Best Practices for Accelerators

As accelerators proliferate, some fundamentals are too often overlooked.

The internet lost track of how many accelerators there are a few years ago. In 2016, the count was at 587. But now there’s hundreds more university accelerators, and hundreds more corporate accelerators, and almost no country or industry doesn’t have some form of accelerator. The definition of an accelerator was never precise; it’s always been an open source concept to reengineer, liberally. If there was one guiding principle that all accelerators aspire to, it’s they make it easier to be a startup.

But there’s an inherent tradeoff. The cozier it’s made for startups, the genius that emerges only under high pressure never catalyzes. The hardness is essential. The high stakes are essential. Forcing startups to hustle and cold call is essential. Accelerators need the best startups to thrive, but they also need weak projects to die, no longer sucking up capital and time.

At IndieBio, we get hundreds of requests a year to visit 479 Jessie Street and learn what makes our accelerator tick. We manage to fit in about 75 visits, including everyone from the world’s biggest food and pharma companies to national science organizations from international governments. They’re looking for our secret sauce. But our secret sauce goes on top of fundamentals. Too often, our visitors look past the obvious structural elements, not recognizing or giving proper respect to their critical role in driving value creation.

And too often these obvious structural elements are not implemented in the design of new accelerators. They’re compromised — perhaps necessarily — but those compromises will undermine any accelerator’s efficacy.

Here’s a list of the most overlooked elements of highly productive, financially-successful accelerators.

In an accelerator, you are not just on a “project.” You are a founder of an incorporated business that is capitalized by at least one professional investor.

Around 80% of innovation hubs don’t follow this, often because they want to have a steady, large flow of ideas coming through their program — and it’s too high a hurdle. But the results show.

In an accelerator, if you do not show meaningful success in five months — and haven’t derisked a significant aspect of your company — your company is dead and you are out of a job.

When founders’ jobs are on the line, they force themselves to do things they find uncomfortable to do, things they’re not naturally good at. They learn through doing, get better, and grow into being founders that investors will trust.

If you are not willing to get on a plane and relocate for the length of the accelerator program, your startup would probably fail anyway.

To succeed, it takes real commitment. Period.

In an accelerator, you are in a cohort of many startups, interacting regularly, not occasionally. A virtual accelerator is an oxymoron.

The support startups get from each other, and the competition they have with each other, keeps them focused and moving forward at a speed that can’t be matched, consistently, from remote programs.

During an accelerator, you work at least 15 hours a day, continuously, for 5 months, with only about one day off a month.

This is obvious — the stuff of legends — but you will rarely see it in a corporate or government accelerator.

During an accelerator, you don’t sleep much.

But you sleep just enough to take care of yourself.

In an accelerator, startups do not rely on large companies to be a success.

Startups can benefit from corporate partnerships, but they cannot rely on them. If an accelerator is designed to feed startups solely to corporates, the limited number of options will kill most startups.

In an accelerator, there is no exclusivity arrangement. You are free to shop for partners and investors. The entire universe of investors is fair game.

Startups simple won’t survive, and true innovation will be rare, if there’s an exclusive buyer at the end — be that one VC fund or one corporation. At the very least, in a corporate accelerator, the startup must have the right to look elsewhere if the corporation isn’t going to adopt and rapidly commercialize the startup’s creation.

In an accelerator, nobody flies solo. You have a co-founder, and co-founder alignment on priorities is the most essential factor to your company’s success.

Startups with cofounders have around a 600% better chance of succeeding than solo founders. Cofounders who are in alignment don’t quit on each other. Inversely, when co-founders strongly disagree with each other, that startup is soon to die.

An accelerator uses financial metrics to constantly monitor itself.

No funny money should be in the system. Everything counts. Everything matters. When an accelerator relies on sources of income like sponsorships, grants, or an accounting method that passes the overhead to other departments, it’s going to inevitably get lazy, and be more motivated for deal flow than returns.