Not every startup can get into YC. And not every startup can get into Techstars. And not every startup can get into 500 Startups. The list goes on. It’s often not a matter of the startup that doesn’t get in not being good enough; it is sheer competitiveness. Before I became a lawyer focused on emerging technology companies, I served on the undergraduate admissions committee at a top tier university. We – and the admissions profession – had an expression to describe why qualified applicants are turned away:
The strength and nature of the applicant pool.
Put another way, you’re probably good enough and probably smart enough. Your startup may have a lot of potential, but there are so freakin’ many great founders and great startups that they can’t take them all. And if they could, the program just wouldn’t work. Tech startups should be able to scale, but accelerators are primarily people-driven. An accelerator can only scale so much before compromising its network, focus and resources.
But while there are many fine universities that don’t have ivy on the walls, there is a perception – and to some extent, a reality – that there is a steep drop-off in quality from the top tier accelerators to many local programs. With that in mind, there are several key founding team conversations to have before signing up for a “non-name-brand” accelerator, and objectives to bear in mind once a startup is within a program.
Will this help? It’s a natural question, and founders need to perform due diligence on the program. Past performance isn’t everything, but it can be a valuable signal. So seek out program graduates and ask what the program was like, what it has done for them and whether they’d recommend the accelerator to you. Be sure to ask about the quality of the program leadership and mentorship matching. You shouldn’t just seek out the shining stars that have gone on to big growth and fundraising. Track down past “demo day” presenter lists online and find companies that the accelerator isn’t showing off. There are any number of reasons why things may not have worked for them yet (or at all), but if you reach out to enough companies, pattern recognition should kick in.
How will this impact the ability to raise money? As you diligence accelerators, you should be paying close attention to how much equity the accelerator will get and what sort of anti-dilution rights, if any, the accelerator will have. Work with your lawyer to understand whether the accelerator can block a future financing or impact the terms of a future financing. It’s unfortunate, but some local accelerator programs insist of sweetheart terms for themselves that can add challenges to the already-daunting fundraising endeavor. And be careful to understand whether an accelerator representative is entitled to a board seat or a board observer role, and if so, whether that position has an expiration date.
Once you’re there, there are simple goals:
Network, network, and don’t forget to network. While accelerator participants and operators talk frequently about mentor whiplash (with camps with the pros and cons), you shouldn’t just be focused on mentors. You should build relationships with other startups with your cohort, and informal relationship with their mentors. It’s not just to have a network for fundraising. It will also help with sales and recruiting. Your peers are both potential competitors and also potential customers. But the failure rate is likely to be higher in a non-top tier program. If things don’t work out for them, if you have already pre-vetted some of their talent, you can grab the best.
Watch out for bad advice. Top programs have unbelievable networks. A local program is likely to be more limited. Hopefully they don’t compromise quality in the name of quantity. Again, it is up to you to perform due diligence.
Use the program to get knowledge from bigger names. There is something about a student or intern asking for help and advice that leads to more open doors than when a peer or competitor walks in and asks. If you interned somewhere or were a student, you hopefully had this experience. Bigger names, and even rivals, may be more open with you when it comes to giving feedback by taking advantage of the same “student effect” when you reach out. If your startup isn’t in the most well-known program, you may have to do a little more to educate someone that you’re reaching out to about yourself. But you can also use it to your advantage and show that you have hustle.
Build. This one is kind of obvious, but the clear way to show prospective investors, hires and customers that you are on a rocketship path is to JFDI. Take advantage of the accelerator’s resources, understand that there may be limitations, and continue to build on your initial goals.