So you want to be an entrepreneur. You’ve put together a small founder team, developed a proof of concept and found a domain name that doesn’t end in .mp. Or you’ve invented something at school, but have no idea how to turn it into a viable business. Or maybe you’ve got an amazing idea and, well… some hustle.
Over the last few weeks, I’ve been talking with entrepreneurs and Canada’s leading accelerators, conducting research for a report on the Canadian accelerator landscape that I’m working on with MaRS Data Catalyst. Given the explosion of Canadian accelerators and accelerator-like programs over the last three years, the issue of who should join accelerators—and which ones—has been a recurring theme in my conversations.
Like a good job interview, the decision about whether or not to consider joining an accelerator is ultimately about finding a good fit for both the accelerator and the founder team. Drawing on the discussions I’ve had with both entrepreneurs who have been through accelerators and those who are running them, here are five questions to ask before joining an accelerator.
Being in an accelerator is a full-time job. Several entrepreneurs have said that joining an accelerator (giving up existing jobs and maybe even moving to a different city) was the best way to see if every member of the founding team was equally committed. Also consider whether you’re able to make the most of the advice and guidance you’ll receive. Do you have a balanced founding team, including a hacker, a hustler and a designer? If you don’t know if you’re ready, consider alternatives like joining an incubator, a co-working space or a program like MaRS’ Entrepreneurship 101.
Unlike two or three years ago, now entrepreneurs have a range of accelerator and accelerator-like programs to choose from. So consider what your startup needs the most right now. Does it need to figure out product market fit? Or does it need to learn how to raise money? Does it need to know how to commercialize a technology idea? Or does it need introductions to companies like Facebook or to mentors with specific expertise? Are you looking to be held accountable with milestones and deliverables or are you looking for a more laissez-faire management style? Accelerators have different styles and different emphases—find out which one addresses your needs.
Accelerator programs need money to operate—both to run the day-to-day activities and to fund investments in your startup. While the success of its startups is top priority for every program, investors, sponsors and stakeholders must also be kept happy. So how does the accelerator measure its success? Is it by number of jobs created (which is typical of government-sponsored accelerators), new patents filed or technologies commercialized (which is often the case with university-related accelerators)? Or is it by the amount of venture capital investment (like many for-profit accelerators)? Do these goals align with yours?
When living on ramen wages, the thought of a $30,000, $50,000 or $200,000 investment is understandably tempting. But when making the decision to apply for (or join) an accelerator, don’t just run your calculations on investment versus % equity. Accelerators are investing a lot more than cash in your startup. From a warm introduction to your ideal customer, to sleep saved knowing that your legal contracts are done right, to hours spent with a rock star mentor—what are these benefits worth to you?
Canadian accelerators are still in their early days. Launched one year ago today, MaRS’ technology accelerator, JOLT, is currently working with its second cohort. And Extreme Startups, FounderFuel and GrowLab have only a few dozen graduates each so far. While most accelerators publicly share their success stories, we don’t have the benefit of open and comparable reporting and benchmarks across all accelerators quite yet. Our research to date suggests that best practices are beginning to be shared between accelerators as they emerge. Best of all, every accelerator alumnus I’ve spoken with is open to sharing his or her experience with other entrepreneurs.
Committing to an accelerator for three to nine months is an important decision for your startup. What do you think is important to ask before joining an accelerator? Let us know in the comments below.
We’ll be publishing a report on the findings from our research on Canadian accelerators this summer. Stay tuned!