Last week we discussed Defining Strategic Advantages for Your Accelerator. Now that we understand the importance of strategic advantages and how they can add significant value to a startup accelerator program we should understand ways to develop those advantages because they’re not going to happen on accident.
What makes an accelerator unique and valuable to investors and to companies completing the program? If it’s not totally defined at this stage that’s okay. We only need a base because everything is going to build off of that base over time and time is really the nonnegotiable, defining factor in an accelerators long-term viability.
So what should the initial strategic advantage base consist of?
Your niche defines your accelerator.
This provides focus in all other areas. You likely have expertise in some area. Focus on only accepting companies from that field. From years of experience you will instinctively know what has potential and what doesn’t, but don’t get too myopic. Bring in some outsiders to help you assess teams and companies. This will help you avoid the bias’ that come with some much experience.
Further the niche will help you sell the dream. If you’re in a fairly populated MSA your niche focus will be appealing to others who can help in the immediate area; others who will be excited that you are advancing a cause they care about so deeply or have worked on for so long.
This is the single most important helping hand you can offer your portfolio companies.
You must have unique alternative routes to customers because putting all your eggs in one basket will not be enough to support the initial traction multiple companies need to achieve success. Spend an inordinate amount of time figuring out how you can help your companies get early customers. The importance of this cannot be discounted. This is the single best thing you can do for your companies. Do you know exactly where to look for those early customers? Do you know how to attract them? Do you know unique and novel ways to get them through the turnstile? If you don’t, you will need a new team member who is skilled and can focus on these things. It is critical. If you are unable to make it happen you have no business starting an accelerator.
If you have the channels for early customers down cold your portfolio will produce better returns in terms of revenue and follow on investment.
Strategic Partners increase your companies chances of success by offering access to customers and valuable market feedback.
Given your niche, strategic partners will be easier to come by. These partners will be companies who can offer the benefits from new technologies to their customers or workforce. But caution needs to be exercised, as being too early can cause strain on the partners day to day operations and could leave them with a bad taste in their mouth. The goal here is to find technology forward strategic partners who understand the difficulty and time associated with testing new solutions.
You should be strategic in picking your strategic partners. If you’re a logistics accelerator, don’t try to get Jim Bobs Trucking, who has been operating with a switchboard, pen & paper since 1930 to test out your new technology or offer it to their drivers. They aren’t going to fully understand what it means to alpha or beta test and will not be able to provide the feedback needed to build better products. Find the trucking company that contracts with thousands of trucks on the road, utilizes technology and can afford to portion off certain team member’s or contract worker’s time in order to give your company the insights and feedback they need to build a truly useful product.
Think of your strategic partners as more of a channel partner and less of an end user.
Focusing on these three areas for your base will pay dividends as you continue to build out your program. Companies will be excited by the fact that you helped them land their first 10, 50 or 100 customers and will tell other strong teams about your proficiency in this area. Customers will beget new customers for your portfolio companies. And investors will begin to take note of your companies ability to grow rapidly after completing your program. In the end revenue covers a multitude of sins and building strong revenue first focused companies will improve every aspect of your accelerator and help build a strong long-term program.
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