Cisco has published a whitepaper titled ‘A new approach to start-up commercialisation‘, in this excerpt, the multinational technology company explores the most important factors startup owners should consider when selecting an accelerator or assistance programme.
Top-tier start-up accelerators have a reputation for being highly selective. Some, according to published reports and Silicon Valley lore, are harder to get into than the latest Shoreditch pop-up bar on Saturday night.
For some young companies, this aura of exclusivity can become a distraction. Instead of focusing on finding a business-assistance programme that best meets their needs, they obsess over acceptance into a programme with a reputation for discrimination.
The truth is that it’s the promising start-up who should be doing the discriminating. Not all accelerators and incubators are created equal. And even those with waiting lists longer than the queue to the London Eye may not possess the resources, structure or policies that will maximise your potential to mature into a sustainable commercial enterprise.
You need to turn the tables, or at least move yourself to the other side of the velvet retaining rope.
Here are the five most important questions you need to ask a prospective start-up support programme before granting them the privilege of nurturing your business:
Business model
The seminal question to ask going into any business assistance relationship is: Do you want to part with a percentage of your business? Are the services offered by this accelerator worth as much as a 10 percent stake in your company? For many, who view graduation from an assistance service as clearing the last remaining hurdle to commercial success, the answer is an unqualified “yes.”
For others, though, parting with a portion of your baby at this point, may induce sweet sorrow somewhere down the road. What if the programme doesn’t get you all the way to the finish line and you need additional assistance? You may also limit future investment prospects by diluting the value of your company.
Programme structure
Shopping for an accelerator is akin to finding the perfect mattress. Some can be too rigid and unyielding, forcing start-ups down paths misaligned with their objectives. Others might be too soft, lacking the support you’ll need to prepare you for the days ahead. Finding that “just-right” fit means finding a partner that tailors its service to the individual requirement of the start-up.
Some of the questions start-ups need to find out before entering a programme include: How much flexibility is built into the programme? Are cohorts selected from the same competitive landscape? Is the length of the programme pre-determined?
Post-graduation policy
What happens after you graduate? Does your relationship with the accelerator, which may now own a small percentage of your business, continue to support your development? Before you sign on the dotted line, you need to understand the long-term commitment offered by the accelerator, including access to advisories, potential investors, as well as legal and marketing advice, after “demo day” is over.
And what about success rates? Even though incubators and start-ups have been around for years, little information is available that measures long-term success. Most start-ups take several years to fail or succeed. Meaningful information about accelerator success rates is just now becoming available. Until that data is available, anecdotal accounts from accelerator graduates are the best source of performance information.
Business backers
Before you sign with an accelerator, you need to know who is calling the shots. What is the accelerator’s business model? Is it a for-profit enterprise that is likely to be more interested in growing its own bottom line than yours? Is the accelerator run by angel investors, who have set up the business-assistance programme as a screening service for potential investments?
Find out who is behind the business and their motivations. Make sure the programme is anchored by a diverse group of sponsors. A balanced mix from corporate and academic realms is the ideal situation.
Target audience
Start-ups require different services and different levels of expertise, depending on their maturity level. Have you already turned your idea into a commercial product or service? Chances are you don’t require the services of an accelerator or incubator that’s optimized its service for the needs of early stage start-ups. Similarly, you don’t want to spend 12 weeks with an accelerator focused on go-to-market logistics when you’ve yet to polish your product.
Start-ups need to know if a prospective accelerator has a specialty or caters its services to a specific stage in the development lifecycle. You need to make sure that the mentors and industry advisors that anchor the programme are focused on your particular needs.
This is an excerpt from Cisco’s whitepaper titled ‘A new approach to start-up commercialisation‘.