At some point in nearly every startup founder's journey, he or she will wonder whether to apply to join an accelerator. It's an idea worth pondering. The funding, mentorship, and networking opportunities some accelerators can provide have proven key to the success of countless startups in Silicon Valley and beyond. Moreover, for first-time entrepreneurs especially, gaining acceptance into an accelerator provides validation that all the time you've poured into building an idea from scratch might actually pay off.
That second part is huge, particularly if you don't yet have a lot of paying customers or a crystal-clear path to revenue.
But while more and more accelerators seem to be popping up every day, not all are created equal. Established accelerators such as Y Combinator, Techstars, and 500 Startups are still churning out companies averaging valuations of tens of millions of dollars, but joining the wrong accelerator -- or joining for the wrong reasons -- could hinder your growth and even lead to failure.
Starting With the 'Why'
If you do find yourself seriously considering joining an accelerator, you'll want to ask yourself why. Ideally, your answer will align with your reasons for starting your company in the first place.
The funding, mentorship, networking opportunities, and validation can be a major boon for any company, but if that's all you're after, you're going to have a hard time convincing the right people to invest their time, money, and energy into you and your team. That's because, as author and marketing expert Simon Sinek concisely put it, "People don't buy what you do, they buy why you do it." On the other hand, if those are your only motivators, you could very easily just join any accelerator. After all, every one of them claims to offer all of the above.
But these days, even the traditionally "elite" accelerators seem to be underwhelming investors. It's probably not smart to give up equity to just anyone who says he can help you. You shouldn't look for anything less than a perfect fit for your company.
So again, ask yourself why you're willing to invest so much into your startup and, by extension, what problem you're solving. You want to join the accelerator that gives you the best chance to succeed.
Corporate accelerators, in particular, tend to be criticized for having ulterior motives or being driven solely by profit. But the reality is that all accelerators take a share of your company, hoping you make it big and bring them along for the ride. This is especially true of accelerators that accept companies from all different industries and verticals.
On the other hand, if you can tie the problem you're solving to a specific industry or business sector, it would be a good idea to explore industry-specific accelerators. Choosing an industry-specific accelerator increases the likelihood that your mission will align with the larger mission of the accelerator you join. It's a given that your success could benefit the accelerator financially, but the fact that it could also drive the organization closer to its larger goal makes a synergistic relationship all the more worthwhile for both you and the accelerator.
Let's take a look at some of the immediate value such a relationship can add to your company:
1. Access to your customers
Legendary founder and venture capitalist Paul Graham says that if he had to choose one rule for startup success, it would be this: "Understand your users."
Graham is a co-founder of Y Combinator, but his accelerator isn't the only one that teaches this rule to young entrepreneurs. Ameren Accelerator -- powered by Ameren, an energy company; the University of Missouri System; the University of Missouri-St. Louis Accelerate; and Capital Innovators, an established accelerator -- is testing out a new accelerator model that is impact-focused and gives founders access to the combined resources of each of its partner organizations.
Above all, says Brian Dixon of Capital Innovators, "Energy tech startups in this cohort will have an opportunity to talk directly to their end user: a large utility company."
Regardless of the industry you're in or whether you plan on selling to businesses or consumers, you need to have a keen understanding of who will be paying for your product. Developing this understanding takes direct acces
2. Mentors with industry experience
You can get lots of great advice from other startup founders, investors, and people who have "done it before," but unless that wisdom is coming from someone who knows how your particular industry works, it's not likely going to be actionable business insights.
The nuances involved in technical development, sales, marketing, and other key business functions vary among industries, and being able to convey industry expertise will be crucial when it comes time to raise money or talk about your product with potential customers.
Even if you have deep industry knowledge, an industry-specific accelerator will allow you to look at a space or vertical from a number of perspectives.
3. Industry-specific investors
Moreover, certain investors will automatically put you on their radar based on your affiliation with an organization they're already familiar with. And when it does come time to accept money, dealing with investors who know your industry, your market, and the obstacles you're up against will be much easier than dealing with those who only know that they want a quick return on their investment.
Choosing to join an accelerator (or not) can be one of the biggest decisions you make as a founder. If you believe it's the right move, you should be able to explain why to yourself and the rest of your team. If you're purpose-driven, you'll have a much easier time weeding out those accelerators that aren't worth your time and identifying the ones that will help you achieve what you set out to do when you started your company.