“Should I apply to an accelerator?” talk about an important question which is seldom asked by entrepreneurs before applying.
Not an entrepreneur which is considering whether he should apply to an accelerator program or not? –> TL;DR.
Why apply to an accelerator? (good reasons)
- Inexperienced founders
- First company you are building? ever created a product from nothing? have you fundraised from VC’s? if the answers to some of these questions is “no” then you might want to apply
- Usually, Israeli founders have strong technical backgrounds but lack the “business side” of things – that’s why for an Israeli accelerator especially it is important to focus on “the business”.
- Getting to know the world around you
- Working out of your cool Tel Avivian apartment? spending 15 hours a day coding & dreaming of success? Many entrepreneurs develop a fear of stepping outside and putting themselves out there. The fear is natural but history teaches us the sooner you are out there getting feedback, the better.
- Need a POC with a corporate
- To prove their tech works, startups often need a corporate to agree to do a POC, working with corporates is difficult and many times dangerous as it can take 12-18 months to get through the door. Accelerators can help with that, at SigmaLabs one of our sponsors is the Israeli fintech leader Leumi-Card, which has built a custom innovation program which enables startups to run POC’s with the firm in under 4 weeks (!!).
- In the Tier 1 Israeli Accelerators, acceptance rate is very low, for SigmaLabs it’s under 4% for finalized applications. Investors, future employees & potential customers are aware of these figures and therefor joining the right accelerator can add some credibility to your brand as a professional has “vetted” them.
- Benefits worth a lot of $
- Accelerators offer various perks, some are worth a lot of money. When the team is bootstrapping and every dollar counts these perks can go a long way.
- A “wave” is often a community of very talented people, so more than often teams assist each other with hiring people they worked with / know therefore reducing the hiring risk each startup faces
- Building your network
- You will meet a lot of people, VC’s, entrepreneurs & executives. Great accelerators help startups establish themselves in the eco-system and build one of the most important assets: a strong business network
- Direct access to experienced mentors
- This will vary from program to program but assuming you are accepted to a good accelerator you will meet mentors which are very hard to attract their attention out of the crowd of Startups.
- At SigmaLabs founders meet with Mentors such as Gil Hirch (CEO of face.com, acquired by Facebook), Ido Yablonka (CEO of ClaritRay, acquired by Yahoo!), Avi Eyal (serial entrepreneur and investor), Omri Moran (CEO of Kitlocate acquired by Yandex), Aki Eldar (CEO of Secure Islands, acquired by Microsoft), Gal Nachum (5x entrepreneur) and others. These individuals can help transform your business and give you invaluable advice.
- The environment forces you to work harder and faster
- Everyone around you is working incredibly hard and the program staff push you to show results on a weekly basis, of course you want to run as fast as possible even without exterior intervention but this environment will often push you to run much faster than if you were working on your own.
Why to apply to an accelerator? (bad reasons)
- Demo day
- Some think Demo day is a guarantee for fundraising, sometimes a meeting which occurred during DemoDay will lead to a financing round but this is not usually the case, most VC’s already track companies before / during the acceleration period and if they are “on the fence” it’s because they are waiting for more traction rather than to see a polished pitch. If you want to get in front of many investors quickly, just e-mail them and set up meetings –> it will be much faster and more efficient than starting a process to apply to an accelerator
- Free office space & coffee
- As weird as it may sound more than a few startups want to get accepted so they can avoid paying rent. I don’t think getting a free office should be a defined company goal but let’s say the objective is to get free office space. If you are developing an interesting enough product your clients / potential collaborators will let you work from their office just so they can keep tabs on your development, this also does wonders to your ability to reach product market fit fast and would be less demanding than an accelerator program.
- We need “structure”
- An accelerator is not a school, especially in Israel where the average age is higher (Army and all). No one can take you hand in hand to the IPO- an accelerator does not give you a daily schedule which if you do well you will succeed – it gives you tools, connections, advice and a lot of experience. An accelerator is more like Yoda, Less like Luke.
- This is probably the worst reason you can have to apply to an accelerator
- Help with marketing (my product is amazing, people just need to know about it…)
- Sometimes it’s true but most times the product just does not “fit” and therefore must change. It is sometimes a brutal truth but the road to success is often paved in pivots (think of Yevvo –> LifeOnAIr –> Meerkat –> HouseParty).
- When you launch the product more important metrics than users perhaps are engagement and retention, once you have those but not many users –> marketing is your problem.
- If you are ready to Pivot some accelerators have no problem with it whilst others will not accept you – no rule of thumb I am afraid.
- You are too early/too late
- I’ve seen numerous startups who joined an accelerator with nothing but a half-baked idea. Ideally you want to make good use of your limited time at the accelerator and not spend your entire time just thinking and coding to validate ideas you might drop 2 weeks from today.
- In a similar manner, there is little value for a post-revenues startup to join an early stage accelerator to learn how to get their first customer.
- This is a tricky clause but the point is the founder should think about what stage he is in and see if it fits with the accelerator’s offerings otherwise as great as the startup & accelerator may be: there will be a misalignment.
- Legal + accounting counsel for free
- In Israel 2017, Lawyers and accountants (except auditors) give their service to startups for free, the pitch is: “I will let you pay me after you raise money since I believe in you” – this rule applies to all startups which these service providers find interesting enough and not only the companies which get in to accelerators.
- We need funding
- Although some accelerators like 500 Startups & Techstars offer funding ($25K – $50K usually) it is never an amount which is enough to build a company on but it can cover your costs for the next couple of months and give you runway to be more comfortable.
- Regarding raising VC money there is no doubt joining a tier 1 accelerator can help purely due to the clout associated with it (89% of SigmaLabs companies raised exterior funds) but it’s a side effect rather than a goal. For funding, it is far quicker and simpler to just approach the VC’s and pitch to them than to apply to an accelerator.
I hope this blog post will help you decide if you should apply to an accelerator or not, if you still have questions feel free to shoot me an e-mail at firstname.lastname@example.org
 “Too long Don’t Read”
 POC – Proof Of Concept
 When a startup pursues a new direction, leveraging previous learnings