You’ve got a global vision for how to change the world, a few friends who’ve heard the pitch and love it. The team is in place, and there might even be a few early customers. You know it could be the next big thing, as long as you get some good advice and a couple of lucky breaks along the way.
Accelerators take startups in their infancy and try and help get them to the stage where they’re ready to take investment and take over the world. But typically less than 5% of teams that apply to an accelerator get selected. What can you do to be in that select group?
Typically funding is granted to startups that excel across at least one of the following three criteria.
A great team makes a world of difference. Here we are looking for people who have a history of working together and getting results. Founders who are technically capable, who can point to a portfolio of things they’ve built or designed. Previous startup experience is a big plus. Basically we’re backing the team in to come up with an interesting solution to one of life’s many problems.
Startups which get in on the back of a new technology are the least common for accelerators. Primarily because unless the technology is in itself a standalone solution to a problem, it normally involves a bunch of joint ventures and partnerships, dealing with firms who are slow moving and of an ethos the polar opposite to startups.
Inventors of new technologies tend to come from research institutions such as universities, the majority of whom are more interested in continuing to invent than founding a company. Note that by ‘new technology’ I refer to something that has not been invented prior, not the novel assembly of ‘off the shelf’ products in the way Dell got started in computers.
Traction is the holy grail for startups. It is proof – to a degree – that you’ve made something people want. Traction is evidence that your team is functional enough to get something done, and into the hands of your users.
The question then is what sort of traction do you need to have a shot at an accelerator? The answer depends on what you’re working on, but generally falls into either users or customers. If it’s the former, a good metric is 100 users who love you. Meaning there’s 100 people out there who would be devastated if you’re startup ceased to exist tomorrow. It can be hard to know that in advance, so a good indication is how active these users are in using your product/service. If they’re using the product or service day in day out it’s a pretty good indication of the affirmative.
Conversely, if your startup solves a business problem then you should have a handful of paying customers. It doesn’t matter if yours is a beta version full of bugs, or a pilot program with only one hundredth of the benefit you plan to deliver. If you’re solving a business problem make sure you charge your customers at least a token amount. Check out How I Got My First 3 Customers as a good reference point for getting started.
Funnily enough, team and technology take a lot longer to accrue than traction. You can go out tomorrow and hustle for traction, the same cannot be said for team and technology.
If you’re working on a startup and feel you would benefit from going through an accelerator, come check out our AngelCube information night, in Sydney on Wednesday, April 15. Registration here.
Amir Nissen is program manager at AngelCube.