How Accelerators Get Your Company Funded
By Patrick Riley on August 11th, 2015
With more than 70 GAN accelerators around the world, we’re always blown away by the great stuff they’re up to, continually finding new ways to help startups. And without a doubt, one of the greatest strengths of the GAN community is the willingness of our members to share what they’re learning.
Last week I had the opportunity to pick the brains of some GAN accelerator directors, and what they had to say was really insightful. When I asked them specifically how we should be thinking through the various aspects of getting startups funded, three big themes emerged.
1) Help companies establish realistic expectations
An ongoing responsibility for any accelerator director is to make sure the expectations of those going through the program don’t get too carried away – especially when it comes to funding. “I try to maintain some level of realism with the founders,” says Jon Bradford formerly of Techstars London. “I like them to be pleasantly surprised when there’s more funding available than they think.”
Timothy O’Connell of the H-FARM accelerator in Treviso, Italy adds that the importance of establishing expectations applies to demo day as well. Demo days are great for “symbolically ending the program,” he says, and things like countdowns add a level of excitement while reminding everyone that the program has a finite timeframe with certain expectations attached. “But as far as investment is concerned, relying on demo day is not always the greatest method to close deals.”
2) Get investors strategically involved
The specific ways investors are involved varies from accelerator to accelerator, and that kind of diversity is great. But all the best accelerators are strategic about not only which investors are involved, but also how and when.
Bernard Moon of SparkLabs in Seoul, South Korea says his accelerator is careful to maintain clear boundaries between founders and investors during the program. “We purposefully don’t bring in any investors to meet our startups,” he says. “What we do is we network like crazy in our community. All the founders and even interns, we send them to different VC events where they can interact.” And when investors express interest, Moon says he’ll tell them about companies they might be interested in, but he doesn’t bring them in to the program as a whole.
At H-FARM, meanwhile, because of how the campus is structured, investors are around the program each and every day. “But we do try to manage it,” O’Connell says, “so the companies aren’t completely overwhelmed, having to do their pitches every five minutes.” If a startup in the program is working on something related to one of the companies that comes by, he will help to make connections, but the process is carefully managed and structured. In relating to investors, he is also careful not to push specific investments too hard, since ongoing relationships with investors should be handled with care.
In London, Bradford says he’s intentional about including a certain number of investors in mentoring sessions. “We tend to blend our investors into later stage mentoring sessions rather than earlier ones,” he says, “because there’s a risk that with teams during early sessions being so all over the place they can do more harm than good.”
3) Know when to get out of the way
Although accelerators exist to help great startups succeed, there are also limits to what an accelerator should do – and what should remain the responsibility of founders. So just how much responsibility for funding lies with accelerators, and how much of it falls to the companies?
“I tend to work really hard with teams during the program itself, aiming to get them on their way and prepared for demo day,” says Bradford. “That’s not to say I’m not available after demo day… but this approach has served me well up to this point.”
Moon says that because of existing relationships with investors throughout Asia, it is natural for his accelerator to help companies find funding. “But for expectations, we tell our companies it really is on them,” he says. “We say it’s 80% their effort, and we’ll try to supplement the remaining 20%.” In reality, he says, the majority of funding usually comes from the accelerator’s existing contacts, but the fact remains it’s the company’s responsibility to pitch and close deals.
O’Connell works hard to bring in investors, but he also challenges companies not to succumb to what he sees as a sort passivity when it comes to funding, believing that’s what the accelerator is there for. “I’ve really been making it clear to all of them that this is not our job,” he says. “We are a partner in the process, but it is their job. We do a lot to bring in investors, but I actually think we should be doing less. We should be working really hard with the companies to make them the best they can possibly be in that period, and then they should be the ones responsible for converting that into investment.”