Over the past year I’ve been running the Startup Next Pre-accelerator in San Francisco. This is a 5-week program by UP Global and Google for Entrepreneurs that helps early-stage startups prepare for an accelerator. Startup Next gives companies the opportunity to find out if they have a viable product by testing ideas with prototypes and real customers. Graduates have been accepted into accelerators such as Techstars, 500 Startups, AngelPad, and Plug and Play Startup Camp. Many have also raised funding from big-name investors.
If you’re coming out of a pre-accelerator program or looking to apply to an accelerator, there are a few key things you need to know before applying. From the Startup Next team, accelerators, investors and the entrepreneurs themselves, here are the top 7 tips for getting into a Silicon Valley accelerator:
1. Building a startup is a team sport. This is something almost all investors agree on. You’ve probably heard phrases like ‘hacker’ and ‘hustler’. But what do these really mean? They mean you need have a solid, cross-functional founding team. You need a good working chemistry and can build product, create great user experiences and acquire customers at breakneck speed.
Sam Altman of Y-Combinator discussed this the Pre-Money Conference stating, “It’s really hard for accelerators to pick good companies at the early stages, so all your efforts should go towards getting awesome founders. Ideas often change from when you start out, but good founders will have the grit and determination to see it through.”
Team chemistry is key. It helps if founders have worked together in the past as the risk of founder break-up is mitigated. Co-founder disputes early on are a major reason startups fail to raise capital post acceleration.
The magic number of co-founders for many accelerators is 3. It should also be noted that having too many founders can give the impression that you’re not as confident and diluted equity could lead to motivation issues.
2. Show that you can be a big company. A small percentage of investments leads to the majority of the returns for a VC fund. This being said, VCs try to determine if their investment in your company has the potential to be worth more than their whole fund.
Peter Thiel, co-founder of PayPal and VC with a portfolio that includes massive success stories like Facebook, Palantir, Spotify and SpaceX, says entrepreneurs should ask themselves, “What great business is nobody building?” Thiel says, “In business, every moment happens only once. The next Mark Zuckerberg won’t be building a social network.”
3. Have a prototype or minimum viable product. It doesn't matter if you’re not working on your idea full time yet, just get something out there that can be tested! Justin Kan, Partner at Y-Combinator said in an Entrepeneur.com article, “The best way to get the ball rolling on an idea is to leap off of a cliff and force yourself to make incremental progress.”
4. Get traction in the form of money, users or both. This will significantly raise your chances of getting in. Accelerators want to see that you can accomplish what you say and can execute on your plan. Show that you’ve validated the market with real customers. If you get an interview, demonstrate how you’ve progressed from the time you submitted the application. Accelerator programs last only a few months, so it’s important that the teams they invest in can maximize the resources provided.
5. Build a strong network and leverage it. Getting a strong referral is the best way to get in. For example, if you’re recommended by a well-known pre-accelerator, entrepreneur, investor or alum.
Take this further by creating a complete profile on AngelList and keeping it updated with information about your team, product, traction, press etc. Get references and followers from your network. I recommend reading this post by 500 Startups on the basics of AngelList, this one by Naval, founder of AngelList, on how they pick trending startups, and this one by Justin Thiele on how he got his startup to trend on AngelList.
6. Be concise in your application. Accelerators go through 100s, if not 1000s of applications. This means you have very little time to catch their attention. Avoid buzzwords and remember less is more. Before you submit, get feedback from those who’ve been through an accelerator (or experienced investors and entrepreneurs if you can’t get to someone who’s been through an accelerator). Make sure you apply early and not on the last day. And once you get a call for an interview, practice your pitch and responses. Be well prepared before going in, as interviews can last anywhere from 10 to 30 minutes. Accelerators see a lot of companies, so they start to understand what may or may not work rather quickly (aka, their BS meter). You want to be educating them during the interview, not the other way around.
7. Do your homework before you apply. Research accelerator programs to see what value they can add to your business. It’s also important to talk to startups that have graduated from the accelerator programs you’re considering. Make sure to ask questions that help you get a good understanding of the accelerator’s resources, mentorship and connections. Be sure to add vertical-specific accelerators to your search, for example hardware, health or enterprise-focused, as they might be able to add more value depending on the type of business you’re in. You want to get a real view of their accomplishments during and after the program.
If you’re a first-time entrepreneur, taking the initial step can be the most difficult. You might want to look into attending a local pre-accelerator program as a first step.
Lloyed Lobo is the co-founder of Boast Capital, which specializes in R&D Tax Credits, Plug and Play Canada, a subsidiary of Silicon Valley’s Plug and Play Tech Center which invests in early-stage startups, and The Cloud Factory, a premiere enterprise tech conference. Lloyed is very active in the tech startup community in Silicon Valley and Western Canada – he runs the Startup Next Pre-accelerator in the Valley, facilitates Startup Weekends, is on the board of Startup Calgary, and writes a weekly column called Startup of the Week for the Calgary Herald. Previously, Lloyed was the Head of Sales and Marketing at two venture backed software companies – TicketLeap in Philadelphia and AL Systems in New Jersey.