The Accelerator Manifesto
Startups should be able to make an informed decision when applying to a programme and, if successful, realise the value they were promised.
By the beginning of 2015, Ignite’s accelerator programme will have worked directly with over 60 early-stage tech companies, and supported dozens more. Not every team and founder enjoys their time with us; more than one team has quit before their programme concluded. But whenever we’ve felt we’ve got it wrong, we’ve worked hard to make things right the next time.
It’s important for accelerators to be on the level with teams — before, during and after the programme. We always try to be honest and open about the experience — our terms, our expectations, our offer and the value we feel we can add. Unfortunately, not every programme plays fair by the startups it seeks to attract. Some programmes are, at best, confusing their offer or, at worst, misleading startups.
For example, in the past week I’ve had to ask Ignite’s solicitor to decipher the documentation issued by another accelerator, because two teams separately approached us for help figuring out exactly what they were being asked to sign. The language is so opaque and the terms so convoluted, it’s not even clear how much investment is being offered to teams.
There’s a need amongst accelerators for accountability and transparency, so this is a first attempt at some basic terms that all programmes should feel confident agreeing to. To paraphrase David Cohen, this manifesto is about what entrepreneurs can and should demand from an accelerator — and it’s about what accelerators should consider if they want to build effective relationships with the entrepreneurs they’re working with:
Is it an accelerator?
Increasingly the terms accelerator, incubator and co-working space are confused and used interchangeably — mostly by the tech media, but often by the organisations in question. There are funds that refer to themselves as accelerators, grants that do the same.
An accelerator is a very specific offering — a programme of fixed length that adds value beyond initial investment to a cohort of several teams, and typically this will include mentoring, coaching, workshops and network opportunities. An outfit offering investment and occasional meetings is not an accelerator, and neither is a co-working venue that charges for mentorship.
Startups should always read through the literature and ask the question — is this organisation really an accelerator? Or have they jumped on the bandwagon to use a popular term, when they’re actually offering less value or something entirely different?
Share statistics that matter to teams
Programmes can’t necessarily release details about the performance of individual teams, but they can provide top-line statistics about their cohorts and portfolio.
Programmes should expect to provide startups with the following information, if they don’t already publish it as a matter of routine:
- How much investment the programme’s cohorts have collectively raised
- Post-programme, what the average raise per team is
- How many teams are still trading; how many teams have been acquired or have exited; how many teams have ceased trading
Headline investment should be post-fee
Often, because of the way their finances are structured, programmes will charge startups a significant fee for participation. Unfortunately, many accelerators won’t mention this anywhere except the small print. Furthermore, the amount of investment the accelerator promotes in the media and on their website will be the total amount, before these mandatory fees have been charged. This leads to teams believing they’ll receive much more investment than they ultimately will.
Promoting an investment amount without subtracting significant and mandatory fees (which can be up to half the stated amount) is misleading, frankly; it’s done purely to make the terms appear more generous than they are. The headline amount of investment promoted by an accelerator should always be the amount after mandatory fees have been deducted.
Terms should be clear from the start
If investment is tranched (teams receive money in several stages that may depend on performance); if investors receive a preferential discount on a convertible note (they receive their shares at a better price than the valuation); if there are clauses that provide investors with control over how the company trades in the future— in fact if there’s anything going on beyond a straight equity deal, then founders should be made aware of it before they apply. A clear, to-the-point, easy-to-find FAQ on the programme’s website is the simplest way to do this.
Teams should know who is investing in them
Founders have a right to know who’ll be taking equity in their startup. Accelerators should always clarify the relationship between themselves and their investors; if there are angels who prefer anonymity, programmes should openly state this, but be prepared to explain in confidence who is investing.
Teams have the right to make an informed choice
Ultimately, this is what we’re aiming for. It’s not just about understanding terms or receiving the latest statistics; founders should be able to assess the true value an accelerator is likely to add to their business. One way to do this effectively is for accelerators to introduce prospective teams to their alumni as and when required, so founders can ask their own questions.
Mentors should have been active within the past 12 months
Most accelerators splash headshots of mentors across their website, because associating themselves with smart people lends credibility to the programme (Ignite does this, for example).
You may not meet them all on the programme; mentors and investors have busy schedules, and sometimes the timings don’t work out. But sometimes these mentors are so busy they have to step away altogether — yet despite the fact they’re no longer involved, some accelerators leave their details online, because their programme looks better for it.
Teams make decisions about joining an accelerator based on what the programme purports to offer. If mentors are unable to work with teams, they shouldn’t be promoted as such.
NB — if you’re a mentor who has worked with an accelerator in the past, it’s worth checking to see if and how the programme is representing you, and request changes or removal of your profile if you’re no longer involved.
Consistent coaching, at least once per week
From experience, it’s critical that startups receive consistent coaching. An adhoc session every two or three weeks isn’t good enough. New teams make lots of decisions in a short period of time, and these often send them down the wrong path.
Weekly reviews should be agreed in advance and set in the calendar, with informal catch-ups in-between as and when required.
Teams should be supported post-programme
One of Ignite’s alumni once said: “Demo day isn’t the day. It’s just a day.” The truth is that when founders wake up the morning after the programme ends — still with investment to raise, still with customers to find — they realise just how much work is ahead of them.
Teams still need help after the programme ends. Sometimes it’s a new introduction, sometimes it’s a review. The fees may have run dry, but all programmes should commit to support their alumni in the weeks and months after.
Shortlisted applicants should receive feedback if they’re rejected
Providing detailed feedback to every applicant is nigh-on impossible if you’ve received hundreds of applications. But if teams reach the final 20 or 30 before they’re rejected? In that case, providing feedback is manageable, valuable and deserved. If an accelerator saw potential but the fit wasn’t quite right, a paragraph or two of constructive advice can play a big role in helping a startup move forward.
Always transparent, always honest
None of the points above are contentious or unreasonable, not if accelerators are committed to supporting teams to the best of their ability. Ultimately, honesty and transparency are in the programme’s best interest — if you operate a programme, consider your engagement with teams to be a form of content marketing. Whether they’re alumni or prospective candidates for your next programme, what will those entrepreneurs say about you to other startups?
What you can do next
If you’re part of an accelerator’s management team — feel free to dispute the points above if you disagree. If you can suggest improvements, please do. If you recognise that you’re not doing your best by founders, please consider what you can do to change, and what more you can do to support them.
If you’re a founder applying for an accelerator programme — read through the points above and make sure any accelerator you approach is sticking to them. Ultimately, you deserve to know what their deal is, what they’ll deliver in return and what experience you can expect, whichever programme you choose.
If you’ve any questions or suggestions, you’re very welcome to get in touch — paul@ignite100.com.
