Do you think your start-up would benefit from an accelerator? If so, you're not alone. According to TechStars founder David Cohen, his high-profile accelerator gets about 12,000 applications a year for about 100 slots. That means less than 1 percent get in--and that you'd have a better chance of being accepted to Harvard.
That doesn't mean you should lose hope. It means you should take an honest look at what it takes to get into an accelerator, and whether your company fits what they're looking for. To help you figure it out, John Jackovin, founder of Bawte, and a recent graduate of TechStars' Boulder, Colorado program, shared some of his insider insights. Bawte is a website and mobile app that helps connect people who own products with the manufacturers of those products, enabling them to buy spare parts, download users' manuals, and so on. Since graduating in December, the company relaunched and now has about 20,000 users. Jackovin attributes much of this success to TechStars. Here's what he says they're looking for:
1. An industry-changing idea.
Accelerators are interested in big ideas that can change entire industries. TechStars founder David Cohen, an early investor in Uber, says he likes ideas that bring equilibrium to otherwise imbalanced markets, such as the taxi/limo market where, in the pre-Uber days, too much power rested in the hands of company owners.
"In the world of retail, the people who make the products and the people who buy the products have the most loosely defined relationship," Jackovin explains. Getting in touch with a product's manufacturer is awkward at best, and usually only happens when the consumer is having a problem. "We're trying to change a really big industry which is a big component of all our lives, so it's a big concept," Jackovin says. Here are some other reasons it's smart to tackle big ideas.
2. A company that's already in the marketplace, not just a concept.
Founders who fear that their companies are too far along for TechStars probably have nothing to worry about. In a video interview on how to get into TechStars, Cohen explains that with so much competition for spaces, a really good idea is no longer enough. He wants to see companies that have raised some funding and put a product into the marketplace or at least created a prototype. Though Bawte hadn't raised much funding, it had already launched in the marketplace and grown to about 1,000 users before applying to TechStars.
3. A co-founder, or at least a lot of support.
TechStars' website encourages solo applicants to find co-founders before applying. The reason, it says, is that no one person has all the necessary skills to start a successful company, but Jackovin thinks it also has to do with the program itself, which can be brutal. "The first part of the program is to vet your idea. You go through a really condensed review. It's a little masochistic, for lack of a better term," he says. "It forces you to really dig down to a place you probably wouldn't be able to dig to on your own. It strips down all your assumptions about your company, your business, and even you as an individual. Which is why they like co-founders, because you can prop each other up." Here are 7 ways to tell if someone is a good choice as a co-founder.
In Jackovin's case, he lacked a co-founder but did get a lot of support from his wife, who encouraged him to attend the program even though it meant she'd be stuck with all parental duties while he was away. And during those three months, Bawte was indeed stripped down from its original form into one with a more solid business model. "We pulled away a lot of the things we thought we were going to be and came down to the core of what we ultimately became," Jackovin says. "We came in as a repository of information for consumers. We ended up as a way for manufacturers who sell by retail to connect to their end customers. The underpinnings are very similar, but the focus is different."
4. The ability to sell yourself.
"Treat the accelerator as you would a potential customer," Jackovin advises. That means staying in touch and sending occasional updates about your business. "You want to share things they would be interested in, such as how you are attacking a problem and the successes you've had. The application period spans months, and a lot can happen to your business in that timeframe."
Accelerators appreciate hearing from you not only because they're interested in your business but also because it demonstrates your communication skills. It also shows your willingness to be transparent. "They like people who will open the kimono a little bit," Jackovin says.
5. The potential for fast growth. Very fast.
Accelerators, along with the angel investors and VCs you will meet in an accelerator program, will invest in your business for one reason: Because they anticipate the very high rate of return that makes investing in start-ups worthwhile. (Here are some inside tips for getting VC funding.)
"Most accelerators get you ready to be a highly scalable business, so if your business is not something that can scale very easily and quickly then it's probably not a good fit," Jackovin says. "They're trying to get you to a place where you can take on investment. Once you do, those investors will want to see a return that's 5, 10, or 15 times."
Potential investors and mentors will ask, "How can this be a $100 million company in five years?" Jackovin adds. In order to get into the program, you will need to have a good answer.