I’ve been involved in one way or another with business accelerators for more than thirty years. Sometimes you hear the names Accelerator and Incubator used interchangeably but these are two very different things. If you are a startup founder these differences are very important.
Accelerators are big money for-profit entities with names like TechStars, Y Combinator, and Entrepreneurs Roundtable. Their goal is to work with companies to rapidly increase (accelerate) their valuation so they can attract a follow-on round investments at a much higher valuation.
A typical Accelerator invests around $100,000 in participant companies for a percent ownership in the company then within ninety days those companies are polished up and pitching to big-time venture capital companies to raise their next one to five million dollars.
Typically, the Accelerator wants to take a company from a million-dollar valuation to a twenty million valuation… That’s acceleration!Incubators are usually operated by government agencies or universities. They put very little if any money into participant companies but offer some level of education, mentoring, and access to local Angel investors. Participant companies are usually very raw. They may have an idea and a few team members but they will usually not have anywhere near a viable product/service. They may not even have a clear idea about their market yet.
Incubators will usually not take any equity because they may be operated by non-profits. Their goal is to better develop a region’s startup culture.
Basically, if you have a rough idea and a ragtag team or are a single founder, an incubator is the place you should go to experiment with your idea until you get something more market ready.
But if you are looking for big money rapid growth an accelerator is for you.
There’s one big catch…
Accelerators will typically have hundreds, if not thousands, of applicants for each precious seat. Lately most accelerators are looking for companies that are a little more developed and mature.
What does that mean?
There are many facets to what Accelerators are looking for. Maybe you would like the accelerator to say that they are looking for companies in the areas of Machine Learning, Artificial Intelligence, or Virtual Reality.
But it’s just not that simple…
That’s why I created an Accelerator Deliverables Checklist. (Click HERE For checklist) Even if you are not trying to get into an accelerator the items on this checklist will strengthen your company and vastly improve your valuation.
The checklist is separated into three columns:
Need To Have – These are the things your company needs as a minimum. If you have been applying to accelerators and keep getting rejected you are probably missing a few things from this part of the checklist. The same goes for unsuccessful VC/Angel fundraising meetings. If you keep doing your pitch and no money comes in maybe it is not just because there is a lack of cash available. You are probably missing a few things from this checklist.
Should Have – The “Need To Have” checklist is really the basic list of requirements. This “Should Have” checklist shows the elements that will strengthen your company even more.
Nice To Have – If you can check off a few or even al the things in this list and you have not won a seat in an Accelerator or attracted a significant investment round then contact me immediately.
Wouldn’t it be nice if success was just about checking off a bunch of things on a list? Maybe it is that simple…