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Accelerators look for different things when recruiting startups to join their cohorts. To find one that fits like a glove, start by understanding their expectations.
‘Accelerator’ is one of those buzzwords in the startup world that seems to be here to stay. With every wind of change or new technology trend, a host of new acceleration programs emerge to support startups in these niches.
Expara announced its VirTech Global Accelerator, for instance, as the global pandemic started to peak worldwide. Identifying the problems posed by the pandemic, the accelerator launched to take on the economic and social challenges posed by COVID-19 and future global crises as well.
But all accelerators are not cut from the same cloth, and the criteria for acceptance can vary widely. The differences depend on location, size, market, and the accelerator’s own goals.
Startups will want to scrutinize these parameters to find the right fit, in order to convert their acceleration experience into long-term value.
Age of the company
One parameter common to most accelerators is the startup stage. Accelerators may prefer some stages over others depending on what they can offer and what they expect in return. Given that many programs make a small equity investment into participating startups, and it’s easier to do so at earlier stages of the company, seed and pre-Series A companies are usually a popular choice.
These startups are usually at the inflection point between proof-of-concept and product development and the growth stage, making it a good time to get onto a company’s cap table ahead of the next financing round.
While growth-stage companies can also benefit from accelerators, they may be much further along the curve, having already achieved many of the early milestones that startups hope to gain from accelerators. The nature of support they need is very different from that of their earlier-stage peers.
To reap the maximum benefits from accelerators, it’s best that growth-stage companies look for programs that specifically target them.
Pre-seed companies may want to opt for an incubator instead. Incubators are better suited to catering to such a young company’s needs, which include discovering and on-boarding customer leads, and validating the product.
Founding team and experience
In a somewhat dated blog post, Y Combinator Co-Founder Paul Graham wrote that having a single founder is the number one mistake of starting a company. While there is some evidence to suggest that this is incorrect, and that solo founders may be just as successful as multiple founders, the founding team is still a major consideration for accelerators and can affect how a startup is evaluated.
For instance, solopreneurs can apply for and receive funding through Y Combinator. However, the program strongly recommends the presence of two or more founders, on account of the challenges of building a company from scratch.
The primary downside for founders who prefer to fly alone is a reduction in autonomy. Yet, entrepreneurship is a testing endeavor, and more so for a single founder who must execute the roles of CEO, COO and CTO all at once. The opportunity cost of a conflict-free leadership position is that founders routinely go through burnout, and their mental health may suffer for it.
Further, a founder may not necessarily have the right skill set to carry out all the management functions – for example, having a technical person on board the founding team can show an accelerator program that the startup can build the technology and hardware that it envisions.
Founders who have prior experience with running or building startups also come off looking like surer bets to many judging committees. Previous experiences dealing with equity negotiations will also work to their benefit when engaging with an accelerator that invests in its teams.
No one factor can determine whether a startup will definitely be accepted into an accelerator program, but meeting all or most of the above criteria can show whether a startup’s leadership is a good fit for the program.
While larger accelerators such as RISE, Y Combinator, 500 Startups and Techstars focus on a broad spectrum of technology, many smaller, niche players often focus on one specific kind of innovation such as AI or sustainability, and for a specific industry, such as retail tech or fashion.
Lever VC’s joint investment fund and accelerator is one such example. The fund has partnered with Brinc, a Lever VC-backed accelerator, for a three-month rolling accelerator program for its alternative protein RMB fund.
Other aspects to consider
Accelerators will look closely at the pain point that applicants are solving, and how integral they are to the market. Shark Tank investors have routinely shown the door to innovators with solutions that did not make sense (such as anti-flatulence underwear).
The standards at accelerators are much higher than those in reality television. An innovation that does not address an existing and wide-reaching market need, or create one, is unlikely to get a foot in the door.
Product development also matters, but not at every accelerator. While some are happy to accept founders with just an idea, some others may want to see at least a working prototype or minimum viable product before they send around acceptance emails.
Some may even go far enough to ask that applicants have a customer base established for their companies, have a registered business, or have patents in order before joining the program.
With the diversity of options now available to startups, these parameters are not set in stone. When applying to accelerators, it is a good idea to take a close look at eligibility details and the application form itself to understand exactly what the program is looking for. Networking with startups from earlier cohorts can also be a helpful exercise.
One last important thing for startups to consider is whether they even need an accelerator – opting for remote accelerators or startup coaching can be viable alternatives as well. Joining an accelerator may sound like an exciting opportunity for a young, growing company, and certainly a noteworthy milestone, but it may also involve having to move shop, give away equity, and pay hefty fees – all factors that could affect your startup’s short-term and long-term growth.
Header image by Daria Nepriakhina on Unsplash