Is Joining an Incubator Worth It?
10 semi-anonymized (but brutally honest) lessons from four fresh graduates of incubator programs.
Edited by Ash Egan and Brian Truong
Contributors
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Co-Founder of Stitch
Y Combinator ‘15
University of Virginia, ‘14
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Co-Founder/CEO of Parkloco
DreamIt Ventures ‘15
Brown University ‘14
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Co-Founder/CEO of Encore Alert
500 Startups, ‘15
Georgetown University, ‘13
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Co-Founder/MD of Shearwater
TechStars ‘15
Indiana University ‘12
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Overview of Incubator Programs
To enable our founders to give their most honest, raw, and real stories, we’ve anonymized their lessons below.
1: It’s tough to balance incubator offerings and actual startup execution.
“FOMO is a great way to describe it. The challenge was figuring out how many events I would go to versus focusing on execution. You had to be OK with missing a couple of those sessions to do what needed to be done.”
“As good as it is, you do get distracted by events and other accelerator things. If I did do another incubator, it would have to be very focused (industry‐wise); I would not go to another generalist one that took 6‐8% and just planned a multitude of events.”
2: Not having the whole team at the incubator creates stressful tension.
“If you can’t bring your entire team to the accelerator, awkward gaps in knowledge start existing within the team. We felt this first-hand. Some employees felt like they weren’t part of the mentor meetings and where ideas came from. To combat this, we started flying the rest of the team to [incubator location] and also had a camping retreat to debrief. It still wasn’t perfect. Some felt like they were missing out when we said “so-and-so told us they wanted us to do this.”
3: During the program, focus on the small wins. Pick 1 or 2 metrics that matter.
“In Week 1 and 2, prioritize picking away 1 metric that matters. As startups chase a ton of different metrics, you end up spreading yourself too thin.”
“The 1st stage of the incubator program is just growing, defining what growth metrics are, and then hitting those numbers by the end.”
4: Management’s biggest focus is on Demo Day, sometimes exceedingly so.
“Demo Day is overhyped. There’s a fine line the accelerlator needs to walk between prepping for demo day (fundraising) versus working on the nuts and bolts of the business. We ended up spending a bit too much time on the pitch.”
“We started as something else and decided 2 days before the final demo day that we wanted to pitch something else. Management pushed and coached us to go through with this. They make sure you have something presentable for demo day.”
5: An incubator’s signaling effect is important for first time founders.
“Our two main founders didn’t have much industry experience, so having another piece of validation was key. Someone believed in us other than ourselves, and that was enough to convince other investors.”
6: Accelerators push you to fail fast if it’s in the horizon.
“Do not be afraid to fail. If you’re going to fail, fail quickly. Our incubator pushed us to sell, sell, sell. And when it didn’t work, we had to change what we were doing.”
7: Expect a boost in morale and confidence, especially in hiring.
“We came out of the program a lot more confident. With hundreds of applicants applying, it feels incredible to be one of the handful that make it into the pool. Apart from the ego boost, the other benefit was that the incubator opened up a whole new talent pool — lots of high level people respect you because of the program.”
8: It’s not worth being bitter about the amount of equity taken.
“I don’t think you can compare to the incubator’s value add… equity is cheap. If you’re building something incredible, equity shouldn’t matter. It matters who you’re bringing on, not the equity and breakdown and structure. I don’t care if the incubator took 15% or 2%. It was well worth it for us.”
“If it wasn’t the standard, we would be frustrated. But it really depends on the founders. If they are experienced, it isn’t worth giving up the 6–8%.”
9: Location matters.
“One of the things we’ve learned is that being your own user is super valuable. Without that, you need to be building something that people actually want. If you’re not your own user, you’re far away from what people actually want. Go to the incubator closest to your customers or where you will build your team. Get as close to your customers as possible, regardless of the incubator.”
10: Being in a cohort is both empowering but also distracting.
“Being the least experienced founder in the class, it was powerful to be able to build relationships with the other founders, especially from those who’ve already had exits. On the other hand, the incubator’s emphasis on fundraising was distracting — we could have spent the summer focusing on sales but instead spent too much time on the pitch. Not sure if the ROI was there for that.
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-Ash and Brian
