Three Critical Lessons We Learned by Interviewing 56 Accelerators
Anyone familiar with the tech world can tell you how quickly a startup can go from nothing to millions of users (and sometimes, right back again). Comprehensive mentorship and training from an accelerator can make the difference between success and failure. Over the past three months, we had the opportunity to work with accelerators throughout Europe and Africa. We set out to determine exactly what the pain points were in launching and running an accelerator, as well as how processes could be most improved. We were lucky enough to receive detailed advice from over 50 accelerators. Every lesson we learned fell into one of three broad categories.
Optimize and analyze dealflow
We’ve broken down the specifics of these three pieces of advice below, and added some of our original thoughts. If you’re looking to optimize your accelerator’s startup selection process, they’re a must-read. There are plenty of smaller lessons we learned too, but most things fall under three main categories.
The optimization process starts with startup selection. Picking a startup that has no chance to succeed or is more trouble than it’s worth will hamstring your daily operations. The less luck you need for each startup to succeed, the better. Working efficiently starts with communication. Make sure everyone involved with the accelerator can obtain all the relevant information quickly. Communication also covers bringing in investors and partner communications without disrupting the communication process.
Finally, optimizing and analyzing dealflow will provide accurate reports and ensure that you’re not being wasteful with time or energy. This can be a real sticking point for a lot of accelerators that reach some degree of success but aren’t able to branch out from there. Sometimes a quick analysis of your dealflow process is all it takes to get to the next level since it helps you see the quality of your sourcing efforts. Sourcing the best startup is what will make your accelerator successful.
Use Data to Select the Best Startups
Selecting the right startups to work with is the biggest indicator of success or failure. Some startups are doomed from the beginning, and others are almost guaranteed to succeed regardless of your input. Choosing the right startups to partner with is critical, and it’s easier with more data. A myth based on the quick success of some accelerators is that startups can be picked on instinct alone. There’s nothing like instinct honed over a tech career, but adding data can put you on the right track.
Look into solutions that allow you to see the founders’ backgrounds. Do they have a history of success? A solid product and path to market? Are alarm bells going off telling you to stay away? A lot of this comes with experience, but if you can figure it out early you can save a lot of time and money.
Reference potential startups against those already in your database. What can you predict as far as traction data, market data, etc? The market is constantly shifting and it’s not always easy to predict what’s coming next. Take a look at the potential startups and how they might fit into what’s next. Understanding the market can be impossible some days. But the more accurate your predictions are, the more success you’ll have picking startups.
Work Efficiently as a Team (and Save Time in the Process!)
Pitching is one of the most critical moments of the startup lifecycle. It’s also something that gifted engineers don’t tend to optimize. Every day counts when your accelerator is working with a startup, and plenty of those days wind up spent scheduling and preparing for irrelevant pitches. While it’s critical to nail the big ones, don’t waste time doing more work than necessary. Make a plan, work together, and ensure the pitch preparation gets done — but don’t overdo it or duplicate effort.
Another major time killer is partner documentation. Processing irrelevant applications is a complete waste of time since you have nothing to gain, and preparing extraneous documents won’t help you much either. Accelerators and the startups they work with both have strengths and weaknesses. Make sure you’re doing your part as well as you can, and let the other side handle theirs.
A good communication system will relieve plenty of these issues. Duplications of effort happen when a message is conveyed unnecessarily or more than once. Many accelerators use software like Trello or Slack for communication. However, these sort of patchwork solutions lead to inefficiency and manual data transfer since these tools generally aren’t designed to work with others the way accelerators use them. While combining communication methods goes a long way toward efficient communication, most accelerators have potential to improve.
Ensure your Dealflow is Optimal
Dealflow management isn’t just patting yourself on the back when a startup lands a juicy deal. It starts at the very beginning with analysis of what startups have applications pending with your program. With a thorough understanding of the application process and expected numbers, you can refine your selection criteria accordingly. If you’re not getting enough good fits, then you can take measures to increase the overall number of applications and give your accelerator a larger pool to pick from. If you’re getting too many good fits (what a problem to have!) then you can optimize your communication and pick even more selectively.
Once your accelerator gets to a certain stage, you’ll need to report on dealflow to investment partners, potential sponsors, and management. Ensuring that your data is accurate and up-to-date ensures that you’ll have the numbers they’re looking for and the potential to capitalize on them. Accurate data also means you can compute internal Key Performance Indicators. KPIs can include any data you want but it’s critical to ensure you know where you’re going as quickly as possible.
The Bottom Line — What Every Accelerator Needs to Know
Accelerators have been around for less than two decades. Just like every startup you work with, we know you’re still trying to find the best practices for success. That’s why we’ve developed a system that analyzes and optimizes accelerator dealflow and helps you select the best startups. We’re just like you — we love efficiency and finding the next big thing. That’s why we launched CDF One. Whether you’re just getting off the ground or you’d like help managing dozens of startups, we’d love to work with you. Sign up here. Do you have any accelerator lessons we missed? We’d love to hear about those too.