Tech cities like San Francisco offer a rich mix of startup accelerators to help grow new startup businesses. No longer does starting a new business depend on your connections and financial resources alone. These accelerators, like Y-Combinator and 500 Startups, can assist with nearly all of the resources you’ll need to get your business moving. Your task is to convince them that investing in your business will be profitable. If successful, your business should be on the way to its first $100,000. Maybe one of the many startup accelerators could be what you need to help push your mobile app to launch?
Coworking spaces, incubators, accelerators, angel and venture capitalists often get involved in helping to launch new businesses. Their activities can overlap, but in very general terms:
- Coworking spaces are shared offices, with added services, usually open to anyone for a fee.
- Incubators provide development programs for businesses at their earliest (often idea) stages – some are free, some charge for admission and others may offer some seed money to graduating startups.
- Accelerator programs help early-stage businesses scale up for rapid growth and most provide seed money to the candidates they accept. Getting in is not guaranteed.
- Angel investors usually provide up to $50k as a startup’s first investor. Some Angels run accelerator and incubator programs of their own.
- Venture capitalists provide larger investments, sometimes up to $2 million to startups. Some VC firms also offer accelerator and incubator programs of their own.
As you can see, the terms are not exclusive. Some venture capitalists manage their own incubators, accelerators and co-working spaces with a dozen different programs. Or they might just have one program for everyone. It’s important to know what you need and research how you can get it.
Our focus is on startup accelerators for two reasons: they help startups get to market faster and they often provide funding. Most accelerator programs are intense 3-4 month affairs, while incubator programs often are longer. The longer a project drags out, the less likely it is to move to the next phase, in this case to funding and MVP. Many accelerator programs, while very selective, also invest up to $150k in their candidates.
Eggs hatch when they’re ready or, in the case of Daenerys Targaryen’s (Game of Thrones) dragon eggs, only after special conditions are met after hundreds of years. Okay, that’s not a fair analogy, but accelerator programs are meant for those moving with a definite goal and purpose.
Y-Combinator, arguably the first startup accelerator, invested $20k in Airbnb early in 2009. By April of the same year, Airbnb raised $600,000 more from Sequoia Capital. On this note, Sequoia Capital has invested in 8 of 13 Y-Combinator $50 billion Unicorns. It pays to look at what Angel and VC firms are associated with the incubator or accelerators you want to get into.
What do Accelerators offer?
Accelerators are investors mainly focused on the earliest stage opportunities. Most invest anywhere from $50,000 to $150,000 for a 5-10% share of a business. Accelerators can be instrumental for any business desiring greater growth, even when already profitable. They aren’t just for startups. However enticing that $100,000 may be, the true value of accelerators resides in all of the other services they offer.
- Demonstrating credibility – finding one investor increases your chances of finding others.
- Mentorship – valuable insight from seasoned professionals.
- Accelerated learning of all facets you’ll need to grow your business.
- Rapid evolution of your market strategy and its potential profitability.
- Network connections with fellow classmates, program alumni, and the accelerator team.
- Access to services with reduced or deferred costs.
- Introductions to Angels and Venture Capitalists on Demo Day.
Accelerators help condense years worth of business development into an intense 3-4 month program. Their programs represent one stage of a long-term growth process toward greater investment milestones. Demo Day offers participants the opportunity to pitch their business to venture capitalists and other investors.
Further investment rounds come in the form of Series A, B, C and so forth, culminating in an Initial Public Offering – very loosely, funding rounds tend to proceed as follows:
- Seed: $100,000
- Venture Capital: $1,000,000
- Series A: $10,000,000
- Series B and Beyond: $100,000,000
- IPO: Billions… and Billions.
What do you need to get accepted into an Accelerator?
Every accelerator will require you to submit an application to their program. Taking time with the application counts more than anything else. Their teams review hundreds of applications. Each knows what they want to see and, equally important, not see. They don’t want to see your business plan, a book, walls of text, or vague answers. Clear-cut brevity is good. Your team details are critical. Some may have an opportunity for you to provide up to a 90-second video about your project.
Accelerators get to pick and choose the applications they like most. This may be 1 in 5 or as few as 1 in 100. You’ll want to make an awesome impression. Beyond this, the challenge only begins after you are accepted. For mental preparation, consider the following four points as hard requirements:
- Physical presence. Nearly all accelerators require participants to be on site for the duration of their program. That means having a place to live if you are not within commuting distance.
- The will to succeed. Startup Accelerators run very intense 3-4 month programs. Even if they don’t run 12 hour days, 7 days a week, expect to apply yourself to that kind of regimen to get the most from their program.
- Listen and don’t let your ego get it in the way.. Be open to constructive criticism and accept it as a catalyst to make your business better.
- Equity. Share some pie. There’s nothing better than pie, especially fresh Pegasus Pie. Would you rather have 100% of a mere crumb or a nice slice of pie that grows faster than you can eat it?
How does getting into Startup Accelerators help build your Mobile Business?
If you have a business idea involving mobile (and IOT) applications, there are three points where an experienced Mobile Product Agency can help.
A Workshop Before Applying to the Accelerator Program
While not required by any startup accelerators, you may want to maximize the chances of being accepted by an accelerator. For a mobile-first business, a thorough education of everything needed to go into your mobile app could be instrumental. A workshop can help flesh out your idea for an app to:
- Identify all the modules, components and technologies needed to do what you have in mind.
- Define the data it will need to collect and the metrics it will need to track
- Detail the sequence and timelines of development.
- Provide you a storyboard or wireframe showing how all parts of your app fit together.
- User personas – helping you to define your target market.
- A professional cost estimate that you can take to the bank.
Workshops like this involve a lot of work and can cost $5,000 or more. In turn, you have a detailed roadmap, visual collateral, timelines, and a professional estimate. Knowing the cost upfront can prompt changes to fit your projected budgeting. Ultimately, you’ll be able to write or speak with much greater clarity and confidence about your mobile-first business.
An incredible Product Prototype while you are in the Accelerator Program
Once you are accepted by an accelerator, you’ll be busy keeping up with the program and developing your business. At the same time, you want to be ready for Demo Day. You’ll want something tangible to show investors. What do they expect to see? Well, three things mainly.
- Your Team. Does it have the necessary leadership and skill sets to make your business happen? Most accelerators will assist you in various ways to develop your team. Portions of your team may be outsourced, like mobile design and development. Having a solid mobile agency supporting your app leaves you to focus on developing your business.
- A Viable Business Proposition. Seriously applying to everything your accelerator program has to offer should put you on solid ground here.
- Something to Fall in Love With. On Demo Day, most investors won’t expect you to have a full-fledged Minimum Viable Product. With accelerator funding, a beautifully designed prototype should easily fit your budget. Along with an attractive prototype, you’ll impress investors by having a detailed, professional roadmap for its continued development They’ll have something tangible to view and you’ll be prepared for all their questions
No single point on its own is likely to convince an investor. You want to hit all three as hard as you can. And if an MVP-style mobile application can be funded from your initial accelerator funding, all the better. Granted, that may represent a significant chunk, but with a solid agency behind your app, you can solve a large portion of your team needs and have a beautifully designed MVP ready to show the likes of Alfred Lin, Josh Kopelman, Bill Gurley – or, at least their representatives come Demo Day.
Continued Product Development Beyond Demo Day
Congratulations! Your startup just received a $1 million investment from a VC firm! Now what? Time to relax, drink tall drinks with little umbrellas in them? Ha, well, maybe for an hour or two. Now, you have investors watching and waiting for you to seriously perform.
If you selected a solid mobile agency to complete your product design and/or MVP, it makes sense to have them continue developing your app. Changing midstream can be disruptive to your timelines, as any new team will need to familiarize themselves with its internals. And hiring your own development team takes a lot of time and is very expensive.
A mobile app can do a lot of things, but it can’t do everything – like negotiate for you, hire people, manage your marketing, keep on track with employment laws, etc. Most early-stage businesses are in this boat, requiring founders to wear many hats. Continuous Product Development lets you focus on your core business needs while your mobile agency acts as your development team. “Access is better than ownership” in today’s new shared economy.
I’m a Doctor, Not an Escalator!
$100,000 by Putting One Foot in Front of the Other
Everything is in the Process. If you focus on results, you’ll get results – good or bad, hit or miss. If you perfect the process, you will consistently realize good results. The problem with perfection is that by the time it is achieved, your standards for it have changed. Leastwise, it keeps improving.
It is much easier today to get funding for a business than ever before — the process is defined, clearly laid out, and improving constantly. It is practically a step by step exercise, where there are literally thousands of other businesses happy to help you with everything you need to make your business a success. Going from a $10,000 startup to a $100,000 startup is like graduating from pre-school to elementary school. The processes are roughly the same.
[…] some respects, applying to a startup accelerator is a lot like applying to a college. Anyone can get into the local community college, but Harvard, […]