5 great reasons why early-stage startups should join an accelerator
You’re a first-time entrepreneur. You have a convincing business idea, a solid co-founder and maybe even an MVP with some sort of early traction as proof-of-concept. The goal is now to scale the business to a point where you can raise an investment round in order to grow even more. But how do you do that? You’re far from product-market fit, you have no easy ways in on strategic growth channels, no capital and certainly not a list of willing investors either.
My two co-founders and I joined the Entrepreneurs Roundtable Accelerator’s spring batch ’16 in New York City from January through April with our startup BookBuses.com. We emerged with the “unicorn-award” as the top startup of our batch after an intense yet very positive experience filled with a steep learning curve and remarkable growth figures.
Here are the top five reasons why I personally think joining an accelerator should be considered by founders of early-stage startups.
Hack yourself a world-class network
As the old saying goes, it’s not what you know, it’s who you know. While you can certainly build a network on your own by networking with potential advisors and investors, or cold-calling potential clients and strategic growth channels, why not hack your way to a bulk of world-class connections instead?
If there’s one thing in particular which accelerators are known for, it’s the resources they provide their portfolio startups. While most accelerators offer extensive amounts of freebie resources such as free server hosting, free access to paid media and marketing sites, software freebies, business services etc., the network which you’re given access to is by far the number one overall resource.
During your time at the accelerator, the main goal is literally to accelerate your business and your team by connecting you with relevant industry advisors and partners, alumni, PR opportunities, synergetic startups and founders, and last but certainly not least a wealth of angel investors and VCs.
If you play your cards right you will end the accelerator program with a network that would have taken you years to build organically.
Get in the zone with your batch
One of the main differences being in an accelerator from being in a traditional co-working space or working from home.. or your parents’ basement.. or the local Starbucks.. what do I know.. is that you’re now among a group of startups where everyone are just as focused as you on kicking ass and maxing their results for the upcoming demo-day.
Accelerator batches have an amicable but competitive vibe with common weekly KPI meetings, pushing every team to perform better and work harder. Also, an array of synergies and inspiration between the participants will be inevitable. That one startup which closed a large contract last week will quickly give you the tips and tricks for how they did it, so you can do the same next week.
Finally, the added bonus of working so closely with a batch of other startups is that while being intensely focused on your own thing, being allowed unique insights to the ups and downs of your co-batch startups, will give expand your understanding of growing and building startups enormously. You’ll find yourself growing from advising and helping others along your own journey.
Demo-day = No time to waste
The vast majority of accelerator programs culminate with a demo-day event. This means that you’ll consequently be working towards this deadline with one word in mind; traction. Traction such revenue, downloads, engagements etc. is the proof that your business model is viable. It’s great for swaying investors upon your demo-day and lay a foundation for your following investment round.
But reaching the necessary traction and finding your product-market-fit are for most startups a struggle to say the least. As you dig deeper into your business idea which at the beginning seemed so simple, a frightening amount of questions will appear. Which areas and verticals should you focus your growth, your product development, your team and your time? How can we reach it all before demo-day!?
The deadline of the demo-day will force you to make tough decisions on where to focus your resources. This is good. It will cut away a lot of bullshit time spent on testing things too long and essentially learn you how to fail fast. Furthermore remember that you’ll have mentors and advisors all around for you if advice is needed for a tough decision.
Accelerators boost your fundraising
If you find yourself in a top-tier accelerator, it can be expected that there will be a demo-day leading to investment rounds for most of the startups in the batch. While the accelerator helps you with intros and connections to angel investors and VC funds, don’t expect this to be a dance on roses. Fundraising for you will most probably still be like fundraising for anyone else; a drag.
However, having been in the accelerator is generally viewed as a positive factor by investors, and through the network of capital-ready peers you’ve established during the program, you will have a head start in the game.
Most accelerators offer some amount of capital in their portfolio companies when they join, often establishing the first real valuation of the startup. This is a positive thing when raising money next time, as this serves as proof that other professional investors (the accelerator) already took a bet on you. Finally it you’ll also now have a starting point in terms of valuation to negotiate from.
Have a blast
Joining an accelerator with your team and your startup will throw you into months of intense hard work, but equally an amazing time with love from your co-entrepreneurs, the accelerator team and the entire network of peers which you will connect to. Everyone wants you to succeed!
Fun, social events but just as much your time working hard side by side, will expand your network with like-minded quality peers, who you can trust to give an honest opinion when you ask them.
If you consider joining an accelerator, do your due diligence properly. List all the options and look at their merits, terms and stats, and of course portfolio companies.
You’ll most likely be giving up a significant piece of equity, but if you play your cards right and take advantage of all the opportunities an accelerator offers, you will never regret it.