Why Top Accelerators Work: The Startup Pressure Cooker

Less than four weeks ago, we came to the end of the 14-week accelerator program focused on working with some of the most compelling food companies today who were a part of Food-X Cohort 4.

It’s a bittersweet moment.

We’ve worked together and created companies that I truly believe are better versions of themselves from when they joined the program. Could they have done it themselves, without being a part of Food-X?

Maybe, possibly, but in 14 weeks?

Hand on heart, I don’t believe so.

It’s also a bittersweet moment because it’s the end of a stage in our relationship. We’ll stay close, but it won’t be the same — it will be like going back to your old high school and realizing, although it’s incredibly familiar, it’s somehow, well, different. There’s no going back to how it was.

It’s taking half a step back from a group of founders who, over those 14 weeks, became something close to family. We pulled together ten companies from around the world, put them into one room and dropped them like screaming startup lobsters into the accelerator startup pressure cooker.

And taking that half a step back is difficult.

I still want to see these funny, interesting, passionate, brilliant founders every day — I still want to walk into Food-X, see the same familiar faces and yell that loud “Hello” that signifies another day working on some of the most exciting and interesting companies launching in the food space today.

Ok, before I start to regret tackling this topic so soon after ripping off the band-aid and closing the doors to Cohort 4, I wanted to share some of the insights that hit me between the eyes like a ram with a jet rocket up its rear.

But before jumping straight into those insights, it’s worth sharing that I’ve now seen both sides — I’ve been on both sides of the Wizard of Oz magic curtain. I’ve seen what it is to push a startup and founder towards hyper growth by being part of an accelerator, and I’ve seen what it is to start a company (actually two…) without being part of a top accelerator, doing it the old fashioned way.

Which is better?

Do top accelerators really work or are they just a fad? Do they deserve a place in the entrepreneurship landscape? Have they earned it? All questions I believe I can now answer.

I’ve been the sole founder of a company, living and working in my one bedroomed apartment in NYC: my staples desk, my rickety old laptop, my crappy printer and a passion to start my own business with the only tools I had to work with.

I remember flipping back my covers on my futon in the morning and padding barefooted across a cold wooden floor straight to my swivel chair to start the day thirty seconds after opening my eyes. Later, realizing at 2pm I’d somehow forgotten to a) change out of my pajamas and b) the bad taste in my mouth a sure sign I’d also forgotten to brush my teeth. NOTE TO SELF: Remember to brush teeth before looking at my desk tomorrow.

Yes, being an entrepreneur is not all romance and changing the world. It can be an incredibly lonely existence, especially if you live and work within the same four walls. Also, non-entrepreneurs (named “Them” or “They” henceforth) look at you weird when you try to describe what being an entrepreneur actually IS — it’s an existence they can’t really understand.

Perhaps one of the most vivid memories from that experience was making up excuses after four or five hours of working on my startup one normal Tuesday, so I could take myself off to an office supplies store. Walking down those aisles, I needed to see other people, to talk to the person at checkout, to smile and maybe see it returned. A rarity in NYC no doubt, but stranger things had happened.

It’s fair to say that occasionally I was on the edge of going a little mad as I worked, dreamt and lived my first startup. I’d taken money from angel investors and it was a concrete weight on my shoulders, driving me to consider failure as, well, something akin to patricide.

Yes, having been part of Food-X Cohort 4 and also a lonely entrepreneur before Food-X, I’ve certainly walked through the startup fun house and seen it from all the crazy angles.

So here are the most obvious reasons why I think top accelerators work, but these reasons are just that — they’re the most obvious. If you try it for yourself and manage to join a top accelerator, come add to this list of reasons. I’d like hear your POV.

1) The Best Companies Coming Together

We get over 300 applicants for every ten places in a cohort. It’s tougher to get into one of our cohorts than it is to get into Harvard. Truth! Not because we’re ‘exclusive’, but because we get a whole heck of a lot of applicants, and most of them are pretty amazing. Truly.

To clarify, a cohort is the group of companies who uproot their lives and relocate themselves to work inside of our accelerator. Our cohorts all start on the same day and work in the same space for fourteen weeks, side by side, desk beside desk.

So why is this cohort cohabitation important?

A few reasons.

We choose the best companies who apply. The companies who we believe have the best chance of making a huge and positive impact on the world who will seriously move the needle and create something great. Life is too short to spend any time on the mediocre. That means these we believe these ten companies have some seed of greatness.

We then put these companies in the same space.

At first they don’t quite know what to make of other humans who also have the startup gene, people who are just as passionate about their own companies and most of the time they remember to change out of their pajamas when they come to their desks.

Within days (usually hours) these startup Ronin are talking, sharing, helping each other. I’ve never seen any of the companies being concerned about competition, about sharing, about talking frankly about their businesses, admitting their fears and weaknesses. And when those gaps are uncovered, it’s often a gap one of the other founders has also experienced and fixed. They share, and in doing so, they pool their successes and failures, and they figure out how to solve the problems they’d been grappling with in their lonely metaphorical basements for perhaps months or longer.

So one key benefit of the accelerator model is bringing together well vetted, strong startup founders and their teams to work side by side, sharing and supporting each other. Even those folks who you would imagine are likely to be the most self-centered were not immune to the collaborative dynamic and became the most helpful founders to the other teams, becoming role models in key skill areas.

2) A Network of Industry Experts with Deep Expertise

When we started Cohort 4, our team sat down together and identified where we believed our companies needed real and immediate help.

Then every Monday, we sat down for a ‘Board’ meeting with each company to identify with them their top needs. Did they need certain resources? Specific contacts? Key experts? Once we identified these specific needs, we create the program for the week ahead, tapping into our network of 60+ mentors and bringing in the right experts to help meet these founder needs.

We’ve been blessed…and hell, we’ve worked hard, to reach into our industry to find the best mentors covering many areas of our industry. Need to understand how to launch a product? We’ve got some experts to help with that. Need to brand your product? We’ve got some experts to help with that.

Need…well, you get the idea.

This network of world-class mentors who are passionate about helping young company founders, are another way these companies can accelerate their progress. I can speak more positively about our mentors — they are class acts who deserve all the success they’ve had in their careers.

3) Accountability and Honesty

I mentioned the Board meetings we have every week — in that session we work to understand what leverage points there are to accelerate the success of our cohort companies. It’s also a time to hold them accountable.

During the Board meeting each company shares the progress they’ve made in the prior week, or not. And if not why not?

They share their business KPIs versus previous weeks.

They take us through what they intended to do and what they actually were able to do. It’s also the time when they tell us what we can do for them, who they need to connect with within our network. It’s the time when we talk through what they want to test in their business, perhaps where we talk through the weaknesses in their strategy, what we need to work on together so they’ll be ready for their next round of funding.

In short, Monday Board meetings are a time for mutual accountability — there is no time for being nice or for friendly bullshit. Money is oxygen to a company and we don’t have time to waste. We want to get the machine cranking, to get each company driving toward meeting their true potential. The Board meeting is a time for frankness, to push on assumptions and weak thinking. They are never the easiest conversations to have, but they’re surely the most important.

4) Leveraging the Brand

The top accelerators have developed a brand, and that brand is leveraged for the benefit of the cohort companies. That leverage includes being able to get a goodly number of investors into a room on a demo day so our cohort companies can pitch to these investors. That brand leverage means being able to reach out to potential strategic partners and encourage them to meet relevant cohort companies. The accelerator brand can be leveraged to engage the press, customers and even recruit team members — being part of something exciting and sexy has real benefits.

5) The Network

Being part of an accelerator means you are able to plug into multiple networks. For example, the network of other companies who have been through the same accelerator — fellow alumni. At last count, there are close to 1000+ founders who have passed through one of the seven global accelerators our parent company runs.

That’s some network, 1000+ founders who are prepared to help you if you ask. Powerful! (Parent company: SOSV). We have built a network of mentors, of investors, of customers, of the press and of friends.

As we work with our companies building their businesses, we establish relationships throughout the industry supply chain. As we build relationships with these companies, the next cohort companies coming up behind can tap into those same company relationships. It speeds up the whole development life cycle and time to market.

Our cohort companies get ‘warm’ referrals to potential investors, customers, partners, advisors and more…they get these introductions directly through me and our team or one of the many experts of networks who support our program. The reality is, if the core accelerator team can’t connect them, one of our mentors probably can. It’s the best of relationships: no one is asking for money, they’re just trying to help each other knowing one way or another paying it forward will benefit us all.

Makes me want to hold hands on a mountain top, drink a nice icy coke as we all teach the world to sing!

The End?

The fact is this article has morphed into ebook proportions because there are a significant number of reasons why top accelerators work. I’m a fan. I’m passionate. I’m a believer.

So why may an accelerator be wrong for some startups?

Believe it or not, there are some very good reasons why you shouldn’t join an accelerator. But as this article crosses the 2000 word threshold, it will need to wait for the next post from me. (Send your requests and a folded $20 bill to… 🙂 )

Having given the last ten companies offers to join our last cohort — there was almost one sticking point that made them (almost) pass up the opportunity of joining. Incredulous? I know right?!?

And what is that reason that almost meant they gave up this life changing opportunity?

Valuations.

Huh? What’s that now? Valuations?

Yes. Let me explain.

Aside from all the benefits outlined above, companies that join our accelerator are also given…yes, GIVEN a check worth real cash money. Cold hard cash. In exchange for all of this, we ask for some shares in the company.

By being shareholders in our cohort companies, we’re doubly motivated to make sure our companies are super-successful. Sounds reasonable, right, but the conversation can get sticky when founders see only the money. They see the money we’re offering and then think through what their company is worth. Now startups are hot right? A company that didn’t exist fifteen minutes ago can be valued at a few million dollars right? (Only some degree of sarcasm intended…)

Along we come and say “Hey. Join our accelerator and we’ll give you $25K or $50K or whatever the amount is, and in exchange, give us single digits in your pre-seed or seed stage company.”

Some founders (Note: usually first-time founders) do some theoretical math and come to the conclusion that this check means a “down round”. In other words, us giving them some money is in some way devaluing their business. (Anyone else see this as somewhat odd?)

A few points to keep in mind if ever you’re in this situation.

Point 1 — Any number that you or your friends and family decide is the ‘value’ of the company when they make their first investment is purely speculative. At the friends and family stage, if the company has yet to ship a product or make consistent revenues, then any value is pure fantasy.

Sure, sure, your business is worth a million bucks. Really. Truthfully.

Point 2 — If there is someone who is not a friend or not connected to you via some common gene pool, and they want to give you spendable papery money that can be used to exchange for things your company needs, consider this as a real potential value-add rather than a way your company is being theoretically devalued.

Point 3 — If the folks wanting to give you said papery money are a top accelerator, consider that they may have something to bring to the party aside from just the cash.

A smart founder is always looking beyond the money when they’re partnering with someone. Accelerator, investor, advisor, even customer.

Look beyond the cash. This may sound somewhat weird, but cash is not in limited supply if you have real value. Don’t focus on just the cash, but how the folks giving you the cash can help you to achieve your real core reason for starting this business in the first place.

To change the world, to build an empire, to gain true independence, to buy cool toys, whatever your reason for doing this crazy startup thing — choose your investors on the basis of who can help you get there, and especially when your company is in its infancy, don’t lose the opportunity to accelerate your business because you focus on the check and not the complete package of value they can bring.

Now I have to admit that this article is self-serving — I wrote it because I want the best pre-seed and seed stage founders on the planet to apply to our accelerators.

Life is too short to focus on mediocrity.

We each need to individually discover why we’re here and give everything we have to fulfill our purpose. If part of your purpose is to start a company that will make a real difference to the world then apply to our accelerator. If it’s not, apply to someone else’s — I can give you some recommendations if pushed.

We’re in the business of working with founders who want to build greatness, and we’re doing so as fast as possible — after all, that’s why it’s called an accelerator.

Ready?

Andrew Ive is the MD for Food-X, and Food-X is just one accelerator created by SOSV. If any of this make some semblance of sense to you, then check out Food-X and the other accelerators through sosv.com.

Originally published at sosv.com on June 29, 2016.