Bryan Menell is the cofounder and managing director of Capital Factory, a seed-stage mentoring program for technology companies. He is also the publisher of AustinStartup, which highlights emerging technology companies in Austin.
In the bad old dotcom days, startups used to be hatched in incubators — idea factories that spewed out companies to meet the ’90s bull market’s demand for tech stocks. (The most famous one, Idealab, was once valued at $8 billion.) Now there’s a new kind of startup booster: the accelerator, a camp-like program that brings entrepreneurs together to benefit from both mentors and peers.
Accelerators have proliferated recently, bringing more opportunities to entrepreneurs who need guidance as much as money. But the sector’s growth means picking one is no longer a simple choice. And now’s the season when many of them start taking applications (including my own accelerator, Capital Factory). How do you choose?
Each program has its own flavor, and no two are really alike. One key consideration: location. Accelerator participants must pick up and move, at least temporarily, to the program’s home base. (Face time is the whole point, after all.) So think about the city in which each program is located. Does it fit your style?
Then there are people. Research the mentors and directors of each program. Would their background and experiences be useful to your company? Is your company going to require substantial venture capital in order to be successful? If so, who are the VCs that historically fund companies in each program? A little research here will pay off.
Some of the programs worth considering include:
- Y Combinator. Now located exclusively in Silicon Valley, they are known for being one of the earliest innovators of the accelerator model, and they invest primarily in software and Web startups. Late applications are being accepted until June.
- TechStars. Initially started in Boulder, this program now funds software and technology startups in Boston and Seattle too. Applications are still being accepted through June 1 for the Seattle program.
- Capital Factory. This Austin, Texas program also invests primarily in capital efficient software and technology startups, and is accepting applications until April 2.
Here’s my advice for any company hoping to get chosen for such a program:
- Be flexible. Taking the advice of the people in the program means changing things about your business. Be brutally honest with yourself about your willingness to change things you are emotionally attached to; names, concepts, ideas, and even people. If you can’t handle your cheese moving, don’t go into the maze. One of our companies last year had an awful name when they first applied. Almost a year later, Sparefoot.com not only has the new name but has significantly altered their operating model three times.
- Do your homework. Know the mentors and their backgrounds, and have an idea of what they could do for your company. When we interviewed the team from PetsMD.com in person, one of our mentors opened their computer and did a quick search of all the pet-related information websites, and asked them for a competitive analysis of each one. They were very aware of the market, and gave a verbal analysis of each competitor’s strengths and weaknesses. You should be able to do the same.
- Be empathetic. Put yourself in the place of the accelerator you’re applying to. They see hundreds of applications each season. They’ve seen your idea many times. Tell stories that illustrate your team’s capabilities instead of hyping your idea.
- Be different. We receive applications from a dozen companies in trendy categories like mobile advertising, location-based services, social networks, iPhone apps, online coupons, etc. What makes yours stand out? If you say either (a) we’re passionate about our business or (b) we know the market better than anybody else, the trap door will open beneath your feet. What unique twist have you come up with that changes the game for this market? Maybe your uncle works for GE and he’s agreed to give you a huge contract if you can ship the product? Perhaps you’ve found a new viral technique that will lower your marketing costs? All of these are better answers than (a) and (b). Even crazy or controversial ideas have the potential to turn an industry on it’s head.
- Be realistic, because we are. We know you don’t have all the answers, and we don’t expect you to. If you did, you wouldn’t need us! Talk confidently about what you do know, and have some sense of self-awareness about what you don’t know.
- Be visionary. Most companies I see think too small. Is it really a company you’re creating, or just a product? I don’t want to hear about how 1% of the market will make you a $200M company. I want to hear your plans for having 90% market share and dominating the market!
- Have a real business model. You’re creating a new way to help people find and share cool new music? Awesome, how do you make money at that? Last year we asked a few business-to-business companies, “Who would be your first three potential customers?” The blank stares told the whole story.
If you’re willing to move to a new city, rip up your business plan, put your trust in a community of fellow entrepreneurs, and work like hell, you could benefit from an accelerator. Some alumni tell me they’ve made a year’s worth of progress in one summer. Time to get those applications in.
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