viable product (MVP), then the best thing for you to do is to work closely with an academic incubation program or e-cell of your college. In case your college does not have such facilities, try and join open hackathons. Most of the time, the interaction with fellow participants, mentors and judges are amply sufficient to guide you in building a viable and feasible product.
Growth stage startups
Typically, any accelerator programs start making sense when you have a product that is ready to hit the market and one that can be ‘accelerated’. In some cases, a startup already has a customer base but the founders are looking for help in growing their business in other aspects such as talent acquisition, fund raising, or holistic counsel on running a business.
Startups at this level are best suited for the long-term cohort (12 weeks plus) or a rolling program where they have enough lead time to meet their objectives. Most of the existing accelerators address this segment of startups.
Participating in such programs may involve moving into the accelerator’s location sans rent, and/or may require giving a small percentage of equity.
Scale stage startups
You have raised Series A or more, you have a swanky office, there is cash register ringing, headcount is at all time high, then why do you need help from an accelerator?
The notion of ‘we have raised enough funds and money will solve all know problems’ could be a huge risk and a blind bet at this level. The founders at this stage usually have challenges in softer aspects of building a company such as culture, values, talent retention, positive perception and so on. Not fixing the softer aspects at this stage may make the startup vulnerable. A high touch accelerator program that connects with elite corporate honchos and senior entrepreneurs may give amazing insights for the founders to imbibe and implement the learning’s into their venture.
Mission specific programs
There’s an emerging concept of corporate accelerators, where a market leader sets aside time and money to invite and incentivize startups working on their domain. For example, Unilever Foundry is a platform for startups specializing in shopper marketing, supply chain efficiency, etc., to partner with Unilever.
Technology specific programs
Leading technology companies like Google, IBM, and Microsoft have developed accelerator programs to give a velvet rope access to their proprietary technologies such as cloud, cognitive systems, Machine Learning, etc., to the participating startups. Startups wanting expert mentorship on such technologies will greatly benefit from applying to such programs. And most of the time, these programs are shorter in duration and may not have a fixed location criterion.
While there are no simple formulas to select an accelerator, one simple parameter is to see their selection procedure. ‘Trespassers will be recruited’ kind of attitude means they value quantity over quality. Worst, it may be co-working space! Do your research by probing about their industry and investor connect, and map them over your own objectives. Do talk to some of the alumni who have been part of an accelerator that you are considering.
This article was first published here at The Economic Times.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)