On April 9, the Ukrainian Startup Fund held its debut episode of the Inside Acceleration series, in which key representatives of Ukrainian and international accelerators described how such training programs for startups work from the inside.
There were such speakers: Aleksandra Balkova, program Managing Director at Startup Wise Guys; Don Hatch, Head of Demium Incubation programs in Eastern Europe, Steinar Hoel Korsmo, founder and President of Seed Forum Global, and Dimitri Podoliev, founder and CEO of iHUB.
The event was moderated by Alisa Bankovska, Head of the Grant Acceleration Program of the Ukrainian Startup Fund.
A full record of the meeting you may watch via this link on your official youtube channel.
Why are some startups successful in accelerators and some are not?
- Don Hatch: There are several reasons. 1) The mindset of entrepreneurs. It should be your lifestyle. You should enjoy your project. 2) there are nuances among accelerators and incubators. Some of them are focused on the very early stages, some – on the later stages. The team should evaluate what is the best fit for them. Being in a building, in a program is not enough. You should want to be taught: visit workshops, listen to mentors, be engaged in the program. If you take a pause to take the best of the program, then you will launch much faster. 3) The team comes without a clear roadmap, clear set of goals that they want to achieve. If you don’t know where you are going, you never come to it. You should have a plan you want to accomplish in the next few months.
Who should NOT apply for your acceleration program?
- Alexandra Balkova: Only one type of person – a non-coachable team. However, people may not know whether they are coachable or non-coachable. Accelerator gives you a lot of feedback, a lot of work, a lot of resources, a lot of input. You will be challenged every single day, even if your business doesn’t exist. You should have the ability to hear and react effectively to criticism. not to become puzzled, being in the noize of information. We work only with scalable businesses that can be global, not with small regular businesses like a local restaurant. «Think bigger». Such a mindset can be developed.
What stage is the most advantageous to join the acceleration?
- Steinar Hoel Korsmo: 1) Not to have a very long time until the market. 2) You would need to have at least a basic team. The startup team is usually very product and technology-oriented. The commercial part of a team is also important. 3) To have a market strategy (not only in terms of geography but also segments).
What goals are best achieved in accelerators?
- Dimitri Podoliev: The opportunity to hear alternative viewpoints on your team, on your product, on your market strategy. Entrepreneurs always are so busy that they can miss important things. You learn how not only to hear but listen to other people`s experiences and apply the knowledge to your situation, to your specific field. Many times you believe that you know everything (entrepreneurs are very smart people), but nobody knows everything deep inside.
- Don Hatch: If you hear feedback and you feel that you don’t like it, it bothers you = that’s probably the feedback you need to focus on the most.
Can an accelerator be harmful to a startup?
- Dimitri Podoliev: Absolutely, not. If someone gives you bad advice, it is your fault, because you decided to follow it. You shouldn’t blame the accelerator for this. All external help that you can get – you should get it: mentors can help to improve your skills, understand what works and what doesn`t. People who don’t take advantage of it will become failed entrepreneurs because they gave up the amazing opportunity to learn a lot of things from a lot of experienced people.
- Don Hatch: Accept it as a part of a journey. You will succeed or you will learn.
- Alexandra Balkova: 1) Yes if the investor wants more than 25% of the business, it can ruin it. 2) There are some teams in most cases that are not so mature and they take into action everything that they take as advice without a filter. And it takes their time, their resources, their energy. It’s because of a lack of critical thinking. So don’t trust everything you hear.
What are the main accelerator myths and misconceptions?
- 1 myth: 95% of people say they don’t want to join because they are afraid that the accelerator will distract them from business, they don’t have time for that. Absurd! Because in the accelerator you accelerate your business, you work on it!
- 2 myth: that the members of the accelerator will do everything instead of you. It will be like magic – your business will be built without you. But no, it is you who will make the business and the accelerator is only your assistant, your coach. We can help you to avoid cold calling, we will make an introduction of you for a big corporation, for example. The more specific you are – the better help you will get.
- 3 myth: accelerator as a funding source. But we don`t provide a large amount of investments. Money is only one of many benefits. If you want just money, it is better to go to angels, but they will not give you time, knowledge, or energy.
Steinar Hoel Korsmo:
- 4 myth: We are mentors, we are to help you to boost your business concept, but we may not stick to your technology so it works.
- 5 myth: Accelerators can connect you with legal advisers and consultants, but not of us are lawyers
- 6 myth: When you join the accelerator, you will get private equity funding. But it depends upon you: how you will complete your investment memorandum, documentation and how you evolve your pitching skills.
- 7 myth: Accelerators are like schools for students who don`t know how to do stuff. But we had people who were building their business for the second/third/fourth time. And still go to the accelerator, because it’s about people you can get feedback from and you can brainstorm together on what you are doing.
Dimitri Podoliev: Accelerator is not like a school or university where you don’t get grades and no one’s going to push you to do your homework. It is the real world no one’s forcing you to make any decisions or do anything. It is your call to be an entrepreneur to build a business and the role of an accelerator is to give young entrepreneurs access to people who have a lot of experience in many different fields. And it’s not up to the accelerator to push the entrepreneur to learn or to engage with for example lots of different mentors, but it’s up to the startup entrepreneur to be proactive, to take maximum advantage of what the accelerator has to offer.
How important is it for an accelerator to include access to private equity tools?
- Don Hatch: Funding is a critical component for an incubator. When you are at least the CEO of the startup and you are getting to that point where you need large funds, you are going to spend more than 50% of your time in most cases raising funds. So the question of comparison among VC / angels / grants / bootstrapping / FFF depends on what stage do you take advantage of those? If you are seeking growth, to be a global company with millions in revenue, then you are going to start out with bootstrapping and with FFF to get early traction to do your validation, to get your MVP, and once you have something reasonably tangible then either angels or accelerators (to choose or сombine). Then you are hopefully ready to be connected to two VCS (pre-seed round, seed round). It is a chain that you go through.
- But when you are trying to get in contact with those angels or those VCS – it’s incredibly hard: you should go at least pre-covet to every single event to try to meet investors, to send emails constantly. You are burning up a lot of your time, which you can spend working on the project. So one of the benefits of the accelerator is we have relationships with a lot of venture capital companies, with angel investors (in the case of Demium we also have our own internal fund), we make it easier, so you can focus more on the project.
What is an ideal case? Who is the ideal applicant?
Steinar Hoel Korsmo:
- Time to market
- The ideas where to evolve the business in terms of the goal to market strategy, segments, and geography
- The desire to change something with the help of your product
- The desire to earn money
- The 1st step is to get a good team
- To build a basic MVP and a good presentation
- Apply to USF
- Go to an accelerator
- Do as little mistakes as possible during 6-12 months
- Use those connections to investors and high network
- To be a b2b startup
- To have a validated idea
- To have feedback from the market
- To be globally oriented, have the scalability potential.
Don Hatch: Demium provides the most value for those who are at a very early stage.
Dimitri Podoliev: To have real 10-20 paying customers (we can help to scale from 10 to 1000 customers).