Top five tips to get into a US start-up accelerator
Monday, September 24, 2012/
The last two years has seen an explosion in the number of start-up incubators, accelerators and co-working spaces in Australia, such as Angel Cube, Startmate and PushStart, to name a few.
The USA, however, remains the undisputed leader when it comes to start-up collectives that invest small amounts of money into new ventures and then ply them with expert knowledge and industry links in order to turn them into market-leading businesses.
These hubs are no longer out of the reach of Australian start-ups, as demonstrated by Sydney-based tech start-up Peeractive, which recently became the first Australian company to be admitted into US accelerator program DreamIt Ventures.
Other Aussie ventures look set to follow Peeractive to the US, following the decision of famed American accelerator 500 Startups to open its application process to international start-ups.
So how can you boost your chances of rubbing shoulders with the best and brightest start-ups in the US?
We spoke to the experts to gather these five essential tips on how to score a spot at a US start-up accelerator.
1. Demonstrate the problem
If you are travelling all the way to the US, you had better demonstrate that your business is solving a problem that currently isn’t being catered to by dozens of other start-ups.
“Make sure you are convinced by the problem you are trying to solve with your intended product,” says Haig Kayserian, a New York-based Australian who is CEO of Kayweb Angels, a start-up fund that is receiving applications for its latest round until October 31.
“Do not kid yourself. If the problem does not really exist, an investor who reads/listens to hundreds of applications a year is going to find you out and pull your pants down.”
At the very least, the decision-makers at American accelerators will want to see that you have done your homework.
“If you cannot prove very clearly that your problem exists (e.g. we are in the dark) and your solution is clearly a winner (e.g. the light bulb), conduct market research,” says Kayserian.
“Your solution may be for shoppers but the investor reading your application or attending your pitch may not be a keen shopper.”
“Do not assume something is obvious; prove it. Go out there and interview people in your intended market of entry; it also shows you are willing to go that extra yard.”
2. Get realistic
As great as you think your idea is, it isn’t the prime reason that a US accelerator will be picking you. Get real about what these potential investors are looking for and be prepared to answer the tough questions.
“The amount of folks who pitch to Kayweb Angels that do not have a business model amazes me,” says Kayserian.
“Get over the romanticism of your idea for a moment and realise the investor sitting in front of you or reading your application is in the business they are in because they want to make money.”
“Show that you understand that, you share that passion, and prove a clear path to monetary success with the business model you present.”
Viki Forrest, CEO of ANZA Technology Network, which connects Australian start-ups with the US market, states: “A compelling answer to these two questions will go a long way to grabbing the attention of a US investor.”
“Distribution – OK, so there’s a billion dollar market out there but how are you going to reach it and what will your customer acquisition costs be?”
“Competition – know who they are and be able to clearly articulate your unfair competitive advantage.”