My job about half of the year is to travel around Central Europe meeting with startups and entrepreneurs, listening to pitches, and scouring the internet for what might just be the next great startup to join StartupYard.
We have a new batch of startups joining us in Prague in just a few weeks, Batch X, which means we’ll be doing this for the 10th time. We’ve seen lots of startups benefit from a once-in-a-lifetime experience, and we’ve also seen others not get everything they could out of the program when they were here.
Sometimes founders tell us what they wish they had known to do before getting here, so in the spirit of that request, here are 4 things any startup can do to kick ass at an accelerator.
You can also read more about the acceleration process in other posts like: 5 Tips to Get the Most out of Your Mentors, 11 Things We Say All the Time to Startups, and 6 Silly Startup Mistakes You Can Fix in 5 Minutes.
One: Know Your Mentors
“Oh hi… who are you?” Is not a question you should be asking the CEO of a major technology company who has taken a day off from a very busy schedule to come and talk to you about your business for no other reason than he or she feels like giving something back.
Certainly StartupYard is selective when it comes to our mentors. We look for humble, experienced, informed, and engaged people with powerful business networks, who generally have enough of a sense of self-worth that you don’t need to suck up to them. Still, there’s a world of difference between being a kiss-ass, and not knowing someone’s name or where they’re from before you meet them.
Your attitude as a founder in any accelerator program should be: “I have limited time with these resources, so how do I maximize my use of them?” Being with a C-level executive of a major corporation, or with the managing partner of a VC fund, or with a successful startup founder for a mentoring session is like the intellectual equivalent of being left alone in a bank vault. You should really spend your time going after the important stuff.
What important stuff? What is this person’s relevant experience in my field? What connections do they have that could save me weeks or months of waiting for cold emails to get answered? What do they know that I don’t? We say you should try and treat mentors as potential customers, and that’s true as well, but just as with a customer, most of that communication should be you learning from the mentor, not you spending the mentor’s time trying to convince them of your vision.
Wait, what am I saying? Don’t try and pitch the mentors your ideas? No, of course you should do that, but many founders get carried away with this. A mentor hears your pitch, raises a few objections, and before you know it, the whole session is taken up with the two of you in a battle of wills, one trying to convince the other of their rightness.
You know who loses in this situation? You do, because the mentor has nothing to prove. They’ve already had impressive accomplishments and success along the way. They have no pressing goals in their meeting with you. You have goals, so spend your time finding ways the mentor can help you meet them.
That means knowing as much as you can about the mentor before the meeting. Ask the management team about them. We know the mentors. Check out their companies and their profiles on LinkedIn. Get an idea of what you think they can do for you before you sit down and ask them for help. Help them help you, as we say.
Two: Know Your Numbers
Below I’m going to share with you a number of real life #epicail scenarios for founders who have been with us, sometimes for a full 3 months, and have not managed to quite grasp this essential lesson: Know Your Numbers.
- So how many email subscribers do you have right now?
- Uh.. i would have to ask the marketing guy…
- Do you have over 1000?
- It could be…
- Over 10,000?
- Probably not…
- Do you have any idea?
- What’s your runway?
- Well, we have XX Euros in the bank…
- So what’s your runway
- It’s… if we spend it slowly then it could be….
- Ok, hang on: What is your runway at the current burn rate
- Uh… I have to ask…
- You don’t know.
- I don’t know
- How much are you raising?
- It depends how much we can get….
- How much do you want to raise?
- As much as we can get…?
- Yeah, no.
This is about two things, mainly. First, it’s about answering questions as straightforwardly as you possibly can. This means yes or no questions have yes or no answers. Do you have cash for the next 6 months? Yes or no. Of course it’s never that simple, but when a mentor or an investor or a stakeholder is asking you a question like this one, they want a straight answer. If you need to qualify, ie: “yes, but…,” or “no… if,” that’s totally fine. Yes and no are powerful words, which is why founders so often try to avoid them.
The other, related thing some founders try hard to avoid is real numbers. Real numbers are your friend! How much money do you need to raise? “Well… we could get by with around…” No. Start with a round number: “We need to raise €150K for runway for the next 12 months.” Again, you can qualify these answers later, but if you don’t start with something real, then there’s no way for anyone asking the questions to understand what neighborhood they’re even in.
Just giving straightforward answers, with the understanding that you don’t have to know every answer precisely every time (though it helps if you do), we can see these conversations going a bit better:
- So how many email subscribers do you have?
- Last I checked it was between 2000-2500, but I would ask my marketing guy for an exact number
- Great! That’s more than I was expecting
- What’s your runway?
- It’s 6 months with our current cash burn, but we can sustain ourselves if we go lean and cut costs.
- Ok, how much would you have to cut?
- About 50%. We are covering half our burn rate right now in net income
- Ok, thanks for the info
- How much do you want to raise?
- We want to raise €300k in a seed round. If we can’t do that, then €100k in an angel round will be ok for the next 9 months
- Great, let’s talk about your strategy
Those conversations are so much better than the initial ones, right? The truth is, you don’t even have to know a lot of your numbers with great precision. You just have to know what they should be, and what they are not likely to be.
How many email subscribers do you get in a week? Most founders don’t know that to an exact figure, but they should have enough of a finger on the pulse to be able to estimate: if it’s been 10 a week or so, and the last time you checked was last month, then there are probably 40 more than before. It bears checking, but it’s a best guess. It’s an answer, which is better than “I would need to check on that, because I have no idea.”
A lot of numbers questions are asked with the understanding that your answers will be either guesses or estimates. Runway is only semi-concrete. It’s an estimate. Number of downloads is concrete, but again, the exact figure is less important than the ballpark. The amount of money your raising is understood to be a goal, not a figure set in stone, but you have to have an answer to that question that sounds reasonable and compares favorably with the reality.
The simple fact is that often times, founders just don’t study their numbers closely enough. They don’t work enough in spreadsheets and they don’t work enough on contextualizing, for themselves and for those around them, what their numbers and metrics mean, why they are important, what they are, and what they should be.
Anyone might have a difficult time answering “what will your cash flow situation look like in month 15 of your financial projection?” But on the other hand, I should know if I’m going to be making money or losing money at that point. A familiarity with my own numbers saves me from the embarrassment of not knowing this basic fact about them. “I’m going to be making net profit at that point, but I think less than €10,000. I need to check it.” That’s an answer we can work with.
Three: Know Your Deliverables and Your Schedule
Investors, including accelerators like StartupYard, manage their relationships with portfolio companies in ways that are quantifiable and hopefully easy to chart over time. We need data from our startups, and we need to know, within reason, that startups are working on the things we need them to work on. It’s not that investors should run a company, but rather founders should be given certain clear hurdles that they need to meet to satisfy our relationship. This is mutually beneficial, if done correctly.
For example, early in our cooperation, during the acceleration phase, we will have a lot of “deliverables” which we expect founders to work on with us, and to have done by a certain time, to a certain standard.
Examples are things like a website, media kit, business plan, user projections, market overviews, competitor analyses, and so forth. Later it’s a pitch script and a slide deck for Demo Day. Then maybe a one-pager for investors. Years after the program, it may just be basic financial data every quarter. Deliverables at the beginning can be quite big and important items, and deliverables at later stages can be less all-consuming or critical, but they are still deliverables. They still need to get done.
A deliverable that doesn’t seem important to you might be very important for the other party. At least knowing this, and knowing why, is going to help you get much more out of an accelerator. You may find what you didn’t value before, when properly explained, is more valuable than you first thought. It can be the difference between something feeling like homework, and something feeling like it will really help your company move forward.
A big challenge for some founders is to understand that when you are dealing with outside advisors and investors, you are dealing with someone else’s standards of what constitutes “finished,” and “acceptable.” Hopefully, in the best case scenario, this is because the advisor or investor has a bit more experience than you do about what level of work you should be delivering, which is why the item is something they are interested in seeing by a certain date.
The deliverables should be helpful to you. If they aren’t, then there’s something wrong.
At StartupYard, for example, we don’t wait until the day we announce the names of our latest batch of startups to make sure that they all have working websites. These are deliverables that come up weeks before that time. We do this because we know that the odds are good that we will not be happy with the first version, and we want there to be time to change it and improve it.
We only do that because experience tells us it is usually necessary. If it weren’t necessary, we wouldn’t do it.
A later investor might not expect this kind of hands-on access to your work, which is clear to you only if you know what your deliverables for them are. This can mean going out of your way to make sure you know exactly what is expected of you, because that might not always be clear. It’s ok to ask what people expect, and it makes your life easier. You don’t want to be caught out the day before your product launch by an investor suddenly demanding that you change your website. You want to know whether that’s something the investor will want some control over.
For example, you can end meetings by saying: “ok, so if I understand correctly, you want to see XYZ, with these details, by next wednesday, and then a final version of that the next week?” This is getting to know your deliverables. It’s much better than just saying: “oh, we need a website? Ok, I’ll get it done pretty soon.” What does it mean to get it done? What is soon?
Discussing your deliverables also allows you to shape them in a positive way. You may not believe a later investor needs to sign off on some aspects of your work. That’s something to make clear beforehand. You may decide together that a particular deliverable is not needed, or a particular schedule is too ambitious.
A major frustration for an investor or advisor who is trying to help a startup to meet a high standard of excellence is to not have the founders take these deliverable schedules seriously. These schedules are in place (hopefully!) for a good reason, and though it may not be one you necessarily agree with all the time, it serves as a fundamental basis of our relationship. This is how we understand if we are being helpful to you or not.
Four: Use Your Management Team
Hey, we’re people too! Each of us has particular skills and particular strengths. If you don’t know what we’re good at, then it’s hard for us to be good at that thing on your behalf.
Remember the axiom: “if you don’t ask, you don’t get.” The management team of the accelerator is there working for you. If the organization is well run, and the incentive structure is set up correctly, then the management team should be interested in making portfolio companies more valuable, founders happier, and products and services better. That’s why we exist, and it’s our main role with our member companies and alumni.
The acceleration process does create a certain sense of whiplash, particularly with a very hands on program like we have at StartupYard. We are so hands on from the beginning that when we start to pull back and let founders steer on their own, they can and sometimes do feel like we’re “letting them go,” or distancing ourselves. Like we don’t care about them anymore, or that they’re “on their own.”
Of course we don’t want that, but the relationship has to change from “push,” to “pull.” Instead of the management team looking over the shoulders of founders, founders exiting the program or even years out have to reach back and ask for our attention if they need it. In my time at StartupYard, I’ve helped to accelerate nearly 50 companies. I can’t spend my days checking up on 50 different founders and seeing if they need my help. They have to come to me, but some never will, even if they need help.
I know this because when I do happen to be talking with alumni founders, it’s a rare instance when it turns out that they haven’t needed help from the management team at some point since we last spoke, and still failed to ask for it. They’ll say: “I didn’t want to bother you… I should have called.” Well, yeah, you should! Some of the best performing startups in our portfolio use us the most. They get that attention just because they ask for it.