Startups: How to Evaluate Whether an Accelerator Program is Right for You
Its a jungle out there for startups. Could an accelerator help? How to choose one that's right for you? Starting a company is one of the biggest, boldest decisions you will make in your life. You may feel ready to quit your day job and give this a go. How and where to start? Here's a short user guide to make a facts-based decision whether to use a business accelerator to help launch your startup.
Guidance #1. Are You Ready for Acceleration?
Sure you will need hands-on high-quality support from an accelerator. Building a business from ground-up means handling issues in legal, tax, bank account, founders, customer database, tech stack, intellectual property rights.But YOU also have to be a good fit for acceleration. Its time to look hard into the mirror and make sure you are ready to dig deep. Here are my personal favourite Top 5 criteria for a good accelerator startup candidate:
The People. Your company is brand new. Maybe you’re not even incorporated yet. You may be two guys in a garage but you better be ready to go way beyond the idea-stage fast. You want to build something and will put in the work. You are willing to learn and work really hard.
The Strategy. Your product will be in an area the market needs. In FinTech this year for example, we are seeking new services in private identity, insurance (InsurTech), regulatory processes (RegTech). You could be a B2B or B2C business model. If you’re claiming to go B2C, better have a very strong story about how you will afford customer acquisition.
The Business. Accelerators are about enabling new business models that the banks can’t create on their own. Technology catalysts like blockchain, artificial intelligence, machine learning are nice-to-have but you can also run a perfectly good business without. Sometimes using excel and a clickable prototype is enough to get customer confirmation of your hypothesis and start the business.
The Financials. You should have enough cash on your bank account to launch this thing for 12-18 months without drawing down a salary. You will end up investing all what you earn in revenues back into the business – so its going to be hard to take anything out of the company to help with your personal financials.
The Commitment. As a general rule of thumb, you should have two people who can quit their jobs and go full-time committed on your startup. This is the moment you’ve been waiting for all your life. You have to accept the fact there is a strong chance of failure and be able to bear that risk emotionally and financially, with the full support of family, friends and colleagues.
Guidance #2. Choosing your Location
For the last decade, FinTech in Europe meant one thing: move to London. That’s changed over the past few years and now you have a great range of locations from Russia to Ireland and everything in between to launch a startup.
Here is why I chose to live and work in Switzerland, as one example. Wherever you choose, all the factors have to make balanced sense.
Switzerland as Global Benchmark. Pedigree. Its something you can’t buy. We are home of a quarter of the world’s private wealth. The percentage of jobs in Financial Services sector is second-highest in the world. Here you can get access to experts on everything here from wealth management, retail banking, payments, cryptocurrencies, asset management, hedge funds.
Finance Talent Pool. We have 2 of the Top 10 technical universities in the world: ETH and EPFL, both leaders in AI/machine learning. There is a large pool of banking knowledge – you can get experts in everything from portfolio management to digital marketing strategy.
Business Freedom. We have a strong engaged regulator but otherwise a laissez-faire economic policy from government. We consistently rank #1 on global innovation lists. Two thirds of our economy is powered by small-medium enterprise most of whom have <100 employees.
Small > Big. Not every startup needs access to a billion-person market to grow into a successful company and get angel invested. What you DO need are first customers to prove you can sell a product, evidence about your CAC/LTV and whether you have scalable growth potential.
Angel Investors. There are lots of them in Switzerland – from private wealth, family offices and venture capitalists. We just are quiet about it.✌🏽
Guidance #3. What are some Top Attributes to Look for at an Accelerator? 🚀
Here a list of my favourite Top 10 things (sharing from F10 Zurich) as one example of best practices at an accelerator.
Meet Customers – At F10 we work hands-on with highly engaged corporate partners (banks and insurers). They look to run proofs of concept with you and become your customer #1.
Meet the Parents – Our parent company is the financial infrastructure provider in Switzerland (stock exchange) and also runs Swiss payment services, securities settlement, clearing as well as financial information flow here. We have terabytes of financial markets data.
Meet the Banks – SIX is owned by its 100+ banking partners – a big potential customer base to start with for your startup! During the program we also run Investor Days where you can meet potential early-stage investors on the market.
Meet the Coaches – We have 3 full-time professional coaches (Thomas Landis, James Sanders and me) plus content partners in legal, tax etc. We are all former startup founders with a full range of skills where you need them most.
Get New Skills – Access to hard skills support including user experience testing lab (PwC), business canvas design, lean startup methodology, design thinking, founders setup, legal support.
Get Toolset – Access to full Startup toolset including Jira, Confluence, AWS and many more.
Get Education – During our six-month program, you receive 7 weeks of full-time coaching in our home-grown Masterclasses format. These weeks are full of pitching opportunities, work on financial plan and risk lists, your business canvas, customer testing and prospecting.
Get Seed Money – We pay a small fixed amount for your expenses as you hit milestones defined around these Masterclasses.
Get Mentored – Mentors are an additional resource to give perspective – kind of like your external Board of Directors. They provide hands-on steering and confirmation of your strategy and can help open doors you didn’t think about.
Final Word: Applications for the P2 “Prototype to Product” Program starting in March 2018 are now being accepted 🎯