Beyond the obvious benefits of accelerators – the seed-money, advice, and access to investors – Techstars, Seedcamp, and Extreme Startups also impart many important business lessons to their startups that set the stage for lasting success.
Here’s how accelerators enable startups to become breakthroughs:
1/ Focus on the team
Accelerators, mentors, and investors don’t invest in startups because of their idea; they invest in startups for their team. The greatest identifier of a breakthrough idea lies in the founders – those most likely to succeed are passionate, multi-disciplinary, collaborative, hard working, empathetic, and future-oriented. As such, accelerator programs are placing more and more importance around recruitment and development of founders, for example Extreme Startups transformed their model into a “founder development funnel to institutional seed.” The old adage that ‘ideas are a dime a dozen’ rings true in this case. It’s really all about having the right people in place, who continue to push themselves and the company over time.
2/ Keep it simple
With such intensive timelines, accelerators have startups focus their efforts on a few core business activities. At Techstars, the program is easy as 1, 2, 3: product/market fit or customer development in month 1, product development in month 2, and the investors pitch in month 3. Working on these building blocks ensures startups have a strong foundation and vision for their company to rally around for the future. As Carlos Espinal of Seedcamp stated, the vision of a startup is “a large determinant on how they will communicate with customers, evolve their product, and hire staff.”
3/ Open the lines of communication
Startups have to be communication ninjas in order to succeed – on the one hand connecting with customers, and on the other hand, investors. The best accelerators act as a translator for their startups, employing mentors with extensive experience as both entrepreneurs and investors. First and foremost, the connection with customers must be established, and this connection must be maintained for life. Startups must then be able to communicate this customer understanding in a way that is digestible for investors, which Seedcamp ensures by teaching their teams about risk drivers and investment strategies.
4/ Encourage rapid experimentation
In the accelerator environment, teams are encouraged to constantly experiment with their product, with feedback from peers, mentors, and customers guiding the way. Marcus Daniels describes the culture at Extreme Startups as one where “ideas get mashed together; it’s iterative and collaborative.” The early failures that inevitably arise provide teams with valuable insights, which allows tem to reset their direction and refine their product to better meet customer needs; to hit the proverbial nail on the head.
5/ Build community
The emotional support provided by the accelerator network is arguably the strongest reason graduates find success. The cynicism and naysayers that startups often encounter do not exist in these communities. There’s no time or tolerance for it. Despite being competitors, teams are supportive and constructive to one another and mentors provide additional support, helping teams to build the confidence needed to attract investment. Through the Global Accelerator Network, accelerators practice what they preach. Through sharing their business advice and experiences with one another – Techstars has open-sourced its accelerator model – they are a shining example that the whole is greater than the sum of its parts.
BONUS / Give a gentle nudge
A final proviso to accelerators’ success in enabling breakthroughs is their hands-off approach. By acting as a guide, accelerators empower startups to successfully run their company… on their own. In line with the goldilocks principle however, their support has to be just right – too much or too little and teams will flounder post-program. While programs vary in length, all accelerators enforce a graduation date. As David Brown of Techstars put it, “it’s a little bit like getting your kids out of the house; they’ve got to fly and be free on their own.”
Photo: “Startup Live Vienna” by Heisenberg Media