READ THIS BEFORE YOU JOIN AN ACCELERATOR PROGRAM

I’ve been thinking a lot about accelerator and startup programs lately, especially now that we are spending so much time looking at early stage companies and came across this article I wrote a few years ago. Originally written in 2016, I was surprised that most of this still holds up, so I’ve attempted to dust it off and provide some inline updates in italics along the way. Hope you enjoy…

READ THIS BEFORE YOU JOIN AN ACCELERATOR PROGRAM

I’m not creative and have never had that moment of total clarity where I had an idea worth turning into a product and company. I’m a services entrepreneur and love what I do. However, founders and startups comprise a large segment of my client list. While I’ve never participated in an accelerator program as a founder of a startup, I’ve been involved in programs as a mentor, resource and even in organizational design projects. Over the course of the last few years, I’ve become increasingly fascinated with accelerator and incubator programs.

At their core, they represent an amazing approach to helping startups gain perspective and traction as they throw themselves into making the next great thing. What’s even more amazing is talking to the people who’ve participated in them. I’ve tried to capture the things they’ve learned and shared with me. Hopefully, this will help aspiring participants make some decisions about which program may be right for them.

There are some globally-recognized programs that have impressive lists of graduates with several branches throughout the world. Techstars, Y-Combinator and others are the Ivy League of accelerators. They take the top 3% of the applicant pool. This acceptance level has changed quite a bit. Much larger percentages of applicants are accepted into both Y-Combinator and Techstars as a result those programs growing in scope and cohort frequency. Their programming, mentorship and cohort selection breeds success on a scale not realized on other platforms. If you are selected to participate in either of those programs, you definitely should. I still believe this is true…

Most startups won’t be granted a spot in one those programs, but with the proliferation of smaller accelerators, you may find some that are worthwhile. There are several new programs gaining an incredible reputation after only a few cohorts. There are other programs that are not any good at all- buyer beware…

First, let me start with the basics.

• Most accelerators will offer some kind of seed/award/prize money for being in the program. You don’t always get it up front. You may get it in a series of smaller payments or after clearing certain hurdles. Some of these will require you giving up equity in exchange.
• These programs are broken into cohorts between 5 and 20 companies depending on their format and programming. It is most common to see 8-10 companies in a cohort.
• Programs usually take place over 12-14 weeks.
• Within these accelerators, you will have some kind of administrator or director, an entrepreneur in residence (EIR), mentors and investors. Some programs will have a stratified management layer of managing and non-managing “members.”
• These accelerators can attract some amazing talent and be a critical springboard for your startup—provided you pick one best positioned for you.

Here are a couple of things to consider when picking a program:

Who’s Running it?

The directors, EIR and management should be successful entrepreneurs. You should look for programs where the leadership has been successful in a specific aspect of business where you also need to succeed. If you must generate revenue and scale your product business, an EIR who shuttered their previous professional services company after 15 years with $1 million in revenue may not be a good fit for you. Accelerators can become a form of “business welfare” where friends and associates who are otherwise unqualified to serve in those capacities get lucrative EIR positions or board seats.

It’s also a huge benefit when the leadership has been through an accelerator program—especially a prestigious one. Nate Schmidt of the Velocity Accelerator in Birmingham is a Techstars graduate and will be able to relate to his cohorts in a powerful way. Nate has since returned to his entrepreneurial ventures but the Velocity program he stood up just completed its 3rd cohort. Thank you Nate!

General and Specialized Accelerators

Specialization is an encouraging new trend in accelerators. Instead of operating general “tech” accelerators, savvy programs are starting to look for the underserved or emerging industries ripe for innovation. The Dynamo Accelerator in Chattanooga and Boomtown Healthtech in Boulder are great examples of this kind of specialization. By focusing on a specific market, they can attract better companies and highly qualified industry experts as mentors and programming that focuses on the specific challenges of that industry.

Company stage-specific accelerators are also extremely worthwhile to consider. Accelerators that have loosely applied stage qualifications tend to have more poorly aligned cohort participants and programming within the accelerator is far more generic as a result.

Funding Sources

Consider the motivations of those who are funding the program. For accelerators that have industry or venture capital support as their main source of operating cash, you may see a higher level of execution and greater sense of accountability than those backed primarily by academic or municipal stakeholders. For the former, they are participating to make money, benefit from the innovation created and boost their prestige as an accelerator. For the latter, the PR alone is often worth the cost of the program. They are largely spending tax money from a general budget or endowments that were granted out of philanthropic interests. If it is successful, that’s a bonus, but they win simply by participating and launching the program. That isn’t to assert those can’t be successful or that industry giants don’t get significant positive PR from sponsoring an accelerator. Understanding what the “money” gets from providing the funding is worth considering.

Benefits Provided other than Money

Excellent programming, mentors, EIRs and leadership can make an under-funded or new accelerator incredibly worthwhile. The inverse is true as well. Top programs should be actively helping you connect with important outside resources and finding new customers even before the program is over.

The mentors can be an incredible source of business deals and networking—provided they are the kinds of mentors you need. Are you building the next great wearable technology? Maybe you should take a second look at that roster of mentors dominated by bankers and lawyers.

Cohort Advocacy

I’ve been routinely disappointed with accelerators that don’t even list their cohort companies on their websites. Some accelerators don’t return calls from potential investors seeking more information about graduates or about getting involved in demo days. Be aware of this and look at how they have advocated for previous cohorts. Shout out to the Gener8tor accelerator program- they do an incredible job of providing information about and access to their graduates.

Participants in the Cohorts

I’ve heard from dozens of accelerator graduates who’ve talked about how much they gained from the other participants in their cohort. These success stories range from finding their new CIO to merging with another graduate.

Are the other companies as hungry as you are—financially and ambitiously—or are they simply taking easy money to half-heartedly pursue a side project while they maintain their full-time salaried job? Are they from various parts of the country or world or are they all from the same place? That may not matter to you, but if every company comes from the same town, you’ll sacrifice the unique perspectives only a diverse cohort can provide.

Choosing to participate in an accelerator is a big decision. The time it takes to even apply is a significant commitment. Make sure you consider what you want to get out of the experience and whether the programs you are considering can deliver.