How to pick the right startup Accelerator?
As the Growth Manager at Gust, one of my responsibilities is to evaluate accelerator programs on the Gust Accelerator Platform to determine if they are a good fit for our community of founders. The guidelines we use for this, which were built by the Gust team, leveraging the collective decades of experience we have working with startups, can also be used to help founders determine which accelerator is best for them.
The Value Being Offered
When assessing accelerators all entrepreneurs are looking for at least one, if not both of the following two things: mentorship on subjects where no one on the team has any expertise and/or investment, (whether that be from the accelerator itself or from funds associated with the accelerator).
Where possible, it is worth the effort to scrutinize LinkedIn and whatever other sources are available to determine that the staff has the credentials to help with whatever subject the program looks to address be that go to market, product development or something else. Equally important is access to these experts. Some programs have one-on-one mentoring. Some do zoom classrooms of 5-10 entrepreneurs. Some have prerecorded lessons and a message board. Figure out what works for your startup before you’re stuck with something that doesn’t.
As for funding, unless some amount of investment is part of being admitted into the program, any program where funding is noted as part of the offer is likely only offering the opportunity to pitch VCs and angels they have established relationships with. A guarantee of investment from anyone other than someone who can write a check is a huge red flag.
Notable Staff or Alumni
It is safe to say that the number of available accelerator programs has reached unprecedented levels. The first and simplest approach to determining which programs are worth your time is to examine the staff and alumni featured prominently in the program’s marketing materials. While not every program needs to showcase staff or alumni with multiple successful exits or early hires at renowned startups (unicorns), it raises a red flag if a program cannot highlight individuals with substantial and credible startup experience.
Every program needs to sustain its operations, and understanding what they require in exchange for the value they provide is a crucial consideration when evaluating whether a program is suitable for your company. Typically, accelerator programs are funded through one of three methods: grants, equity or tuition.
Starting with grants, these are usually government-funded programs designed to encourage startups to establish themselves in specific locations or industries. The benefit is that they typically come at no cost to those admitted. However, they often have stringent requirements that make it challenging to gain admission or may even require founders to relocate their businesses for a period of time.
Next is equity (or a convertible note). This is fairly straightforward: the program receives, in exchange for the services rendered, either an investment instrument (in the form of a SAFE or Convertible Note) or a warrant for a predetermined amount. Sometimes, a small fee may also be associated with this arrangement. It is important to note that accepting equity-based payment has implications for your cap table, and founders are required to sign a legally binding document at a stage in their company’s lifecycle where they may or may not have access to legal counsel that can explain to them what they’ve agreed to. If you’ve setup with Gust Launch, the platform will help you issue vetted and recommended SAFE and Convertible Notes. While most of these agreements are conducted in good faith, if you have any uncertainties about how they may impact your current and future financing efforts (from agreements provided by the investor or downloaded off the internet), it is advisable to invest in the services of a competent attorney to review any areas of concern. If you are under time pressure and feel unable to fully comprehend and be comfortable with the terms before providing an answer, it may be worth considering walking away.
Lastly, we have the most straightforward option: tuition. You pay a fee, and in return, you receive the offerings of the program. Some fees may vary depending on whether you are also providing equity or meeting specific criteria, but these aren’t typically negotiable. It goes without saying every dollar in the early days of a company’s life is precious and it behooves founders to get very particular about what you spend them on.
These are just a few of the criteria we use to determine whether accelerators are a good fit for Gust. We have additional criteria, and as you make your own assessments, you will likely develop your own set as well. However, we believe that starting with these three key factors in mind—what you will receive, who will provide it, and what they expect in return—will significantly simplify the process of narrowing down your choices. This approach will help you make efficient use of your valuable time, energy, and financial resources, which are crucial for growing your business.
This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.