Podcast: Should you do a startup accelerator program?
Are startup accelerators even worth it anymore? Well, yes and no with a lot of fuzziness in the middle. Let’s rant and break down if you should consider an accelerator, and how to find the right one for you.
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Rough transcript:
(Not copy edited)
Welcome to Percval’s startup rants, a solo podcast where I rant about, you guessed, all things startups while also providing help for first-time founders. This week I'm ranting on and asking myself a question I’ve been thinking about for a while.
That being are startup accelerators even worth it anymore? Well, yes and no with a lot of fuzziness in the middle. Let’s rant and break down if you should consider an accelerator, and how to find the right one for you.
I guess let’s start with a little bit of my background on this subject as it’s a space I know very well. I have started, managed, or developed so many accelerator programs that I have honestly lost count of how many. That number is somewhere around being involved in at least 50 different programs. I started in this area by running the flagship accelerator for 500 startups in Mountain View, California and have since worked on programs in Sweden, Vietnam, Japan, Mexico, and of course, my beloved Norway. I also wrote a book called the Accelerator Survival Guide for new accelerator managers. You can get that on Amazon or order at bookstores worldwide.
So let's start with the basics and why today I’m wondering if startup accelerators are even needed anymore. The reason I ask myself this is because today the general competence of founders has greatly increased. Coupled with the ease of starting a company has also dramatically improved from say 10 years ago. Back then we were all just figuring things out and there was very few people with deep experience to help. ya, ya ya, not to sound like an old man here, but today you have super efficient acquisition channels and a myriad of amazing tools you can use to build your startup. Furthermore today there is sooo much content online to help you with pretty much everything. From blogs, to newsletters, to online courses, and of course many many podcasts. So truthfully if you were motivated enough to do the research yourself you could probably answer most questions you might have about company building.
That all being said, there is one group of founders who still can and probably will always benefit from an accelerator program. I’m talking about the first time founders. You poor but beautiful bastards. You likely dont know what you dont know. So doing an accelerator program will teach you the ropes fast, and it will also help you with something else key to startup success. Building your network of other technies and of course investors.
Now there is one word of caution I did want to share for the first-time founders when it comes to accelerators. That is that you ideally should just do one accelerator program, or at the most 2, as opposed to doing several programs. So that means you should find and get into the best program for your business. Don’t just jump into any program you can find or any program that finds you. And these programs will find you! Since today there are so many programs they have to actively recruit most companies into the program. So don’t be too surprised, or impressed, if they outreach to you. Sure it feels like a big compliment to even be considered but let's wrap up this rant with the why you need to be cautious. That really comes down to opportunity cost. Regardless of your own level of experience, the best way to grow your business will always be to put the time directly into growing it or working with your team to do so. Spending a month or more in a program is a massive allocation of time and since these programs can be hectic you’ll find you don't get much time to actually work on your business during them. Sure you’ll get a lot of mentoring and maybe some investment but at what cost? I encourage you to think deeply on whether a program will really be worth it. Or if you could better advance the business by just putting in the work.
Let’s jump into a few things to consider when it comes to these programs. To start and perhaps the largest issue I see is related to the competence and experience of the staff running these programs. When I look at most programs in Europe for example I don’t see them being run by startup founders. I see a lot of former corporate or big consulting company folks. Now now that’s not to say these people are not smart nor that they don’t provide value. They of course can and I’ve had the pleasure to work with many who fit this profile. From my experience what they lack in direct startup experience they make up for in other ways. However, I’m not going to be shy to share my feelings that as a founder, you should spend your time with other experienced founders. This is also true when it comes to selecting an accelerator program. And maybe that’s why everyone wants to get into YCombinator and why YC is often considered the best program. It is run by nothing but former founders with real operational experience. When Dave McClure at 500 Startups offered me the job running their program, I was upfront and said “but Dave, I have no experience running accelerator. I haven't even attended one”. To which he replied, “Sure, but you’re an operator, and that’s who these founders need to learn from”. Having worked on so many programs now I can see that he was absolutely correct. Truth be told, anyone working a program can give you bad advice, but a fellow founder will give you, well, less shitty advice in general.
The next thing to think about is if a program offers investment or not. With the massive proliferation of accelerator programs around the world there has been a big surge in programs without investment, or as they are also known, non-dilutive programs. Candidly, I don't really see the point in doing a program without investment because nothing else, and as we have discussed, time is your most finite resource. You shouldn't just be allocating big swaths of time to just any program that comes along. You should get something for it, and what’s better than capital for into your company typically at fair terms? Furthermore, programs that invest money into your company will generally work a lot harder to provide value and, well, accelerate you. That’s because with that investment, they have their own incentives to generate a return, both for their LP investors and themselves, in the form of carry which is how investors get paid for the investments they make. This all being said, there might be some non-dilutive programs that offer other types of value, say industry-specific programs where you might really need help. I would just caution you to guard your own time and protect it ruthlessly. Could you perhaps have more customer interviews or sales calls instead of sitting through a presentation on IP law? What do you think will be more valuable to your early-stage company, you tell me. I’ll save you from a rant on how corporates and startups don’t and shouldn’t mix because even I have seen some corporate accelerators provide a lot of value and partnerships via their accelerator programs. Depending on your industry it might make a lot of sense to give them a try.
So the decision to do an accelerator should be a personal one. If you are super early in your founder journey and well, you know nothing, then yes do a program. You’ll learn more in a few months than you ever could on your own in a few years. You might even have some fun and build some relationships you can carry with you throughout the years.
However, if you’re somewhat experienced or ready to get to work, then just do that. What are you waiting for and why do you need to be told by others what do? Save your precious time doing what probably benefits you and your business the most. Sure, you might make a few more mistakes along the way but from my experience, those tough learnings are better than anything that can be found in an accelerator program.
