This is a guest post written by the Co-Founder and CEO of Buildit Accelerator, Alexander Tõnnisson, originally published in Buildit’s blog.
Not every startup should go through an accelerator. And not every startup idea should be given a try. Quite frankly, not every company who thinks, actually is a startup. There are a lot of myths in the startup world, just as there’s lot of confusion about business accelerators.
Don’t go to an accelerator because of the money. Accelerators in essence are investment funds, but with a different mindset compared to VC-s and often with limited capabilities. The cash is only there to buy you some freedom. It’s about being able to focus on your product, without having to worry about bread and shelter.
Taking into consideration relocation costs and the cost of living, the runway an investment from accelerator will buy you is not more than 6 months. That automatically means you have to start thinking about raising the next round right away. And this is exactly why you should go — accelerators are there to make you investment-ready and will help you get in contact with relevant investors.
Accelerators are investing in pre-seed stage Valuations start at €200k
If you already know how to talk to investors, raise more capital and have your own investors lined up, be careful not to give away too much equity.The later you take in investors’ money, the cheaper it will be. Sometimes it makes sense to bootstrap your company if you have the money, skills and the connections to make it happen. I have seen very few startups, however, who don’t have any shortcomings in their plans, execution or the team. Think of accelerators as the cure to those deficiencies.
Forget about applying if you’re the type of person who thinks they always know the best. Coachability is one of the key factors when choosing startups to join the program. You’re wasting your own and the mentor’s time when you’re not open-minded about other points of view. It’s perfectly fine to build a company on your vision alone, but not with a strategic investor on board.
If you think being an entrepreneur means high salaries right from the start, delegating every task and sipping cocktails on the beach while the business takes care of itself, don’t go. Accelerators will make you work harder than ever before. 3 months is a very short period to achieve anything. Unless you work hard, you will fail. For inexperienced entrepreneurs it’s often difficult to understand that investors don’t divide their time equally, but direct their energy into the highest performing startups. We can’t help you, if you’re not helping yourself.
Leverage mentors and accelerator’s network and partners, especially when manufacturing in China.
People sometimes think that building startup is glamorous and easy. It’s not.Building a startup means 80h working weeks with no pay nor guaranteed success. Quite the opposite, it’s highly likely that you’ll fail — about 2/3 do. Odds are against you and at times you will feel that the whole world is working against you, including your investors. If you’re not able to give up the lifestyle you’re used to and fight till the bitter end, better not take the investors’ money.
Don’t go if you don’t like to take on the responsibility. There’s nothing worse than wantrepreneurs burning time and money. Accelerators are not the secret source of success. Sometimes founders think it’s the end of the journey and not vice versa. Accelerating a business has the same meaning as in physics — it takes lot of energy to gather the momentum. And it goes faster when you have more power. Think of the accelerator team as your co-founders.
Do some background research through the alumni network. Taking investors’ money is like marrying somebody you just met. You’ll go through thick and thin together. It usually takes 3..5 years before first investors are exiting your company, sometimes even longer. If there’s no good fit between you and the team running the accelerator, it’s a recipe for disaster.
Make sure you have access to tools needed to build your product.
Here’s an article from one of the Buildit’s alumni Comfee.
Accelerators are not public funds giving out soft loans. You’re taking somebody’s hard earned cash and they expect results for it. If you’re not willing to commit to your idea for a minimum of 18 months with no guarantees whatsoever other than it’s going to be hard, stay with your day job. No one can guarantee that you raise your next round. Also, we like to run on the lean principle, and put our efforts into best performing teams with biggest impact and return.
You should think twice if your favorite activity is to spend time with friends and family. In fact, you’re likely to lose a few friends by choosing the life of an entrepreneur. By no means should you quit your friends and close ones but you should make it clear to them that the beginning is going to be rough and it’s going to be difficult to find time to hang out. That’s why I would suggest you apply for accelerators as far from home as it gets. Being away while together with your team makes it easier to focus and move faster. Think of it as a 3 month hackathon.
Choose an accelerator based on the mentors. Make sure these are the people who can help you reach your goals. Ask who is actually going to be working with startups and what their commitment levels are. Specialized accelerators should have mentors fitting that profile. Going to a hardware accelerator should mean you get to work with top-notch mentors from the hardware field and you should have access to prototyping tools and know-how. Don’t join if you’re not sure that you’re getting value out of the deal.
Listen to what mentors have to say — learning from others mistakes can save you lot of time and money.
We at Buildit are very proud to be able to work with mentors such as Scott Miller @ Dragon, Zak Homuth @ Upverter, Hardi Meybaum @ GrabCAD,Katherine Hague @ The Blueprint, only to mention few. Here’s a list of all mentors we work with at Buildit.
If you haven’t got the team or you’re working with somebody for the first time in your life, it’s better to postpone applying for a program. Investments at this early stage are done mainly based on the team.Being a single founder almost always means rejection, similar to having people on your team you don’t know or have never worked with before. When it gets tough, it’s good to have people around you who you can rely on.
Not being accepted to an accelerator doesn’t mean you should give up your dreams. At Buildit Hardware Accelerator we often find ourselves investing into teams on the 2nd or even 3rd try. What we like teams to work on is the product-market-fit and early traction to prove that there’s a real business opportunity behind their idea.
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