Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about
how startup accelerators work. The
first thing about startup accelerators is to know that they are a great way or a great
resource for founders to take things to the next level super quickly. Startup accelerators,
essentially, are a support system where there is a network, where there are resources, where
there is money to help companies to go from zero to 100 super, super quickly.
In the last years, you’ve had companies like YCombinator and Techstars that have been
able to create incredible programs. Today, what I want to do is really help you understand
how they work, what is the process, what to expect, and what is the experience if you
were to get accepted into one of those programs. So, with that being said, let’s get into
it. The first part is applying. Essentially, applying
is about filling out a form online where you’re going to be talking about yourself, about
your business, maybe your background, what you have done.
The next thing is if they like what they see, perhaps the accelerator, they’re going to
call you in either to do an interview in person, or you can also do this in video. During that
time, they’re going to ask you about the market, how you’re seeing things, how you’re
seeing your product. They’re going to ask you about yourself, your background, and why
you went at it with this. Typically, it’s a very small percentage
of people that get admitted into the program. There are places like AngelHack or even YCombinator
that they are labeled to be harder than Harvard to get into. We’re talking about a percentage
of acceptance that ranges between 1% to 3%. So, it’s very low.
My advice to you is, when you’re filling out the application or when you’re interviewing
with them, you really want to make sure that your passion is coming out of the why of why
you’re doing this, and also they understand why your background is the right background
to execute and bring this idea to life. The next part is going to be getting funded.
Basically, when you attend one of those accelerator programs, they’re going to give you anywhere
from $10,000 all the way to $120,000 for a percentage of equity in your business. That
could range from as little as 5% all the way up to 12%. I’ve seen them in all different
flavors. The form or the structure of the investment
is, for the most part, going to come in a convertible note or on a safe note. What that
means is that investment that they’re giving you is not coming with a percentage, or let’s
say an equity or a valuation. What it means is that form of debt or that
money that they’re giving you is going to convert into equity when you do your next
round of financing. This ideally happens on the Demo Day when you connect with other investors,
which we’re going to get into very soon. The next part is learning. When you attain
one of those programs, it is an amazing network of experts and other founders that have also
been super successful. What you want to do here is tap into those experts that have that
expertise or knowledge specifically to what you’re doing and get their help on either
the product and achieving product/market fit or understanding internal processes or understanding
who you need to hire and how you can get in front of these people. That’s essentially
what you’re going to be doing. There are going to be workshops. There are
going to be all types of sessions on different areas like fundraising and marketing. So,
that’s what you’re going to be doing is learning a lot. Again, there are some places
where there are certain days where you’re going to be in attendance, and then there
are other days where it’s going to be like in-office, hours where you’re asking questions
and using that as a Q&A to understand where you are in the process, how you’re progressing,
how they can help you, and things like that. The next part is the network. The network
is a massive component here because there are a lot of accelerator programs out there,
and there’s a lot of noise. There are only probably two or three that are the best program,
and those are the ones that you want to take a look at. Those are like YCombinator, Techstars,
AngelHack is great, but there is a lot of noise, and you really need to be able to filter
because the network is everything. When it comes to the network, for example,
if you take a look at YCombinator, you’re going to be able to potentially have access
to founders of like Dropbox, Airbnb, and of super, super successful companies. That’s
why in many instances when founders attend a program like this, they end up already with
a bunch of customers because those customers, let’s say big companies, were essentially
at one point attending this specific accelerator program.
So, that network is really fantastic, how those founders are coming in and helping each
other out, and I think that network is what you want to go after. Also, that network includes
investors like angel investors or venture capital firms, so you want to make sure that
you understand and that you’re asking who is part of their network and how they can
help you on achieving the milestones that you need.
The next thing is the Demo Day. When it comes to the Demo Day, that means you’ve already
done your three or six months already as part of the cohort of that batch of the accelerator.
You’ve already done your progress. You’re ready to showcase your product, your service,
whatever that is, and have everything in a pitch deck in that 15 to 25 slides where you’re
presenting your story. And by the way, you can download the pitch deck template below.
Essentially in that demo day, you’re going to be in person, or maybe you can even do
it online. There are going to be all types of investors in the crowd watching for your
pitch. Essentially, the pitches that the investors like the best, they will reach out to the
founder, and they’re going to want to engage in order to potentially make an investment
in your business. For that reason, you really want to be buttoned-up,
and you want to start with the why; then you go to the what; and then you go into the how
of the business. And you need to get them excited. Don’t go too much into detail here.
You really want to give the 30,000-foot view and give the call to action so that they reach
out to you with excitement. You want to be very careful here. The best
accelerator programs are the ones where on Demo Day, they bring qualified investors and
top-tier investors. However, not the other accelerator programs where most of the time,
what you see is a bunch of service providers that ultimately are going to waste your time.
So, be very, very careful, and when you’re asking the questions, ask them about the type
of investors that they’re going to have on their Demo Days. Maybe they can give you
some case studies too. Ultimately, you need to ask yourself: is a
startup accelerator something that you want to do? Are you going to be okay giving away
equity of your business? Are you going to be okay relocating for three to six months
for whatever amount of time that that startup accelerator program is going to take? I think
those are all very important questions that you need to ask yourself before you go ahead
with a startup accelerator program. If you like this video, make sure that you
hit the Like button. Also, subscribe so that you don’t miss out on any other videos and
leave a comment, and don’t forget to check out the fundraising training where we help
entrepreneurs from A to Z with everything related to fundraising.
We offer live Q&A sessions, agreements, templates, a community of founders where they help each
other out. So, take a look at it. I think that you would like it, and you can see that
on the link below, and thank you so much for watching.