How to Get Accepted into a Startup Accelerator
Over the past two years being the Program Manager at Ocean Accelerator, a startup accelerator located in the heart of downtown Cincinnati, Ohio, I have probably seen close to 1000+ startup business pitch decks and applications cross my desk. Trust me when I say I have seen it all. Crazy ideas, dumb ideas and some brilliant ideas. For those of you who have a business idea or maybe even have some early paying customers, stop what you are doing and take 5 minutes to read this post. I guarantee it will give you insight into the world of startup accelerators that you did not have before.
There are over 200 accelerators in the U.S. And before I go any further, allow me to let you in on a little secret: Accelerators do not receive hundreds of high-quality applications with rockstar founding teams. That just isn’t true. Every year accelerators are competing with one another for the best companies, and on the other end, companies have gotten smart and have started “shopping around” accelerators. Believe it or not, accelerators have to grind it out just to fill out their roster of 10 companies in their next cohort.
I wanted to mention that quick sidebar as a word of encouragement to those of you who are self-doubting yourself or think that your business isn’t good enough to get into an accelerator…because the simple truth is, you probably are. Anyways, running an accelerator program has been both a joy and an honor and I wanted to take time to pass along knowledge I have accumulated over the years.
So here we go.
Here are 3 tips for how to get accepted into an accelerator program.
- Have paying customers. This is the most important secret to getting accepted into any accelerator. You must having paying customers. It could be 1, it could be 10, it could be 100. Why is this so important? Because when people are willing to pay for your product it means you actually have found a problem worth solving. Secondly, investors are starting to move their investment criteria further and further down the line. 10 years ago all you needed was a passionate founder who could cast vision and a working website and you could raise a seed round of funding. Not the case today. Investors want to see paying customers and they want to see customers who are not your mother or distant uncle. You can get creative here too, let’s say your product is 50% complete and will not be done for another 3 months. You can still generate Professional Service revenue by working as a consultant for your customer base to help solve their problems while your product is being developed. Who knows, I bet they will probably end up loving you so much that they’ll offer to prepay for your product.
- Know the problem you are solving. I see this way too often and it is a darn shame. Very talented founders with a snazzy looking product, but no one will pay for it. Why? Because they forgot the cardinal rule: Always know what problem you are solving. It is tempting as a founder to fall in love with your product, it almost becomes your baby. You are constantly adding features and you forget the entire reason you built the product in the first place. When applying for an accelerator, be crystal clear on what problem you are solving and the work you have done to validate that it is actually a problem. The best applications I have seen supplement their application with a Google Doc listing the 100+ customers interviews they have performed…word for word. Some applicants even submitted MP3 audio files of recorded customer interviews (although I suggest you can verbal consent from the customer before doing this). The worst applications I have seen say something like “my mom said she would pay for it if she had the money”. No joke! Know what problem you are solving and tell me how you validated it was a problem.
- Understand how you make money. There are all kinds of buzz words I could throw in here: revenue model, go-to-market strategy, scalability, BLAH BLAH BLAH. Putting all that aside you need to have a fundamental understanding of how you actually receive cash in your banking account and what are your associated costs. Now, in reality, when you are startup, how you make money and how much it costs will always be changing. You might think you are going to do direct sales and make money through annual contracts, then the next month one of your mentors tells you about this sweet little model called a “SaaS” model and you get all excited so you pivot to that. Here is what I say….who cares. What accelerators are looking for is an awareness that you at least have a list of assumptions for how you THINK you are going to make money and what you THINK it will cost you.
In summary: If you have an understanding of how you make money, know what problem you are solving and actually have a handful of paying customers then it is very likely you get accepted into an accelerator.
There are ways for you to get creative in all three of these areas. That is ok! You may in all honestly not know with 100% accuracy what problem you are solving. Guess what…that is ok! Some of the strongest applications I have seen are companies that literally say “we have surveyed 100 businesses and here is what we think the problem is that we are solving although we are still continuing to test and speak with customers to learn more.” Honesty goes a long way in your application.
Hopefully this post added some sort of value to your life or business. If you have any questions, shoot me an email, would love to hear your thoughts and answer any questions.
Ian is a graduate of The Ohio State University and a seasoned technologist. He is a serial entrepreneur having founded over 5 high-tech businesses and currently serves as the Program Director at Ocean Accelerator, a startup business accelerator located in downtown Cincinnati, Ohio. When he isn’t coaching entrepreneurs you can find him renovating his house, playing golf, shooting clay pigeons or hiking.