I can’t explain the depth of my gratitude to the 500 Startups family of networks and mentors. They’ve housed, loved, overwhelmed, and accelerated the Chewse team, from co-working space to Demo Day:
As an ode to my experience at 500, I’ve prepped a brief guide for any newbies entering an accelerator — I was part of the 500 Startups Winter 2012 Accelerator, but I’ve spoken with founders from TechStars, Y-C, Angelpad, MuckerLab, and others. The expectations from these high-caliber programs are similar enough for me to write generally for. You can read about the different thesis and comparisons between the programs if you sniff around — I’ll let others handle those debates:
A note about terminology: accelerator vs incubator
The terms “incubator” and “accelerator” have become interchangeable. I only looked into this because 500 Startups very clearly brands its program as an accelerator.
Brad Feld, the founder of TechStars, has the most nuanced explanation. He argues that incubators refer to the program where ideas and teams are incubated in-house. These are often formed in connection with a venture capital firm, but without a formalized program of seminars, mentors, and Demo Day.
Accelerators are an incredibly focused program that are mentor-driven — meaning that you have a limited amount of time (4 months for 500) where a maximized amount of the network and its teachings are opened up to you in a more curriculum-based format. As Feld puts it, “in 90 days you get 2 years worth of really focused effort.”
I would consider any program with an application process, mentor-driven focus, and established timeframe an accelerator — so I’ll be using that term.
Step 1: Figure out a cogent reason for joining the accelerator, then set a goal
You’re staring at the “submit” button on the Angellist application to your dream accelerator, or you’ve received the call from Dave telling you to pack your things and head up to the exciting town of Mountain View to join the next 500 batch (congratulations, get ready for mayhem!)
Sit down with your co-founder/team NOW and come to a consensus on the one thing you want out of the program. That way, you don’t look back at 4 months of “heads-down” work and a piece of equity gone, and wonder what you actually achieved.
Your goals may be to use the capital to hire, to build shit faster, to learn a ton, or just to launch your beta. I’ve had founders tell me that they want to join an accelerator to be with other companies facing similar challenges. The camaraderie sentiment is touching, but an accelerator is an expensive way to hang with other founders at the same stage — if this is truly your goal, I would join a trusted co-working space instead. (Usually) no equity, similar community.
My goal at 500 was to establish a strong, value-add network of founders, startups, and investors to help us in our fundraising efforts. And $1M in capital raise later with an incredible network of 500 founders and mentors, I’m happy to say we’ve met our goal.
Step 2: Get some sleep before the accelerator, you may not get much during it
You’re stuffing your luggage, packing for the journey ahead. Shirt with company logo? Check. Startup stickers? Check. That folder you got for free at that event at Box? Nice. All chargers secured? You’re almost set. How do you really mentally prepare for this foray into the land of startups?
I’ll admit, I got sick 3 times during the 4-month program. The most epic instance was at the SF Demo Day, when I was literally on fire with fever.
Okay, the point here is that I definitely exhausted myself during the program. I have a ton of thoughts on work-life imbalance, but I’ll leave it at this: give yourself permission to rest. What founders don’t share enough is that pitching is exhausting work — 3 pitches in 1 day, and you’re entitled to an early night’s rest. I often found myself feeling guilty for coming back in the afternoon wiped out, and I pushed myself to work just as hard as if I hadn’t been out pitching at all (e-mails don’t rest, why should I?).
But this is certainly a work in process for us all :)
Step 3: Build meaningful relationships from Day 1 (especially with past founders)
It’s the first day of your shiny, new accelerator experience — and the room is humming with 100 other entrepreneurs. There’s free food, shirts decked with strange names ending in “-ly,” and a sensation of being utterly overwhelmed.
Going from a young, budding tech scene in Los Angeles to the entrepreneurial powerhouse of 500’s network (largely in SF, though truly international) was overwhelming. It was like my high school/college transition — I went from a 500-person high school to a 30,000-person university.
That’s why I spoke with 17 founders in the first 3 weeks of the program, trying to figure out how to best leverage being in an accelerator. There’s no manual or guidebook. The teachings you learn are tribal, so hit up the tribe immediately.
And the tribe taught me a ton. Those early relationships have blossomed today in unexpected ways. Some of those founders have served as investor reference checks, employee reference checks, first money in the round (you never know who invests), insiders to the Valley, pitch partners, drinking buddies, and close friends. #500STRONG
Just because you’re attached to a mythical brand like 500, however, doesn’t mean that these relationships form themselves. Again, revert back to those carefree college days and think about how you made friends there. I shocked myself with how I initially forgot to pass my fellow founders/mentors through the same filter that I pass new friends through. Build relationships of value as you do in all spectrums of life. Don’t feel pressured to build a meaningful relationships with everyone — sometimes you just don’t click, and that’s okay.
You’ll also be surprised at who in that network invests. It could be previous founders or mentors. Or the accelerator following on. Or an investor in the accelerator (known as a limited partner or LP) doubling down on you.
You will never have the guaranteed sheen of a new toy as you have when you are in the midst of the program. Once you graduate, you lose a lot of that natural momentum. Take advantage of it immediately.
Step 4: Pitch early, pitch often
I was pitching my startup from Day 1 and spending 90% of my time on it. All for the splendor of epic photos with slightly blurred backgrounds from Demo Day.
You learn quickly that as a founder, you’ll be pitching forever — whether or not you’re fundraising. You have at least 3 different pitches: to investors, to hires, to customers (oh yes, and if you’re a marketplace, to the other side of the market). See why pitching gets so confusing?
Specifically for fundraising, you want to have smart people pummel your pitch early on. Ideally before your first investor coffee, and DEFINITELY BEFORE DEMO DAY. In hindsight, I would sit down with 5 mentors/founders and have them nail me with questions. Make sure you feel at ease, not defensive. Ensure that you look comfortable instead of having the terror of walking to the guillotine.
In my opinion, investors aren’t necessarily looking for a right answer to their line of questioning (if they knew the right business answer, likely they would have started/funded your competitor long ago). They want to see confidence in the founding team and the nuanced answer demonstrating the great deal of thought into your business.
Besides, don’t you wake up in the morning and go to sleep at night thinking about your startup? If not, reconsider joining an accelerator in the first place.
Start getting practice now for being a good CEO/leader in the future. Practice your pitch with rigor.
Step 5: Demo Day and why graduating from your accelerator is a lot harder than graduating from college
You’re standing in the auditorium where Demo Day is about to go down. Press surrounds the rows of chairs set up facing the stage, and investors are placing their name tags over their crisp, blue shirts. You’ve made it through an intense round of practicing your pitch with your peers, but oddly your palms are still sweaty as you reach for your business cards to hand out like candy.
Demo Day is what I consider graduation from startup school. But instead of you taking the stage with a hangover and gallantly grabbing a diploma before heading to family brunch, Demo Day requires you taking the stage to pitch your lifeblood in front of hundreds of investors. It’s an incredible opportunity for access to a highly-qualified pool of potential investors in your startup. I’ve written in-depth about the heat-seeking weakness missiles and kryptonite cough syrup you consume in preparation for Demo Day pitches. Read it, and consider yourselves warned :)
The accelerator’s job is to provide access, press, and momentum surrounding the big day — and it’s your job to close the opportunities.
It has become well-known fact among accelerator alumni that Demo Day will not rain dollar bills (there are other places to go for that). People will tell you not to expect to close money. If you don’t start fundraising early, expect first meetings to come from Demo Day. In my experience, if you start fundraising early, expect to close money at Demo Day.
After seeing us at the first Demo Day, here’s an awesome text I got from an investor before the second Demo Day:
Once I went on-stage and spoke about closing in on 87% of the round, I get this delightful tweet from another investor:
We literally closed 25% of our round in the 48 hours before the first Demo Day (500 Startups has multiple days). We started raising 3 months prior to that, and it was one of the best decisions we made. If you have the necessary traction, I highly recommend starting to fundraise several months before Demo Day. It can certainly shave time off your fundraise later in the process (companies have closed as late as 5-6 months after Demo Day — this puts a huge crimp in your timeline post-accelerator, where you are ideally focused in on company-building).
I’ll write a separate post dedicated to fundraising, where I was initially a complete failure at. Generally, it’s advisable to close 50% of the round before Demo Day. Figure out what milestones you need to get there, work those into your goals, and get cooking.
People are everything
Accelerators aren’t for everyone. And they aren’t free. The view of the “startup promise land” doesn’t even hint at the long journey to get there.
But if I want to hear one thing about why you want to join an accelerator, it’s this:
I want to hear you’re so passionate about your startup, you’re eager to let smart people take a part in building it with you. Continue reading