There’s no denying that startup accelerators have earned their seat at the table among startups, VCs, and corporates by investing hundreds of millions of dollars in thousands of startups in the past 13 years.
Similar to how a startup operates, building and managing an accelerator is just like building and managing a product. With that in mind, I’m excited to present the accelerator product lifecycle from a PM execution point of view.
What follows is a review of startup acceleration programs, presenting my five key-takes which you can implement in your acceleration program, and increase your product value.
Accelerators market size
The first startup acceleration program was Y Combinator, established in 2005. Fast forward 11 years and there are 579 accelerator programs globally that have made over $206M worth of total investments in over 11k startups as of 2016, according to the Global Accelerator Report 2016 by Gust. Most of this growth started only in 2011!
Acceleration models vary from non-profit to for-profit. They are backed by VCs, academic institutions, NGOs, municipalities or corporations(when corporate accelerators seem to be the current trend). We can all agree acceleration products have a market!
As this industry grows, with about 70% growth in the number of new programs from 2015to 2016, it is more difficult to precisely define what an accelerator is. Today in Israel alone, there are more than 200 programs under this category, which includes incubators, open spaces, and a variety of entrepreneur courses. For this exact information and the purpose of this article, I’ll use the accelerator definition used by the Global Accelerator Report 2016 by Gust, which describes the following common traits:
1) An application process that is open to all, yet highly competitive.
2) Possible provision of pre-seed investment (grant or equity).
3) A focus on small teams instead of individual founders.
4) Time-limited support comprising programmed events and intensive mentoring.
5) Cohorts or ‘classes’ of startups rather than individual companies.
Let’s dive in; here are my 5 takes on acceleration products from a PM perspective:
1) Market Research
As an accelerator PM, you will need to learn and follow your market, key players, competitors, and your users — Entrepreneurs!
With or without a background in the startup industry, this is the moment to get a profound understanding of the different needs of both your users and partners: entrepreneurs, VCs, corporate innovation departments, and a broad spectrum of service providers. For me, it was important to invite leading accelerator managers, and seed VCs in Israel for a coffee to see hands-on our differentiation and where our value proposition fits in, with other ecosystem players. Understanding the market requirement, your positioning and what your product is aiming to fulfill is a must, even if it’s not a new accelerator or if you are not yet in the stage of defining the product at its initial phase.
While your local ecosystem is important, you should also aim to conduct market research on a global scale. For our use case, there are over 178 accelerators in the US, over 193 in Europe and about 44 in Israel that fit the definition I gave above. In your own research, consider these three questions:
a) How is an accelerator product measured?
b) What are the product components?
c) How do potential customers perceive the accelerator, and why?
Y Combinator is a great example where a) the accelerator is measured by how much capital its alumni raise and the number of exits (as they invest $150K in each company). b) The product itself includes a joint dinner once a week, office hours, and social events. And c) it is perceived as the #1 accelerator in the US according to the Seed Accelerator Ranking Project 2017 by Rice University, and the hardest to get into.
2) Stakeholder & User feedback
Collecting feedback from existing and potential users is the most crucial part of your job. Putting yourself out there among your users is one way to achieve that goal and will help your marketing, sales, and product funnels as well. Be open-minded and ready to engage in conversation after conversation. In Israel alone, there are about 100+ meetups a month! Which makes the Israeli ecosystem a great one to learn and engage with entrepreneurs and potential partners.
Another way to collect feedback is in-house surveys or 1:1 conversation. These methods are useful as acceleration products are used for a fixed-term (3, 4, 6, or 12 months), which means your product updates and changes need to be implemented fast, or you will miss the opportunity to give a higher value to your current users.
Don’t forget to build consistent communication channels with your alumni, current and potential users as well as mentors, sponsors, and partners to keep improving your product. To be able to digest all feedback (and there’s a lot of it), you need to choose your metrics; is it user satisfaction, user progress, future user engagement, etc. This should be an element rooted in every new feature you create or any tweak you make in your product, that is, acceleration program.
3) Your “Daily Scrum”
A procedure that I love is called a “daily scrum,” a term used by R&D departments to share updates on their ongoing tasks and challenges for the next 24 hours. To approach this tool, it’s important to understand that acceleration products are built for one-time use by entrepreneurs (alumni phase might be considered a product of itself), who use these products to build their own products (that’s the “job” startups are aiming to fulfill by attending acceleration programs).
Due to that fact, accelerators should design a product element that allows entrepreneurs (their users) to share their updates, ongoing tasks and challenges for a set time-frame (each day, each week, etc.). By doing so, you will be able to track their progress, solve real-time problems and extract useful insights that will translate into a backlog of features that your user needs, both now and in the future.
(Note: “daily scrum” is not a feedback session, it’s your user’s current status and tasks update for a specific period of time. They may not be able to say what they need or how you can help them, but it is your job to read between the lines. This is where your problem-solving, and analysis skills will come in handy).
4) Measurements and Testing
One of the outcomes of having a “daily scrum” and a consistent feedback funnel is your ability to act upon the needs and challenges of your users and stakeholders. You should use a more numeric approach to your acceleration product, focusing on defining KPIs that are measurable, as well as testing new changes in your product. This will result in having an effective and efficient product lifecycle.
Test existing and new features that will increase conversion rate & quality rate, either from your website, application questionnaire, or marketing campaigns. It can be small tests or bigger ones, depending on your resources and time constraints. Don’t forget to define your matrices, collect your data from each test and examine your results.
5) Product Market Fit
For any early-stage startup, achieving product market fit (PMF) is probably the single most important aspect. I believe accelerators need to aspire to achieve that as well, each accelerator in its stage. PMF has a few stages as your company and product grows, starting from coming up with the initial concept to your first customers, then scaling and having a clear definition of your target customers and then comes high demand(expansion) and a strong selling point.
With the visible growth in personas of entrepreneurs, business models, the number of new VC’s and new industries that are being explored, accelerators should now, more than ever, make sure they reach PMF. You can start by defining your leads qualification, or in other words which startup or entrepreneur does your product fits the most. You should also define the problem you are solving and build a strategy of ‘winning’ new segments. Being clear and specific here, will guide your marketing funnel and will help you achieve the desired product market fit.
Ok, acceleration is not a pure tech product, although there are technological elements to it, and some of you might feel uncomfortable with this comparison, but when examining accelerators market, sales, and in some cases fundraising processes, the resemblance is clear.
From my point of view, accelerators are harmoniously blended in our hi-tech/startups horizon, and it doesn’t seem they will be disappearing any time soon, so we better analyze and build them in a way that will create better products for our customers to use.
Leetal Oknin, a Program Manager and part of the SigmaLabs accelerator team in Tel-Aviv, Israel. A graduate of Tel-Aviv University with a BSc in Statistics and Operation Research, and an MA in Political Marketing from the IDC.