Startups fail everyday. And depending on who you listen to, the crash and burn rate is anywhere from 50% to 90% within one to five years. Because smart entrepreneurs know this, they seek help. Mentors, advisors, peer group entrepreneurs, business courses, masterminds and accelerators are a few options. In fact, according to TechCrunch there are roughly 170 accelerators worldwide. Media darlings like 500 Startups, TechStars and Y Combinator churn out big successes
and sometimes colossal failures — but rarely is there a peek behind closed doors of what an accelerator is and what it can do for your startup business. So in search of answers, Robert Wallace, Executive Vice President of Tallwave shares key insights on how it works. To start, Wallace defines accelerators as: “Organizations that ‘accelerate’ the growth of new ventures. They offer professional services and coaching focused on product development, funding, end user experience, branding, sales/marketing, establishing valuation and effective team building. Normally the services and sometimes small amounts of seed capital are provided in exchange for up to 10% of equity in the startup venture.” Although this gives entrepreneurs some insight, let’s focus on four things you can expect inside and three questions to determine if an accelerator is right for you: What To Expect 1. Prepare For The Bright Lights Of Interrogation Imagine a dark room, spotlights and all eyes on you as you’re peppered with questions so intense they produce sweat marks over your eyebrows. A bit dramatic? Maybe. But successful entrepreneurs face the fire. According to Wallace, “The hard questioning, doubting, hole-poking, and criticism inside an accelerator is to make your venture stronger. So I recommend entrepreneurs put their egos away and listen, learn, and overcome those questions. Remember, it’s in the accelerator’s best interest that you change the world too.” 2. Expect To Work Hard(er) Sad to say, but I see it everyday in my own experience with entrepreneurs — some just want the lazy way to success and aren’t willing to work for it. Wake up from the dream because it takes hard work. Wallace says: “Some accelerators roll up their sleeves more than others. But the reality is, they’ll add more work to your already sizable to-do list. But like anything else, what you get out is based on what you put in.” 3. Brace Yourself: Your Startup Will Change One fact for sure, intense questioning combined with hard work (focused on the right things) on a business idea will distort and change things. In other words, your startup will not (and should not) come out the same as it went in. Wallace adds: “Say you have an idea on a napkin. You should leave with a prototype and a realistic idea of how you’re going to make money. Maybe you come in with a working prototype and beta users. You should leave with a deeper validation of the customer needs, a capitalization strategy, and a robust go-to-market plan. A good accelerator specializes in taking a startup from point A to point B, depending on where point A is for that startup.” Is An Accelerator Right For You? Question 1: “Do you believe capital is the magic pill for your startup?” If your only goal in joining an accelerator is to raise capital, prepare for disappointment. Good accelerators should improve your chance for funding — but your business must be ready for this step (which most aren’t). Focus instead on the accelerator making your company more fundable. Wallace says: “This typically means the product has made progress, you’ve gotten some traction in the marketplace, your financial models make sense, and you have a vetted plan to get to market. If the accelerator helps you in these areas and has connectivity to capital too, that’s great. But never expect it to make fundraising easier because even in the best cases, fundraising is hard work.” Question 2: “Do you want to build a company or just launch a startup?” I love this question from Wallace. Yes — “overnight” success stories coming out of accelerators make it sound easy. Just get accepted to one, pull all nighters writing code, and hobnob with the right VCs until the day of your buyout or IPO. But that fairy tale is only the case for a tiny percentage of entrepreneurs. A larger percentage die quickly, and the others fall into the middle. So what’s your plan if you fall into the middle and have to make payroll, hit revenue targets and gut it out for many years? In other words, forced to run a real business? Smart entrepreneurs look in the mirror first. They ask themselves tough questions like this one. As Wallace pointed out, Michael Gerber made a case for what happens to most entrepreneurs after their “entrepreneurial seizure.” In short? Most entrepreneurs are not prepared for the “middle ground.” If this is you, an accelerator might not fit. Further, entrepreneurship in general may not either. Those in the middle must build a company. Wallace says “If you are ready and willing to do that, then you should seek out accelerators to help with the commercialization of your business, not just the launch of it. This means the nuts and bolts around product, customer acquisition, financing, and business management.” Question 3: “What kind of access do you need?” If you passed the question-number-two test — next is to determine how to choose the right accelerator. Successful entrepreneurship is all about access — access to experience, mentorship, potential funding sources, peer-group entrepreneurs and viable partners. Wallace says “Can an accelerator expose you to people tailor-made for your idea, and just as importantly prepare you to take advantage of those connections? If the answer is yes, then that accelerator is probably right for you.” When I asked Jeffrey Pruitt, Co-Founder and CEO of Tallwave, to sum up the most important benefit for entrepreneurs, he told me this: “Education and mentorship. Accelerators will provide access to experts in your market and a regiment of training. It could be the secret ingredient your fledgling business needs to make it over the hump because their process can move the needle forward in countless areas. ‘Been there, done that’ advice and the relationships you build often last the duration of your business.” Regardless of whether an accelerator is the right move; I would highly advise you go back and read these points again. Why? Because the best entrepreneurs foster an environment where tough questions are asked, mentors are there to help with guidance and the focus is to build a long-lasting company. Everything you’d find inside a reputable accelerator. 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