Are Startup Accelerators Worth It?

When considering an accelerator, the first question you have to ask yourself as a startup founder is this: is it going to be worth it? The truth is that it's going to take a lot of your time. You're going to have to work with hearty doses of critique, and let's not forget the equity you have to give away in return.

For the uninitiated, a startup accelerator is usually a fixed term programme where a batch of early stage startups receive investment, mentoring, and educational content through workshops or coaching sessions. The aim of these programmes is to help fledgling startups find their optimal trajectory, and then accelerate their progress along it. The programmes usually culminate in a public pitch or ‘Demo Day’ to an audience of investors and other stakeholders in the startup ecosystem

Techstars

My company NIRA was fortunate enough to be selected as one of 10 startups out of more than 1,000 applicants for the inaugural Techstars accelerator programme in India. Techstars is undoubtedly one of the most prestigious accelerators globally, so I was thrilled when we made the cut. Many of us are familiar with the rather morbid statistic that 90% of startups fail; Techstars’ alums seem to defy gravity: 90% of their startups are either still operating or have been acquired.

The Techstars programme is spread over 3 months; the first month is dominated by “mentor madness” an extensive series of 20 minute meetings with more than 50 mentors from across a range of fields. This was an intense experience in the extreme. Viewpoints, questions, and challenges were coming from all angles, it was disorienting, sometimes debilitating, and absolutely exhausting. It was also incredibly valuable. It exposed our weaknesses in our plan, it raised questions we hadn’t conceived ourselves, and it did of course give us some answers to questions we had going into the process.

The second month is meant for executing the key takeaways and learnings that emerged from the mentor meetings.

The third month was ostensibly about getting pitch ready, but its true objective is to lead you through a process of attaining clarity on what your business is really about.

After 13 weeks of slogging away, stressing out, depriving myself of sleep, and performing on Demo Day on adrenaline alone, was it worth it? The answer is a resounding yes, but for different reasons than I had expected. I was able to ‘tick-off’ some things my wishlist, but I got a myriad others that I hadn’t bargained for.

Business Learnings 

* Customer first. It’s easy for the customer to get lost in the chaos of running a startup. You’re jumping from one firefight to another. In your mind you’ll return to the customer once you’ve dealt with that tech or ops issue that’s jamming your system. I learnt that we must go back to them today. They are our most important stakeholder. Everything we do derives from them. The answers to what we should do lie with them.

* Clarity on who we are as a company. Positioning. This is particularly important in competitive space such as ours. Demo day drives this process: it focuses the mind. There’s a deadline by which you must have to succinctly articulate who you are, what you do, and why it’s an exciting opportunity.

* Rapid iteration of thought process through a much higher frequency of using feedback loop with mentors/ Techstars team. This also helped us explore new ideas and reduce the chances of making avoidable mistakes. Together they cut time in developing the right path for our company.

* Focus on metrics: we have so much data available today, it’s easy to get overwhelmed with information overload. But measure we must. There was an emphasis on the importance of picking relevant KPIs, but also the habit of institutionalising the use of those KPIs.

Overall, we went through a process of deconstructing what we had at NIRA, and reconstructing something more robust and watertight than before. 

The Personal Journey

There were also some deeper outcomes that I think are of value to every entrepreneur, if they give themselves the time and space to discover them.

Why am I doing this? What do I want to get out of this?

What sort of company do I really want to build?

Founder/ strategy fit: am I the right person to execute a particular strategy the best?

Our mental space is usually occupied with firefighting operational issues, chasing growth targets, and thinking about raising funding. But these are the core questions that can give us a clearness of mind which will translate to a sharpness of focus for the business if answered honestly. 

Further, there were unexpected, and ex-ante, under-appreciated outcomes too:

Power of network. Ever heard of the phrase “it’s not what you know, it’s who you know”? Well, it’s true. I’m not talking about getting people to pull strings for you, I’m talking about leveraging the power of your network to help you tackle the challenges you face. In a startup, time is precious. If you know someone with relevant expertise or experience, it’s far more efficient to seek their advice. Techstars has a tremendous network; I now feel I have someone I can call for pretty much every problem I encounter. 

Lifelong friends. This was an intense experience. As a batch, you go through a lot together. You have a common understanding of each other’s struggles. You learn to let your guard down. You share your fears, your insecurities. We all know the glossy entrepreneur life depicted in the media is a lie. I think this is similar to university; the bonds you establish are for life.

What makes a good accelerator?

PEOPLE.

Techstars says 3 of their 5 application criteria is on the founders/ team. I would say the value of an accelerator is the same:

People, people, people, track record, and the ability to harness value on an ongoing basis.

An accelerator is really about the power of the network. Anyone can put together a curriculum with workshops and tag along a nice office space and some fancy perks.

Can they attract the best people to run the programme?

Can they attract the best people to work with the startups whether as mentors, facilitators, and speakers?

We must acknowledge also the importance of funding. Have graduates of their programme gone on to raise capital?

Reciprocity

Techstars was a positive experience for me. I feel we have a much greater chance of success, and so feel vindicated in our decision to give up some equity. I’d rather own 94% (Techstars charges 6%) of something that’s likely to be very big than 100% of something with a lot less favourable odds.

When considering whether to apply for an accelerator programme, it’s crucial to recognise that it’s not sufficient to simply evaluate what the accelerator can offer. Any accelerator programme is a two-way engagement. It requires input from you. Making the cut through the admissions process is the start-point, not the end. Don’t expect to glide passively through the programme and achieve great results. That would be a terrible waste of an opportunity. Instead, you must be prepared to work hard. You’re going to be exhausted and it’ll take everything out of you. Be prepared to listen and have an open mind. You know your business better than anyone else, but you have weaknesses, we all do. There will be blind spots in your strategy. Be ready to listen to feedback and act on what you think makes sense.

So go ahead, take a look at all the accelerators out there. Before you begin the process of applying, ask yourself this question: am I ready to commit?