3 questions that you need to ask before joining an accelerator program
The Australian and NZ startup ecosystems have been booming over the last decade, and accelerator programs have been a big part of it.
Accelerator programs (or incubators) are organisations that provide startup founders with value adds like seed investment, mentorship, educational programs and curated networking events, usually in exchange for an equity stake in their business.
In my experience as a mentor at various accelerators around Australia (and some international ones too) I’ve seen hundreds of startups go through these programs, many of which have gone on to create highly successful companies.
But, it isn’t always sunshine and daisies in the startup world, and sometimes joining such a program can turn out not to achieve the desired results.
So before joining an accelerator program, as a founder, here are some questions that you might want to ask yourself.
Are you up for the challenge?
Joining an accelerator program may bring a lot of benefit to the startup, but it also involves undertaking a significant commitment.
Committing to see the entire program through from beginning to end, attending all the programs and workshops and adapting the mentorship to your startup is definitely not something for the faint-hearted.
You need to be up for the challenge.
Ben Hutt, Chief Program Director at the Slingshot Accelerator Program, explained that when it comes to joining an accelerator program, it all comes down to timing.
“Timing is everything.” Hutt explained.
“We [at Slingshot Accelerator] meet with thousands of start-ups every year from all around the globe. Sometimes in our discussions with start-ups we learn that they are not ready – from a commitment and scaling perspective – for the intensity of the challenge.”
Are you ready to give away equity?
In life there’s no such thing as a free lunch, and the same is true when joining an accelerator program.
Nine times out of 10, you’ll need to give away some equity.
Whatever the equity stake is, before committing to an accelerator program, make sure that you are comfortable with what you’re giving away.
Zaver Sima, Founder of Aloki Tutoring and recent graduate of the H2 Ventures Accelerator Program in Sydney, was of the opinion that giving away equity in exchange for cash might be the key that propels your startup into the future, but advised founders to consider both sides of the coin.
“Something to consider,” suggested Sima, “is that if you continue to bootstrap and decide not to give away equity, you get to own a bigger piece – which is great for a founder.
“However, not giving away equity may also mean that you miss the window which you might’ve capitalised on by joining an accelerator and meeting the right partner company or investor.”
So, as you can see, it’s all subjective – so make sure you’re comfortable with your choice.
Are you joining the right program?
There are many different accelerator programs across Australia and NZ – each with a specific and unique offering.
Joining an accelerator program is similar to looking for an investor.
Just like you need to do your due diligence when looking for an investor before joining an accelerator program and giving away some of your business’s precious equity, make sure to do your research.
When it came to giving advice to founders who are looking to join an accelerator program, Piers Grove, Managing Director at the EnergyLab Accelerator Program, encouraged startups to manage their expectations wisely.
“Choose an accelerator with clear expectations of what you expect to get from it and have a conversation with the team to make sure it’s aligned,” encouraged Grove.
“An accelerator is not a silver bullet – it is just one piece in a network of resources you’ll need to succeed. Choose carefully, be realistic and make the most of what your chosen accelerator can offer.”