Startup accelerators have rapidly increased in popularity ever since Y Combinator came into existence in 2005.
Since then the “accelerator model” has come into its own, providing entrepreneurs with a wealth of expertise and access to capital that simply wasn’t available in the past. A quick look at Seed-DB will attest to that. According to their data, accelerators have pumped over $88M into the global startup ecosystem.
But, as an entrepreneur thinking about applying to a startup accelerator, it can often be tough to know what to expect from the process or how to do it (and whether or not it will actually benefit your startup).
To help give you a peek behind the curtain, and answer some of the key questions related to startup accelerators, I enlisted some help from people who’ve actually done it.
Just recently, I spoke to three startup accelerator alumni and asked them to share their experiences.
She’s the co-founder and CEO of Sendspark, a startup that’s revolutionising how companies connect with their customers using video communication.
Launched just three years ago, Sendspark has already completed two seed rounds and has quickly grown to over 10,000 users.
Then I sat down with Y Combinator alumni Cory O’Daniel.
He’s the co-founder and CEO of Massdriver, a startup disrupting the DevOps space to make it easy for engineers to deploy secure, production-ready infrastructure in minutes.
Finally, I spoke with another Y Combinator alumni, Shawn Drost.
He’s the co-founder and CEO of Phoenix Hydrogen, the world’s first marketplace for a utility-scale clean hydrogen ecosystem.
They bridge the supply and demand gap for hydrogen power to help energy companies replace the use of fossil fuels with more solar and wind power.
All three of these entrepreneurs attribute part of their success to the experiences they had at their respective startup accelerator programs.
And, fortunately, they were more than happy to take half an hour out of their busy schedule to share those experiences with our community.
- Why Should You Apply for a Startup Accelerator?
- How Long Does it Take to be Accepted by A Startup Accelerator?
- What Does a Typical Week Look Like at a Startup Accelerator?
- What Are the Main Benefits of Working With a Startup Accelerator?
- What Are the Downsides of Working With a Startup Accelerator?
- Final Words of Advice on Applying for Startup Accelerators
Why Should You Apply for a Startup Accelerator?
There are several reasons why entrepreneurs decide to apply for startup accelerators. Chief among them is the chance to meet investors and learn from experienced advisors during their time in the accelerator program.
But for Bethany Stachenfeld, it was the community around the accelerator that made her and her founding team fill out an application:
Of course, we wanted to experience the accelerator program from 500 Startups – and all the learning that goes with it. But, more importantly, we wanted a community of founders.
We felt it was important to broaden our network and connect with Silicon Valley. And because 500 Startups is now remote, it was a great way of doing it without moving from our home in Texas.
A key lesson for any entrepreneur: your network and how you cultivate it, is often the main differentiator between success and failure. It’s not just about meeting advisors and investors, it’s also about meeting fellow founders in the same stage of their journeys as you.
These can go on to be lifelong business relationships, as Bethany experienced first-hand:
One of the best things I got from 500 Startups was the buddy program. My buddy helped me a lot and who I still keep in touch with regularly.
His company is doing phenomenally, it’s at a later stage than ours is. Every time we speak he’ll tell me what he did wrong and give me some tips on how to avoid making the same mistake.
I’ll bring him an idea and he’ll say “Well, we tried that and burnt $8M in the process so please don’t do that.” So it’s a big help.
And she made these relationships without having to uproot her family.
Not wanting to uproot your family is something that originally made Cory O’Daniel not want to join an accelerator. It wasn’t until COVID hit, and the world went remote, that he and his founding team considered joining Y Combinator:
We were very anti joining an incubator. And the main reason is that we’re old.
We’re not 23-year-old Stanford dropouts, I’m 42. I can’t uproot my family and say, “Hey, we’re going to move to San Francisco for three months.”
What made the difference was the pandemic. The idea that it was remote, I’ve been a remote developer and engineer since 2006. And so seeing the rest of the world finally catch up was great.
That change is what made it possible for us? Otherwise, we would not have joined Y Combinator. I would not have moved to San Francisco.
It was this major change to the way Y Combinator operated, twinned with another critical moment in his startup’s journey, that made him and his founding team finally take the leap:
We found out we’d failed to raise funds in 2021. We’d pretty much met every VC out there and they didn’t quite tell us that our idea was stupid, but you could tell they wanted to.
So we got around to January of this year (2022) and we had an MVP, no customer and no funding.
We’d burned about a quarter-million dollars of our own money just between quitting our jobs and pumping money into the business.
So we decided to apply for Y Combinator – to try and get some funding that way.
Then, the day before our interview, we got our first customer. The next morning (the day of the interview) we got our first angel investor. That same afternoon we got our second angel investor.
By the time YC called us back, we’d raised $500,000 in three days.
Which made us question if we even needed YC. Our whole goal of applying was to get some money behind us, and we had that now.
For me, it came down to the question “Do we actually know what we’re doing? Or did we just luck out?”
And the answer was no, we don’t have a clue and we needed that mentorship.
The interesting thing, in Cory’s case, is that he and his founding team went into the application process purely for the funding element.
But, when they no longer needed the money, Cory and his team realised that the mentorship aspect of the program would also be valuable to them.
That mentorship was also one of the reasons Shawn Drost and his team decided to apply for Y Combinator:
The mentorship and programmatic support from an accelerator like Y Combinator are so valuable.
But the funding element also played a critical role in his decision:
On top of the mentorship, it’s just so much easier to get funded when you come out of an accelerator – especially if it’s Y Combinator.
I’d previously built and sold a startup before this one. I was proven and had successful exits. So I could get a lot of meetings. But even then, I was struggling to get funding.
Having that credential of being a YC startup simply opens doors and gets people to write checks. And getting that credential was a big part of why we wanted to be part of Y Combinator.
Funding is getting increasingly harder in the current ecosystem. A good idea is not enough, traction is not enough and, apparently, even a proven track record may not be enough.
This is a valuable lesson for any entrepreneur: you need to explore all viable options that enable you to bring your startup to life. And if leveraging the credibility of something like YC will get you to your next funding milestone – it may be worth it.
For this reason, Shawn’s reasoning makes complete sense.
Investors already know Y Combinator has some of the best startup minds in the world who have already seen something in the founding team – or they wouldn’t have been accepted.
It makes betting on them that little bit safer – and can often mean the difference between deciding to write a check or not.
Summary: Why Should You Apply for a Startup Accelerator?
- The entrepreneurial community
- A wealth of mentorship
- Opportunities to gain funding. From both the accelerator itself and from investors after the accelerator has ended (using the “credential” to get through the door)
Do you have a brilliant idea that you want to bring to life?
From the product and business reasoning to streamlining your MVP to the most important features, our team of product experts and ex-startup founders can help you bring your vision to life.
How Long Does it Take to be Accepted by A Startup Accelerator?
Time is always of the essence in an early-stage startup. So, naturally, one of the questions at the forefront of entrepreneurs’ minds is how long it will take to actually get into a startup accelerator.
Here it varies, often on a case-by-case basis. For Cory, it was around two months. Whereas for Shawn, it was two to three weeks.
But for Bethany, the experience was entirely different. She and her team didn’t get in when they first applied:
We didn’t get in the first time we applied – they told us we applied “too early”.
So we just kept emailing them every month asking “How about now?”
It’s so funny because founders get so annoyed when they get told “it’s too early” but in hindsight, we joined 500 at just the right time.
If we had done it any earlier we would’ve still been building out the core features. We wouldn’t have been able to take advantage of the networking, the advice, etc.
Our product is a platform to send video emails to leads or clients. So I used our product to send video emails direct to 500 startups, which I think helped.
In fact, when they told us we were in, they told us by recording a Sendspark video and emailing it to us.
There’s a lot to take away from the way Bethany handled getting told she applied “too early”.
First, she took the advice and continued to build out her core product.
Then, she had the ingenuity to use that product to persevere. She made sure that 500 Startups knew she and her startup were still there. But more than that, she showed them that they were ready to take that next step into an accelerator program by using the very product she was pitching.
Summary: How Long Does it Take to be Accepted by A Startup Accelerator?
Although it varies case by case, it typically takes between three weeks and two months (if you get accepted the first time around).
What Does a Typical Week Look Like at a Startup Accelerator?
A standard week at a startup accelerator will normally depend on the specific accelerator you choose.
That being said, the core focus will generally be on investment and mentorship.
For instance, here’s how Bethany described her typical week at 500 startups:
You meet with your investment lead once a week. Then you meet with your EIR (Executive in Residence) twice a week.
The EIR is someone you get to pick to work with you it’s not one size fits all and we told them up front, that we want an EIR with experience in the video industry who’s all about product growth.
They somehow found two people who fit the bill – both of which were amazing – and we chose one of them. It was a match made in heaven.
There was also a weekly standup with fellow founders and then there was a long list of optional events.
And although Y Combinator’s program is a little different, you can see from Shawn’s description that the focus on investment and mentorship stands strong:
So the weekly program is that there are one to two live talks depending on the week.
Those are talks given by experienced startup founders of big companies with different stories to tell about product, marketing and other relevant startup topics.
Then there is a weekly event with a small group of companies in what’s called a “section”.
We were in the climate tech section. We had six other startups with us and it was awesome. Those companies are all just total killers and they’re really fun.
In those meetings, you share what your goals are for the next week and what you will accomplish. As well as whether or not you accomplished your goals from the previous week.
It’s both motivating and intimidating because you set these goals and then you have to make them come true. Or you have to show up to a meeting full of people that you really like and say I suck again. So it was very motivating.
It’s clear to see from these founders’ experiences that the reasons they joined an accelerator were fulfilled on a day-to-day basis.
From mentorship and investment to that all-important startup community of like-minded founders.
Summary: What Does a Typical Week Look Like at a Startup Accelerator?
A typical week at a startup accelerator will consist of:
- Weekly talks from industry experts
- Roundtables with fellow entrepreneurs and startups in your industry
- Numerous optional events to give you networking opportunities
What Are the Main Benefits of Working With a Startup Accelerator?
As I’ve already mentioned, there are many reasons why entrepreneurs choose to join a startup accelerator.
But when I asked these three entrepreneurs what the main benefit was, they all had similar answers. It was all to do with people – or rather the community and network they built.
Let’s take Bethany’s answer as the first example:
The people are the most important part of the experience. Not just the people we worked with there, but the people we’ve stayed in touch with and continued to work with as we’ve grown Sendspark.
There were many benefits to working with 500 Startups. They helped us make sales, get funding and avoid many mistakes on our journey.
But all of that was enabled by the community of advisors, mentors, investors and fellow entrepreneurs.
And when I sat down with Shawn, he said exactly the same thing:
I really recommend the community experience. Everyone who’s an entrepreneur should have a circle of entrepreneurs that they can just text to bounce ideas off and figure things out.
If you don’t already have that, go and try and build it because a lot of people will appreciate that. With YC we didn’t need to go and try to build it, it was there.
Just like you can get a WhatsApp group together of entrepreneurs that are at your same stage in life. It’s great.
Cory gave me a similar answer:
I think the bigger benefit is just the comradery. The idea of “we’re all in this together, we’re all on the same team.”
It was a great help to just have other people around us going through the same struggles and having the same problems at the same time. The ability to talk to them and know you’re not the only one is invaluable.
We had a lot of founder-led sessions where we had specific topics to focus on. But I feel like at least half of them just turned into founder therapy.
Just people sharing, saying “This happened, it sucks, I’m not sure where to go from here” and everyone understanding that instantly and trying to solve it collaboratively. It’s extremely cathartic.
And sure, you can talk to friends or your spouse about these issues.
But it’s not the same as being surrounded by other people trying to build a business who are in exactly the same stage as you.
It’s something that’s extremely hard to find outside of a startup accelerator but it’s so important.
I’ve been saying for a while now that people are the most important aspect of your startup. Not just who you hire. But also your mentors, advisors, customers and extended network of entrepreneurs in the startup ecosystem.
Being able to build a community of entrepreneurs around you as an early-stage startup founder is extremely important.
It will ultimately help you avoid common hurdles and improve your product because you’re constantly bouncing your ideas off fellow, like-minded professionals. It will also open a lot of doors.
Not just with other entrepreneurs from your batch, but with all the mentors you work with, as Cory pointed out when we spoke:
Now we all have a slack channel and I can talk to everybody that was in my section and my group – including the partners. I can even go to the site and I can book additional sessions with my partners if I want to talk about stuff.
But it’s funny, we’re all still in touch. I mean, we only hung out for three months. But because we went through working extremely hard on our startups together, it bonded us.
For example, we have an LA contingent that still hangs out together, I flew to San Francisco a few weeks ago to meet them all.
Summary: What Are the Main Benefits of Working With a Startup Accelerator?
The people. Whether it’s fellow entrepreneurs, advisors, mentors or investors, the networking aspect of an accelerator is clearly the biggest benefit of the experience, according to these entrepreneurs.
What Are the Downsides of Working With a Startup Accelerator?
Of course, there are some downsides to working with a startup accelerator. Both 500 startups and Y Combinator take 7% of your company.
But for all three of these entrepreneurs, the benefits were well worth the 7%. And, as Bethany pointed out, the percentage they take isn’t enough to become a problem in the long run:
It’s a real champagne problem in the long run – because if they end up taking a lot of money from the company, we’ll be so successful it won’t matter.
I know other people have wanted to do 500 Startups but didn’t want to give up equity or were just at a much later stage. For them, 500 Startups has a fund that they use to invest in companies, so there is a way for you to access the community without doing the accelerator.
In fact, for Shawn, the question of the 7% didn’t even come up:
For me, it would be dishonest to say anything negative about the YC experience. The only thing I would say is that the weekly talks are sometimes hit and miss.
Don’t get me wrong, they’re by far the world’s best software startup talks – without a doubt.
But, even the world’s best talks might be hit and miss in terms of value for your specific startup needs.
Summary: What Are the Downsides of Working With a Startup Accelerator?
Having to give up around 7% of your company. That being said, the benefits you gain from working with an accelerator are more than worth the equity you give up.
Final Words of Advice on Applying for Startup Accelerators
Despite the number of valuable insights these three entrepreneurs had given me, I wanted to ask them for some final words of advice.
Shawn’s advice? Don’t spend too much time on it:
Building a startup isn’t about getting into an accelerator. There are a million different pathways forward – so don’t waste too much time worrying about getting into an acceleration program.
The main thing is to build a great company and don’t worry too much about the pitch itself. If you believe in what you’re doing and you’re doing something cool, it will come through. If not with an accelerator, then with an investor.
The idea of doing it quickly is also something Cory also mentioned:
We overthought our application video. They’re not looking for great video editing or the best presenter in the world.
They’re looking for people who believe in what they’re doing.
So don’t overthink it. Just get the information in there. Communicate the problem you’re trying to solve and do it with passion.
Show them what you’re trying to do and why you’re excited about it. Because that’s what they’re looking for.
Shine a light on your product by communicating the “why” behind it. Showcase your unique value proposition, why your idea is better than anything out there and, critically, why you’re the team to solve it.
And if, like Bethany, you don’t get in the first time around, don’t give up:
Persistence is key. We applied twice, which I think is pretty normal. Then we kept bothering them regularly.
But I’d say that’s also good startup advice. Take “no” as a “not right now.” Everything you do as an early-stage startup can change on a weekly basis. Nothing is permanent in your startup so don’t take a “no” as permanent either.
This is not the first time a successful entrepreneur has told me that persistence is one of the most important values you can embody when you build a startup.
In fact, almost every entrepreneur I’ve spoken to has been told “no” a million times. The ones who succeed are the ones who keep moving forward.
Just remember, in your persistence, that the people you’re talking to are exactly that, people.
My other piece of advice is to remember that the people you’re involved with in the application process have a lot of decision-making power. More than that, if you get in, they’re people you’re going to be working with the entire time.
It’s really worth investing the time to build good relationships with them and make sure you like them. Especially early on.
Because if you’re going to apply multiple times, which you most likely are, you’re going to keep coming back to the same people. It’s not a one-way interview process where you’re trying to simply impress them.
It’s much more of a business relationship. You should be challenging them as well and see if there’s a click between you.
From my experience, these conversations represent very well the most common paths successful entrepreneurs take through accelerators and incubators. They join either for the mentoring and advice; or for fundraising, especially now that the era of easy money seems to be fading out.
Then they leave as part of a strong community of brilliant people that will be both a safety net catching them when they’re down, and a catalyst, opening doors they never knew were there.
In the end, the story is always the same. You can get money from many places: incubators, VCs, Angels, banks, family, etc. The same for advice and mentorship, as long as you’re open to engaging with people and sharing your idea (another huge early-stage mistake).
But if I need to distil one key element from the hundreds of conversations I’ve had with successful founders, I’d say their success is deeply tied to their ability to build and nurture their networks.
Keep that in mind moving forward.
And By The Way,
I’m Rui, Partner & CMO at Altar.io — a team of experienced second-time founders & world-class developers based in London, Milan and Lisbon. We help startups and corporates build great tech products.
If you have a brilliant idea that you want to bring to life — drop me a few lines here and let’s chat!
Good luck and thanks for reading,