When, why, and which accelerator should you join?
When, why, and which accelerator should you join?
One of my least favourite things about looking for capital on the continent is figuring out who, when, and why. It is still largely opaque and complex in some cases. Part of our work at The Baobab Network is demystifying some of this opaqueness. In this two-part series, we will look at how to select your next capital partner: first, we will look at accelerators then we will look at institutional investors.
To start, let us have a look at what an accelerator is by definition,” an accelerator is a business program that supports early-stage, growth-driven companies through education, mentorship, and financing. Start-ups typically enter accelerators for a fixed period and as part of a cohort of companies.”
According to a Harvard Business Review Article, Silicon Valley-based Y Combinator launched the first seed accelerator program, in 2005, in Boston, followed closely by TechStars, which was founded the next year in Boulder, Colorado.
Africa has also seen a rise in Africa-focused accelerators, keen to build the ecosystem while being on the continent and understanding the local context. We have gathered a few insights running The Baobab Network Accelerator over the last 4 years.
Lesson 1: Check which accelerator fits your start-up stage
Lesson 2: Only join an accelerator if you are keen to dig deep and ready for an intense learning experience.
Lesson 3: If you do not have the time and are not ready for the commitment, I would refrain.
Lesson 4: Match your startup needs as closely as possible (country, sector, and stage) to the experience of the accelerator.
Lesson 5: Weigh the cost and benefit clearly before joining an accelerator.
Be deliberate about asking what the team will provide in terms of targets, access, and skill sets. Be very deliberate about outlining what you feel are your biggest areas for growth, but also keep an open mind..
While I recognise some recent sagas have made the word ‘Community’ very unattractive, founders need one. The journey of building a business is both difficult and lonely sometimes. Having a group of people to lean on, and learn from is a critically underrated piece of the puzzle.
One of the larger missing pieces for any African founder is building the networks and access required to raise your follow-on rounds or even to meet the people you need to propel you to scale. Accelerators exist to bridge that gap. Whoever you settle on should have a track record of some great start-ups in their portfolio, and have the prerequisite partnerships to help you to the next level.
It is important to pick an accelerator that is well organised, making sure that you can see some foresight in the way the program is laid out and understand deeply what to expect is always a good sign for any kind of partnership.
Lastly, the accelerator’s reputation is crucial. If fellow founders feel the program is a big no, then assume it is a big no. Do the research and do it well before applying. Speak to other founders or join founder communities such as ours- The African Founder Community, to get insight and share experiences with those on the same journey as you.
Make sure you understand the terms deeply before you sign any agreement with an accelerator. Make sure you understand any implications on your cap table, currently or in the future.
Ensure that the accelerator you pick covers some key thematic areas and those of particular concern to your business. Some standard ones are customer acquisition, product/ solution, financial statements and modelling, fundraising strategy and etiquette, building a great deck, and storytelling.
In conclusion, even in your early days of building a start-up in Africa, be selective of whom you work with, as there are long-term implications. Be sure that you go in with the right mindset and expectations. The only way to win is to make the most of every informed decision and connection. In the next series, we will look at picking your next investor.