How to make the most of an accelerator program
Narrativa has been very lucky to be accepted into two of the most prestigious accelerator programs in the world for media startups. We joined the Next Media Accelerator Program in Hamburg (Germany) in March and the Flat6Labs program in Abu Dhabi (UAE) in June.
Why you should apply, or not?
Accelerator programs will help you to get exposure, and the opportunity to validate and fine-tune your idea, technology, and business model. They will also give you access to a network of customers, partners, and investors and, in some cases, to get some seed funding. Accelerators, in general, will provide mentoring, office space, internet connection, some Amazon Cloud space, etc. In exchange, most accelerators will get equity.
The first thing you need to know about accelerators is that it is really hard to be accepted. Top accelerators receive between 500 and 1,000 applications and they usually take between 5 and 10 startups per batch, so it means that only the top 1% of startups are selected. This should not discourage you, actually applying to accelerators will be the first serious test of your idea, technology, business model, team, and also of your ability to present and defend all that in front of experienced professionals. Also, every rejection will help you to build your resilience, which will be very important through the years.
Accelerators require full-time dedication from 1 or 2 members of your team and in many cases, the accelerator will be located in a different city or even country, so you need to feel comfortable working remotely and not having your team next to you all the time. If you have a family, the situation can be even harder since you will have to be away from them for several months.
Once you are accepted in an accelerator, then your startup has already passed a first filter. From that point forward, it will be much easier to access customers, investors, and partners.
What accelerator should you choose?
Before applying it is very important to understand what your startup needs and apply to the accelerators that will help you the most to achieve your goals. You might need help with your technology or to validate your business model or maybe you need help to enter a new industry or market. Whatever it is, you need to identify it before applying. Quite often, the most well-known programs might not be the right choice for you. So you should try to gather all the information you can before applying. I would recommend talking with other startups that have participated in the program.
You need to choose an accelerator that can really add value to your startup. For example, if you are in the IoT field you might be tempted to apply for accelerators specialized in that technology. However, your clients might be in the logistics industry, and you might consider choosing an accelerator specialized in the logistics industry. Figuring out what accelerator to choose is a very hard decision as there may be many valid answers. However, in my opinion, the key is to understand which phase your company is currently in.
Using the example above, if you are still developing the technology and still don’t have a ready to market product, then I would recommend choosing the accelerator specialized in IoT. However, if you already have a product ready to market and a clear understanding of what industry and market you are going to tackle, then I would recommend joining the accelerator specialized in the industry/market you are trying to conquer.
In our experience, the most important thing about taking part in an accelerator program is the network of contacts they provide. Accelerators will make sure that you get in front of many customers, partners, and investors so that you can validate your business and hopefully get the initial traction needed to succeed.
In the B2B area, we discovered a very interesting trend — the enthusiasm of companies to run pilots with you. This is a great thing. However, there are some key aspects to consider when it comes to pilots.
First, you need to choose the right company to run the pilot with. It is really important to be sure that you are solving a relevant problem for the company and that you will be able to execute and validate quickly. Very large organizations might not be the right choice and I would recommend that you look for small/medium size companies.
You need to have enthusiastic champions at the client side so they will dedicate enough time to help you with the implementation and validation and will definitely influence the final decision. As important as identifying the champions, you also need to identify the “Trolls.” “Trolls” are usually individuals with a certain influence in the company and, to say the least, they are very reluctant to adopt your technology. It is crucial to be able to address their concerns and to make sure you have arguments against his/her objections. If the “Troll” is too influential and aggressive and you find out that is blocking the progress, then I would just consider abandoning or pausing the pilot before you have consumed too many resources or time.
Probably the most important thing when it comes to pilots and also the biggest mistake of most startups is not charging for the pilots. Free pilots are free for the customer but not for you; you will have to spend time and money, and at the initial stage of any startup, these two things are very scarce. Paid pilots are much more effective than free pilots. When a company is paying for a pilot, they are showing a real interest since they have committed a budget and probably a decision maker has been involved in the decision. Paid pilots also ensure a higher degree of attention from the customer side and obviously will help you to get additional funds to cover the costs of running the pilots.
One last consideration about pilots is that they will help you to show progress to investors; however, investors understand very well the game and most of them will only consider paid pilots as valid proof of your traction.
All accelerators have a list of top mentors who are supposed to help you. The reality is that from the list of mentors only a small fraction of them will actually spend enough time mentoring and, if you are lucky, one or two mentors will want to help you in overtime.
Some mentors will initially help you; however, if you really want them to be engaged and became advisors you need to be able to attract their interest and be ready to offer them something tangible in exchange, maybe equity or a commission on sales or investments.
Mentors can be really valuable so you need to do your homework and find out all you can about them and then actively contact them and sell them your idea. Also, consider that some mentors are also active business angels so make sure you talk to them.
Another incredible source of mentorship comes from the other startups of the batch. I have met incredible founders with great experience and business savvy. Some of them are real visionaries and will definitely spend much more time with you than the mentors and they can be a constant source of advice. After all, they will be the ones that understand you better since they are going through the same challenges.
Length and season
The length of accelerator programs varies from 2 months up to 6 months and this is something very important to consider. The longer the accelerator, the more exposure, contacts, and mentoring you will receive. However, you might also discover that after some time, the program does not bring you much value anymore. However, instead of focusing on your business, you will still need to take part in the mentoring sessions, networking activities, etc. There is no ideal length for a program; it really depends on your needs and the ability of the accelerator to provide value over time.
Also, consider that taking part in an accelerator might be very costly, so the longer the period of acceleration the higher the costs.
One important consideration is the season. I would not recommend anyone join an accelerator program that runs during the summer. Summers are typically periods when everybody is on holiday and you will figure out that most mentors, customers, and investors are not very responsive and arranging meetings will be almost impossible. I would recommend programs running in autumn and winter. A quick note: this advice, which is valid in Europe and MENA, might not apply to other regions.
Financials & Legal
Some accelerators will provide seed funding and this can be very useful, but you do need to consider if this funding will, in general, increase their equity take.
Taking part in an accelerator will cost you money. Obviously, if you live in the same city as the accelerator it will be much cheaper, but the expenses will skyrocket if you have to move to a different city or country. During the program, you will also need to visit customers and investors and this will have a significant impact on your costs. In our case, we spend over 4,000 euros per month just covering the basic expenses of the program for myself and our COO.
Another thing you need to consider is the legal fees. This is probably the most unexpected cost of the acceleration. You need to remember that the accelerator will get equity and there is a long and costly process to incorporate the accelerator and to adapt your Articles of Association, Shareholder Agreements, etc. If your startup is in a different jurisdiction of the accelerator, then things will get even more complicated and expensive. This will also occupy a large part of the CEO’s time and unfortunately is something very hard to avoid.
You should also consider that the funding usually does not arrive at the beginning of the program. In some cases, you will only get the funding when the program is over so don’t count on this funding to finance the program.
Once the program is over, I recommend keeping in contact with the accelerator, after all they now own part of your company and they should keep adding value and helping you to be successful. The accelerator is interested in your success and they will be happy to help you, so keep using their help as much as you need.
Our experience has been really positive. However, I have to acknowledge that an accelerator program is not for everybody; it is crucial to select the right program and to make sure you make the most of it.