MARTIN OMANDER: Hi.
Welcome to Root Access, the show on Google Developers
Live about startups.
My name is Martin Omander.
And I have here Don Dodge, longtime investor
and startup advocate.
Welcome.
DON DODGE: Great.
Thanks.
Great to be here.
MARTIN OMANDER: I see you got the memo about blue shirt
today.
That looks good.
DON DODGE: I did, yeah.
MARTIN OMANDER: All right.
Good, good.
So Don, we've got a question from a viewer, Jim, who said,
is it worth it as a startup to go into an accelerator?
So let's talk a little bit about that.
What are typically the terms in terms of money
for going into an accelerator when you are a startup?
DON DODGE: So Y Combinator and Techstars and several
of the other incubators, their models are pretty similar.
They give you $20,000 to $30,000 of cash
to basically live off from.
They require at least two founders.
And then they take about 5% to 6% equity
in return for that $20,000 to $30,000.
So if you do the math, they're valuing your company
at about $400,000 to $500,000.
So it's a pretty low valuation.
So it's something to consider.
The valuation part of it is something
to consider if you want to do it.
MARTIN OMANDER: Right, right.
And also, $20,000 to $30,000, you
could possibly get that in other ways.
We've spoken to founders here who
have got it through maxing out credit cards and whatnot.
DON DODGE: Right.
So cash shouldn't be the reason for doing an accelerator.
You can do that on your credit card.
You can get friends and family to loan you money.
So it's not about raising the cash.
It's about the other services that they provide.
MARTIN OMANDER: Right.
So let's talk about those.
What are those services?
DON DODGE: I think the biggest thing that you
get from being in an accelerator is mentorship.
So they're able to attract mentors and experts
in the field of all kinds of things.
So once a week, you might have a group meeting
where an expert comes in to talk about SEO or marketing
and how to do target marketing, or a lawyer
to explain how term sheets work, or a successful entrepreneur
to talk about scalability and technical issues.
So you get a lot of expert mentorship
that you probably wouldn't have access to otherwise.
So that's number one.
Number two, you get to focus on what
is your minimum viable product.
What are those key features that have
got to be there in order to launch and be successful?
And that's a tough question, because, typically, it's
not obvious what those things should be.
So you'll get a lot of advice about how
to do your minimum viable product.
The third thing you get is a lot of training
on how to pitch, how to put together your pitch deck,
what issues you should cover, and then
how to pitch in front of an audience,
or how to pitch in front of a VC.
And if you haven't done that before,
that's a pretty big deal.
The last thing you get is, typically, they'll
have an investor day or demo day at the end of the session.
And that's where you get exposure and access
to lots and lots of investors and maybe some press.
So that's four things you get that are a pretty big deal.
There are other ways to do it.
But they're very, very good at delivering those services.
MARTIN OMANDER: Right.
So if you're a startup and you're
thinking about whether to go into an accelerator or not,
whether you can provide these things yourself,
what's the thought process one should go through as a founder?
DON DODGE: Well, there are counter cases and examples
for each one of those four benefits that I mentioned.
There are other ways to get those benefits.
That said, getting into Y Combinator
or Techstars is very, very difficult.
They accept 1% to 2% of the companies that apply.
So it's sort of like getting into college.
Should you go to college?
Well, yeah.
If you can, you probably should.
Should you go to Harvard or Stanford?
Absolutely, if you can.
But that's not a prerequisite.
It's not, if I can't get into Harvard or Stanford,
I'm going to be a failure.
Obviously not.
You don't need to go to college at all.
There are always different ways to do things.
So if you can get into an accelerator like that, sure.
If you can't, there are other ways to raise money.
You can raise them from friends and family.
There are other ways to get mentorship.
You can bring on an adviser.
And rather than give up 5% or 6% of your company,
maybe give up a half a percent to an adviser.
There are other ways to raise money.
Your advisers or other founders can introduce you
to VCs or Angels.
And you can raise money that way.
So there's an alternative to every one of these things.
I think being in an accelerator just
makes it all happen faster.
And the single biggest thing you really
get out of an accelerator is it's like being in boot camp.
You have other founders who are going through the same things
that you are, trying to solve the same problems.
And you learn a lot from them and together.
And you probably make progress faster.
MARTIN OMANDER: Go faster.
And speed is important, right?
DON DODGE: It is.
That's why they call them accelerators.
MARTIN OMANDER: Accelerators.
Ah, good.
So at what point is your company, your startup,
ready to go into an accelerator?
Should you have a product?
Should you have a team?
Should you have customers?
What's the right place?
DON DODGE: Yeah, good point.
So there are incubators.
And there are accelerators.
So incubators, like Techstars and Y Combinator,
assume that you don't have a product.
So you probably have an idea.
You have two founders.
You might have a prototype or maybe even a working model.
But you don't yet have a product.
So that's why they call them incubators, because you're
going from nothing to something in an incubator.
If you have a product, you have a team, and it's out there,
and you're looking to accelerate,
then you go to an accelerator.
Sometimes we use those words interchangeably.
But they're different.
Incubators are for starting from nothing
and incubating it to an idea that's ready to accept money.
Accelerators are you already have a product.
You have a team.
You might have a little bit of money.
And you're looking to accelerate.
So they'll give you some office space and a place to expand.
They'll give you different services
that allow you to accelerate your plans faster
than you normally would.
So I would say you can do an incubator or an accelerator
at any time.
It just depends on what services you need
and what stage you're at.
MARTIN OMANDER: Great.
Thank you.
Excellent advice, Don.
DON DODGE: Great.
Great to be here.
MARTIN OMANDER: So if you are a cloud developer
and you want to run your application on Google
infrastructure, you should try out the Google Cloud Platform.
And right now, if you're a Root Access viewer,
you can get a $2,000 credit to get started on the platform.
The details are on your screen.
Please keep the comments coming in on the YouTube video.
And we'll address them, like we did
this one in future episodes.
Thank you.
See you next time.