This spring alone, over 100 companies will graduate from startup boot camps, accelerators, incubators, or other similarly named programs. As my own company Dibsie prepares for demo day with Entrepreneur Roundtable Accelerator (ERA) in NYC, I want to share some thoughts with the founders thinking about applying. Do your diligence, and make sure you’re an educated buyer. Here’s what you need to know…
First of all, these programs are venture funds at the core. They can help you develop as an entrepreneur, but ultimately they’re designed to make money for their investors. No doubt the mentors, advisors, and VCs involved enjoy working with entrepreneurs and early-stage companies. But the truth is, like any investor, they require a return on their investment of time, money, and connections. This point should go without saying, and it actually helps align your incentives to build a successful company. But, don’t be surprised if you experience “tough love” in the program—it may be personal, but it’s definitely business. Think boot camp, not band camp, and be prepared for rigorous feedback over an intense few months.
This brings me to my second point, which is: haters are going to hate, and advisors are going to advise. One of the common pain points I’ve heard from friends in all the top accelerators is that they get tons of feedback, much of which is confusing and even conflicting. If you ask for a critique, you get criticized—and knowing what to filter is on you. Have conviction in your decision-making, or risk paralysis by analysis. Never have I taken so many meetings in such a condensed timeframe or chatted so much about Dibsie and social commerce. And some folks just don’t get it (which has sometimes made me wonder if I do). But what I’ve learned is to seek out the folks that really understand our space and our goals, and to elevate their feedback above the noise.
Accelerator programs tend to do exactly what they advertise—they accelerate your business. The downside is that they don’t promise which direction that acceleration will work in. Accelerators are in the business of picking strong entrepreneurs and strong ideas that (hopefully) can become strong companies. But as I said, this is business—and I’ve had plenty of advisors tell us what won’t work, and when we’re wasting our time. If your concept holds water, you should emerge a stronger company than when you entered. If your model is weak, try to fail quickly and pivot.
I’m not sure who decided that three months was a magic number for accelerator programs. In my opinion, the number seems arbitrary, and it presents challenges. Three months is not much time to grow your fledgling user base, close huge deals, or in some cases raise money—especially if you’re still iterating on the product development side. Your time in the incubator can provide a good window to hone your pitch and stress-test your hypothesis, but it’s helpful to go in to the program with your idea as well-formed as possible. Move as fast as you can, and start gathering metrics early so you have the building blocks to demonstrate progress. Blink, and your three months can be over.
Whether you’re ready or not, “Demo Day” waits for no one. All programs culminate in a one to two-day pitch event (ahem, looking at you 500 Startups and Y-Combinator) with graduating companies announcing all of the great progress they’ve made in the previous three months. Demo Day typically draws a phenomenal lineup of professional investors who want to review multiple companies and founders in one efficient presentation. It’s a great opportunity for companies like Dibsie to kick-off discussions with a number of potential investors—but there are drawbacks to keep in mind.
For one thing, Demo Day builds transparency into the market, which can be both a good and bad thing. Investors get a look at who’s attending, who’s interested—and who’s not. Companies can showcase their product and business to a large audience, but give up the option of working in stealth. Demo Days also dictate timing in ways that can prove challenging. In most cases, they build in a free time-option, since investors have low incentive to commit ahead of Demo Day presentations. On the upside, they can provide a useful catalyst for your investment round. The challenge and the goal should be to make the schedule work for you.
Net-net, accelerators are an amazing addition to the startup landscape. They provide some timely capital, and amazing access to top investors, advisors and industry professionals. It’s tough to downplay one-on-one access to figures like Fred Wilson, Peter Stern, and Chris Dixon—all of which I’ve had the pleasure of pitching at ERA. But remember these folks also regularly attend meetups, conferences, and post blogs and videos online—and therefore, should not be the sole reason you apply. Programs are not about idea validation, personal recognition, group dinners, or speakers. Accelerators are about building a successful business. Or as Ronnie Coleman so eloquently puts it: if you want to be a bodybuilder, “you gotta lift that heavy-ass weight”.
Garren Givens is co-founder and CEO of Dibsie (http://dibsie.com), a social shopping site you browse and curate with friends. He previously co-founded CampusDibs, the first daily deal site focused on students. You can check out his writing here (http://garren.me).