A recent Techcrunch article talked about the startup accelerator trend and where it’s headed. But most accelerators feel very one-sided: Focused on mentorship and fundraising, without much structured guidance to improve the product or the team. This results in a flood of companies that look polished but lack substance.
I’m often asked to help design startup accelerator programs, so here’s my ideal. This program is similar to some in that it includes mentorship as a primary component. It differs from many in that it places a heavy emphasis on the product and on coaching the team around good, momentum-building behavior.
The 3 Pillars of an Effective Startup Accelerator Program
- A Rock Steady Facilitator. This person needs to be someone who has been around the block a few times. If they don’t know the answer, they know how to help you find it. The facilitator guides the teams through a process, books special mentors or speakers, makes introductions, and, when necessary, counsels the founders in times of high stress.
- Business Model Canvas. This is a great way to get a snapshot of a team’s current vision on their business landscape. The canvas will inevitably change a lot over the course of a program, but you need to get a baseline. This should be revisited often, and at the end of the program a new one should be created, reflecting the now-current view.
- Product. This is the part that is neglected in most startup accelerator programs. We have seen numerous teams who had brilliant ideas, excellent software developers, sometimes even marketing-savvy founders, but they still didn’t know how to turn the sum of all that into a product that would have meaning for a human being. An ideal startup accelerator spends at least 50% of its time and effort on the product development (and customer development) process. This means understanding customers, knowing their needs and behaviors, and aligning those with the business vision. It also includes developing a proficiency in articulating hypotheses, creating experiments, and measuring the results.
- Market Sizing and Segmentation. Market sizing is voodoo, but it’s voodoo that can help you set realistic expectations about growth potential. And it helps a lot when it comes to getting investment. The work on the product will help teams identify who needs their product. Once they have that, they can go on to figure out how many of those people there are, and whether that market is sufficient to meet their business goals.
- Sales and Marketing. This includes the basics of running a good sales call (for B2B startups) as well as developing an understanding of how things like email campaigns, or social media campaigns work, typical conversion rates, how to drive conversion, and so on.
- Founder Legal Stuff. Many programs handle this with a single presentation from a lawyer, covering things like incorporating, equity, board resolutions, etc. First-time founders have a lot to learn and need to understand, and it requires more than a simple Q&A. In an ideal program, the facilitator should know this stuff well enough to be able to give sufficient answers as they come up. They should also know enough to call in a real lawyer at the right time.
- Optimization. Teams should learn how to refine the things that they’re already getting mostly right. They should do multivariate testing and spend time improving the sales funnel (though the core of the product is always more important).
- Showing traction. How do you know when you have traction? What does product-market fit look like? Teams should be measuring traction and evaluating product market fit from week 1.
- Fundraising. Pitch practice is essential, but insufficient. An ideal startup accelerator program helps founders target the right investors, reposition the pitch for different types of investors, scale the pitch to get the most out of a given context, and adapt the pitch for other important stakeholders, like partner meetings.
- Resources. The best startup accelerator programs have loads of supplemental resources available (books, blog posts, videos, etc.) to help founders attack specific problems.
The facilitator works more than full time, supporting the teams, both pedagogically and psychologically, and no one would be accepted to the program unless they were truly willing to put their heart and soul into it.
Interestingly enough, the workshops that we’re creating for luxr.co are very similar to the line-up of key topics I’ve listed above. This is not a coincidence. This startup accelerator program is based on what I’ve seen entrepreneurs actually need, and of course, so is our product.
Funny money buys no honey