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Getting the most out of an accelerator programme

Garren Givens, founder of social commerce site Dibsie, wrote a great post on Venturebeat explaining how founders should think about accelerator programmes. As the number of programmes mushrooms there is inevitably going to be some bad ones to go with the good ones, and so this is a topic that founders need to think more about.

His main point is that at their heart accelerators are venture capital funds. They exist to make money for their investors. Whilst the principals might love working with startups when push comes to shove they will have to prioritise making the numbers work.

His second point is a great one. I’m going to quote it in full:

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.

In the early stages of a company soliciting feedback from a wide range of people, including those with contrary opinions, helps to speed the iteration of the plan and increase the chances of success. However, the feedback will inevitably be conflicting and as Garren says the difficult part is deciding which advice to take and which to ignore. It is challenging to be open to criticism and new ideas whilst at the same time being able to quickly discard comments which are unhelpful, particularly when great ideas can come from the most unlikely of places and even experienced people sometimes come up with bad ideas (myself included). Good innovators are particularly adept at rising to this challenge.

  • Gordon Guthrie

    The point about feedback is that “you should not take advice from mentors, you should take advice from mentors seriously”.

    From experience with Seedcamp I think you get three types of advice:
    * the right advice at the right time
    * the wrong advice
    * the right advice at the wrong time

    All the evidence is that it is the third one that kills you – see the Startup Genome Project about most startups dying by premature scaling.

  • http://www.theequitykicker.com brisbourne

    Yes. Right advice at the wrong time is hard to distinguish from right advice at the right time, particularly when it is in the form of encouragement to be ambitious.

  • neil_lewis

    Hi Nic

    An interesting article – and given the growth of accelerators I’m slightly surprised that more people haven’t commented.

    I think you are right that accelerators are essentially VC companies – but I believe – outside of hot money locations such as SF, NY, Boston etc… and perhaps London… that accelerators need to focus on revenue generation rather than equity value.

    This is simply because the investment communities in the regions are focused on greater certainty and earlier paybacks, albeit, they give up the opportunity of backing the next Facebook.

    If an accelerator – or startup – doesn’t take this into account, then they often find the companies can’t raise finance.

    Hence, outside of the key big named accelerators based in the cities with the most extensive VC funding – then I believe the accelerator needs to become more like a publisher and less like a VC – that is, develop a revenue share / royalty model rather than a one off equity win.

    I’ve written more about this here http://www.ibusinessangel.com/2012/04/what-makes-a-startup-accelerator-work-and-why-regional-accelerators-need-to-change/ - in case you want to continue the discussion.

    Br
    Neil

  • http://www.theequitykicker.com brisbourne

    Hi Neil- thanks for an interesting comment. I think you are right that accelerators need to service the needs of local investors. I’m not sure how widely applicable a revenue share model is though. I know that we don’t like it when a company has to pay out a portion of its revenues to a third party and can’t use the cash to fund growth.

  • neil_lewis

    Hi Nic

    Good point – I think this illustrates that as a company moves up the investment chain (from local business angels) to international VCs that the needs of the investor changes.

    We’ll structure things so that fees paid from cashflow will be seen similar to the fees you’d pay a trade association.

    Br
    Neil