The highs and lows of Accelerator Programs for entrepreneurs #interview
Starting a business isn’t easy, you don’t need us to tell you that, but at least it’s not as lonely as it used to be. Start-ups and entrepreneurs now have the support of hundreds of organisations, government agencies, educational courses, websites, meet-ups, and even apps to help them build their businesses. The challenge for entrepreneurs is now to decide which of these is best for them.
These supports have developed over the past five years to create a strong but fragmented system of possibilities for entrepreneurs. A decade ago entrepreneurs would have loved to have been faced with such difficult choices, but what should you do as a modern entrepreneur if you’re looking for support? Where should you seek help?
We spoke with Luke Deering, the founder of VineUp, which helps to solve the problems faced by recent graduates searching for employment.. Luke is also the author of Accelerate, a Kickstarter project that aims to become the go-to guide for start-ups looking for support.
Accelerate has interviewed over 150 accelerator-supported founders from programs around the world to see how the accelerator ecosystem has developed and how it is helping entrepreneurs.
We speak to Luke about the state of current accelerator programs, the challenges that start-ups face when applying to them, and whether America has lost its place as the home of entrepreneurial talent.
What is the state of current accelerator programs?
Since Y Combinator (arguably the pioneer of today’s accelerator programs) graduated its first class of 8 Startups in 2005, which included Reddit. Since then, various forms of accelerators have launched globally. Our latest estimate indicates that there are just over 150 accelerator programs around the world graduating around 3,000 startups over the past year.
All programs have a focus – internet technologies, consumer retail, hardware, music, etc. However, over the upcoming years I feel globally recognised companies will increasingly start to leverage their brand power and roll out accelerator programs of their own that are specific to their vertical. This type of a program will sculpt the future of accelerator programs. It would be a surprise to me if companies like Walmart and even LVMH don’t follow the likes of Nike, Microsoft and the New York Times and launch their own accelerator program.
From your interviews, what are the biggest problems that start-ups face when applying to accelerators?
All the founders that we interviewed for Accelerate have successfully applied to and graduated from an accelerator. But from speaking with the founders and managers of these programs there are an array of hurdles that applicants stumble at. However, more often than not it’s either that the idea is not far enough along or the team. At the seed stage, accelerators are to an extent investing in the company, but they know that things more than likely will go wrong with the team and their product along the road and the companies direction may need to change. So their question is, does this founding team have the capability to not only handle what’s coming but take over the world in the process.
I would also say that when you are applying to a program make sure that your team doesn’t rely on outsourcing operations (like website development), that you have an MVP (Minimum Viable Product) and it will never hurt if you are showing traction. But at the end of the day getting into an accelerator is a competition. There are usually just 10 places and the better the program the more competitive it is. It’s not uncommon when you are applying to top tier programs, that there are at least 5 others applying that have already raised at least $500k and are on their way to proving their model.
Some 22% of the people you interviewed for Accelerate were female, is enough being done to encourage more women to become entrepreneurs?
Good question. I might not be the best person to answer this, but yes I think so. There are a lot of great networks like DWEN (Dell Women’s Entrepreneur Network), The Next Women and Sheryl Sandberg’s Lean In community that do a good job to support and encourage female entrepreneurship. Also, I have never come across any entrepreneurial group that attempts to alienate female founders, so I definitely feel there are some good resources in place to support female entrepreneurship in the West. I wouldn’t be surprised at all if in a few years the female to male founder ratio is 50/50.
You spoke to entrepreneurs from across the world, are there cultural differences between American, European, and Chinese entrepreneurs?
Sure there are underlying cultural differences globally that affect the way people run their business, the formalities of getting investment and pitching especially is different from country to country, but ultimately gaining an understanding of the demographic and doing a little research on etiquette should prevent you making any serious faux pas. A good read is “The Geography of Thought: How Asians and Westerners Think Differently…and Why” by Richard Nisbett.
America is seen as the home of entrepreneurship, should people (say from Europe) travel to join an accelerator in the US?
I think it depends on where your market is, the quality of the accelerator and which mentors are involved. One thing to keep in mind is that there is no real good legislation in place in the US to support non US citizens that wish to pursue their entrepreneurial dreams in the US and stay.
There is an E (Entrepreneurship) Visa that you can apply for but you need in excess of $500k in funding to do so and then there are all sorts of other stipulations involved. If the program is 3 months you will miss Demo Day if you fly out on the Visa Waiver program… So try not to do that. If you intend on applying to a US accelerator you will need to apply for a B1-B2 Work Travel Visa or its equivalent that will give you 6 months at a time in America.
For that you will need to be able to prove that you have enough $ to cover your stay, which shouldn’t be too much of an issue since the program will be providing you with $20,000 + in seed funding. The US has been promising reform of their immigration policies that will encourage entrepreneurs to immigrate to the US but Congress takes such a long time to do anything in the US, so who knows when that will materialise and what it will look like.
The top 10 or so programs along with some accelerators tied to companies like the Nike + Accelerator program in the US are definitely worth travelling for… and you can find out which programs they are in Accelerate.