Accelerators and Incubators have become a pretty lucrative business over the past decade. More traditional programs, like Y-Combinator, TechStars, 500 Startups and newer, more junior programs have continued to grow and expand into cities both in developed and developing cities. Innovation is everywhere and they’re catering to it.
Certain founders question what an accelerator is like and whether it’s the right choice. Let’s dig into the good, the bad and the ugly to figure it out.
To start, accelerators, in our opinion, are truly meant for one thing. To accelerate. Yet, certain startups join an accelerator or an incubator with no team and barely an idea. Some Accelerators now encourage these types of participants and, to boot, charge thousands of dollars as an entry fee. In many cases, this can be the motivator to push new entrepreneurs into the deep end. In certain other cases, it can improperly accelerate a new entrepreneur down a rabbit hole or a new venture idea that is not yet fully mapped out. The important thing to ask yourself, therefore, is do you have a business model or the beginnings of a product built to push in front of veteran mentors and potential users for market feedback?
In virtually every case, an Accelerator is great for a network effect. You get access to, in most cases, an incredible network of successful, local entrepreneurs that donate their time to the cause of helping you wade through the minefield that is the real world of tech, which differs quite significantly from the TechCrunch headline world of tech. At the very least, you get a fire little under you to start the exploratory process. It can help push you to build out your very first pitch deck, pitch nervously in front of your first audience and show your ideas to people that either match the profile of your ‘ideal user’ or can offer insight. All great things. If you don’t have a team, though, or if you haven’t figured out the other 4 pillars of building a self-sustaining product company (i.e., product, initial financing, monetization and user acquisition) you may be forced by the program’s fast-paced curriculum to spin your wheels and waste time. As a very strong caveat, you should be deathly afraid of wasted time.
To help you better understand the workings of an accelerator, we compiled a list of feedback from 10 successful entrepreneurs that pushed a product-based company through an Accelerator (whether large or small):
Pro: The network of real-world practitioners (i.e., Mentors)
If you’ve been in the trenches long enough and have been lucky enough to survive for two or more years in tech, then you’ve probably also learned something interesting; there are way fewer people that have actually succeeded at scaling a SaaS or tech-driven product company than you initially thought when first entering the space.
Naturally, then, the largest value point of Accelerator programs that are set up properly is the Rolodex they come with. Instead of spending 6-months scrapping LinkedIn, pushing leads into ClearBit or guessing at email addresses to get in touch with a mentor, you can join TechStars and meet 50 of them all at once.
This, without question, is the greatest value point a program of this nature can provide. In our experience, having a mentor (or two, if you’re fortunate enough) is highly correlated to success. These people rarities. They’ve built a financially viable product company, have experienced the scare or the wrath of receiving or deploying a patent infringement claim, have hired and motivated a team of hundreds of people, etc.. These people have done it before and have been burned time and time again. Ultimately, this means that they can help save you hundreds of hours with only a few minutes of advice. Mentors are, therefore, an intangible asset that should be cherished. Accelerators, paired with your ability to mingle, can you get in touch with these folks.
Pro: Starting a company is a big risk. Risk is scary. Accelerators push you to start.
Starting a company, let along a product company, is quite literally one of the most difficult things to do. It’s so hard. It’s insanely, painfully hard. Accelerators can help push you off the deep end and actually get you started, which is sometimes all it takes. Whether it’s motivation enough to quit your job, invest some of your own money or start writing that first line of code, it’s something.
As an aside, if you need the motivation to quit your job, though, that’s usually an easy tell that building a startup is probably not for you. Enjoy the watercooler, friend.
Pro: The network of other risk takers
We strongly believe that you need to possess a strange strain of genetically modified DNA or be somewhat off your rocker to actually want to build a SaaS or service-based technology company. It’s lonely. You’ll be broke for, almost always, a very long time. You’ll be more overwhelmed, both mentally and emotionally, than you ever have before. And there’s a 90% chance that it will all be for nothing.
In dealing with this agony, you realize how unique your personality is. You realize you’re extremely resilient, a pretty good problem solver and somewhat an obsessive-compulsive. You love the problem you’re trying to solve to the point where you’re obsessed with every micro detail about its implementation. More importantly, you feel compelled to be the one that brings the solution to the masses. Over time, you realize this behaviour and this thought-process is not common. Then, you learn the importance of finding and communicating with others that are trying the same thing, sharing war stories with them and finding common ground in your insanity.
Pro: The capital injection
Certain Accelerators offer an initial cash injection when you get accepted. Fuel for an initial product company, especially if you don’t have much to show, can be a game-changer.
Con: the capital injection
The more you grow as an entrepreneur, the more you learn of the economics behind general venture capital. Only at that time, you realize how much value you’re giving away in early fundraising rounds. In certain cases, it is much more beneficial for a founder to build their product-based company and fund the initial 6-12 months themselves to show early market traction, which can end up saving you 20-30% of your company in the long term.
If you have anything you’d like to add to this list, please feel free to reach out to your GigaLab representative or email us directly at firstname.lastname@example.org