Swirling in your brain is an idea for the next big technology company. You have the drive, the revenue model, even the team, but a few roadblocks stand in your way, namely access to funds and mentors. Wouldn’t it be great if someone gave you $25,000 (in exchange for a percentage of equity) and three months to do nothing but work on your company, talk with the best minds in the industry and get in front of potential investors?
This dream is realized for entrepreneurs granted access to startup accelerator programs. Such programs are popping up all over the country and grooming promising companies into big-time successes. Most choose around 10 companies to participate in an intense three-month program culminating with a "demo day" in which entrepreneurs present to investors and hopefully attract enough money to keep running.
Sounds great, right? So how do you get in?
To find out, I sat down with the founders of three popular startup accelerators: David Bookspan, co-founder of DreamIt Ventures (with programs in New York City, Philadelphia and Israel); Marc S. Billings, founder of IncubateMiami; and Troy Henikoff, co-founder of Excelerate Labs in Chicago.
What do you look for in a potential company?
Bookspan: Most important, we are looking for the right people. We want to see a great team from a business and technology perspective. We want to know that the team has worked together before. And we want to know you come from a good background.
Billings: We are specifically looking for disruptive technologies that leverage assets in South Florida, Latin America and South America. We love anything that relates to media, travel, water or boating. In the application, we want to see a really focused idea. We also like it when people come prepared to learn, when they aren’t just locked down on one thought. And we want people who have confidence in what they are and have a thick skin.
Henikoff: We are looking for companies that use technology to disrupt big markets and for new opportunities in a specific marketplace. But primarily we are looking for the right founders. You need to be stubborn but at the same time open-minded and coachable. It is a tough balance to find.
What do you look for in a business plan?
Bookspan: We don’t look at business plans. We have a very simple application and are focusing on the people. The second most important thing is the market. We don’t care so much about the idea, as long as they are targeting a rich market.
Billings: We want to hear about the aha moment, the moment when the team realized what exactly they wanted to fix in life. We rarely need financials to the extent that most entrepreneurs think we do. We only care about connecting the dots.
Henikoff: We need to see you prove that there is a product market fit. We want to see a prototype and that targeted customers want to use your service. I care about level of engagement, not total number of users. If you sold something to 50 percent of a crowd, regardless of how big the crowd, I’m interested.
Tell me about a few companies to come out of your program.
Bookspan: Seatgeek, a ticket search engine. They had already launched by Demo Day. Another is Notehall, a lecture note marketplace. When they came to us, they were already deployed to universities and had revenue. We just helped them to scale.
Billings: Bookigee, a startup that helps authors digitally connect with readers. The founder explained to us that there were around 10 layers between the author and consumer in the old print world. Her idea was attractive to us because of her deep domain knowledge and love of the industry.
Henikoff: Tap.Me, which offers a platform for video game advertising. In 2010, the amount of time people spent playing video games was on par with the amount of time they spent watching television, yet advertising dollars spent on TV was larger than on games. It presented a huge opportunity.
What are some of the biggest mistakes you see in program candidates?
Bookspan: Believing you know the market, deciding what the problem is and saying that you will solve it come hell or high water. We want people to be nimble, to talk to customers before they even code and be willing to launch seven or eight times along the way.
Billings: Trying to solve every problem in the industry and believing that they will be able to do that. It is a deep challenge to narrow down business models into something extremely simple to understand. We want to see a single solution to a single problem.
Henikoff: Being close-minded. Not understanding the mechanics of your business and financial model really well. You need to be able to answer questions like: How did you get the lifetime value of your customer? [There is also] not knowing exactly who you customer is. It sounds obvious, but we see this often.
What advice can you give to entrepreneurs looking to apply?
Bookspan: First, realize that there is nothing academic about what you will embark on. People need to be very flexible in their personal and professional lives. Don’t think about applying if you can’t devote 100 percent of yourself to it.
Second, hone in on programs that will give you the most resources to move your company forward. Look at which advisors are listed for glamour purposes and which are the real mentors.
Billings: Know what you know, but come prepared to learn. Don’t be cocky.
Henikoff: Get in front of your potential customer. Get a minimum viable product out there, tweak it and try again. Don’t sit in a cave and polish your rock. We also want to see a customer acquisition plan, a go-to market strategy.
Have you applied to a startup accelerator? What was your experience?
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