Ignite is currently open for applications for its Summer programme (the first of three in the next 12 months). In the period prior to deadline, I try to meet as many teams as possible, close to home and around the world; we talk about their ambitions, their situations and challenges, and whether or not our accelerator programme could add value.
Some founders are convinced they need to go through a programme when they clearly don’t — there’s plenty they can do for themselves, by testing assumptions about their product and market. Others are intensely cynical and refuse to entertain the possibility. Then there’s everyone in between, all coloured by their own shades of experience and uncertainty, their circumstances and opportunities.
The question at the heart of many of these conversations is:
“Does my startup need an accelerator programme?”
The answer is no. No startup absolutely needs a programme. There are plenty of technology companies that have raised millions and sold for billions without giving equity to a programme’s investors. There’s no point pretending otherwise.
However, it’s a fact presented out of context. Highlighting Twitter’s IPO or a billion dollar acquisition as proof that programmes are unnecessary — it means ignoring the millions of attempted businesses that went unnoticed and died an unremarkable death. IPOs and ten-figure exits are the tiniest fraction of a global output that has seen millions of opportunities and billions of dollars squandered. You can’t realistically compare it to the output of accelerators, where the numbers of graduating startups are still in the thousands.
In September last year, a group of angel investors and VCs heard research from students at Cambridge Judge Business School concerning accelerators and incubators. One of their conclusions was that accelerator alumni were roughly a third more likely to still be trading four years after launch, versus startups that didn’t complete a programme. The figures came with a caveat; the research focused on YCombinator and Techstars because they’ve been trading for a time of length where objective measurement of their outputs could be made. That said, research concerning EU-based Seedcamp also confirmed their alumni are far more likely to exit than similar VC-backed startups (although it’s worth noting that Seedcamp is not an accelerator and hasn’t been for some time, despite what lazy journalists say on the matter; it’s a fund with incubation services — a very different to an accelerator).
It feels like common sense; compare the progress of 100 startups on a respected, established accelerator programme, against the progress of 100 randomly chosen startups left in isolation. It doesn’t seem unreasonable to suggest that the accelerator portfolio is likely to perform better. In other words, completion of an accelerator programme doesn’t guarantee success (whatever your measure of that is), but it will improve the probability.
So if somebody says accelerators are worthless, I’d suggest that what they mean is that they’re not suitable for them. That’s not to say all programmes are created equal and all will provide value — there has been plenty of talk of an accelerator ‘bubble’ in the past year as programmes pop up everywhere, and it’s very fair to say some have proved little more than a costly distraction for those teams taken in by empty promises.
Ultimately, all startups are different, and there’s no one right way for a startup to achieve success. There’s best practice, of course, but even that is subjective to a point; despite a world full of advice, opinion, testing, workshops, testimonials, investment, success and failure — we’re still learning how it all works, and we’re inventing new methodologies all the time.
Every programme is likely to offer (to a larger or lesser extent) mentoring, investment, office space, introductions to their network, demo days (not Ignite, however) - and you can do a reasonable job of qualifying the value of this offering (and you absolutely should —again, see below). However, there are two benefits that rarely appear in the brochure because they’re not as easy to quantify, yet are arguably the most important aspects of a programme:
Some people can find focus in their lives; they can tune out all distraction, whether it comes from employment, friends or family, and fully dedicate themselves to developing their ideas — in isolation, in the spare bedroom, night after night. Very occasionally, they find one or two others who are able to do the same on an similarly intense and consistent basis.
For those who struggle to find focus amongst the pushes and pulls of our daily routine, an accelerator is an opportunity to step outside that environment and pour your heart and soul into your work for several months, without distraction or procrastination. Ignite’s programme manager Tristan once described this focus as the difference between saying you’re going to go to the gym three nights a week, and enrolling in the Marines. For some, it’s the opportunity they need to draw a line in the sand, to stop making excuses and get on with it.
You are in a situation with 25 people. You’re rarely the smartest person in the room. Day-to-day, you’re solving problems of all shapes and scale — and so is everyone else. Accelerators are physical brains trusts; founders may be selfish in their focus on success, but giving to receive is the mantra of the world’s best programmes.
The result? Developers become better developers. Designers learn new skills. Business development becomes faster, smarter, sharper.
Lots to think about, but once you’ve decided that an accelerator is worth considering, how do you find one that’s suitable for you? And how do you lessen the risk of falling in with a poor-value operation? Programmes pick and choose the teams they work with; teams should do as much due diligence on a prospective accelerator as they’re likely to do on you:
• Don’t just look at what the programme is asking for, but look at previous cohorts and the type of teams that interest them. Consider whether the accelerator is interested in a specific vertical or teams from a specific geographical region. Will they invest in a concept? A single founder?
• Ensure the investment offered isn’t a case of bait-and-switch; too many programmes take fees from the headline amount, or wrap loans into the total (you should never give away equity for investment that includes a loan — a bank will give you a loan without taking a piece of your company);
• Ask to speak to alumni teams — if the programme management are reluctant to make introductions, walk away. The majority of a programme’s alumni should be their most enthusiastic cheerleaders;
• Know who the programme’s investors are, what their sector expertise is, what role they’re playing in the programme and, crucially, whether they’re likely to invest post-programme;
• Ask the programme outright what their portfolio is worth — there isn’t much commercially sensitive about the headline numbers (unless it’s performed poorly) — and ask them to highlight any individual (public) successes;
• Don’t assume a programme is better for your startup because it doesn’t take equity. Depending on who they are, a group of angel investors and VCs investing in you from the beginning in return for equity is no bad thing. It means you’ll exit the programme backed by angels aware of your objectives, and who are likely to be receptive to investing in your next round;
• Read the FAQs, it should answer most questions before you apply. If a point is ambiguous and you’re unsure, seek clarification. Sometimes it’ll be ambiguous for a reason (the programme may make exceptions as and when they meet the right people).
Whether your interested in a programme or just curious about what they do (or don’t) offer, get in touch and arrange a chat before the deadline. Better yet, if you’re in the neighbourhood, ask if you can buy the manager a coffee. We’ll always make the time to talk to teams — we’re keen to hear what people are up to and help if we can. The real value, however, comes if you do apply — it means your name is already known to the programme managers. In a sea of hundreds of applications, it makes a difference.