Choosing Your Next Capital Partner: Accelerator Edition

Published 3 October 2022
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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.

Here are a few things to consider before choosing an accelerator:
  • Your start-up stage – Similar to the first institutional investment, you have to consider which accelerators match your start-up stage. Each program is built for a particular stage of a start-up’s growth. While many are agnostic, some will have sector, country and stage preferences. Checking their website or socials to understand their thesis will save you time. Another way to check their stage preferences is to look at the recent start-ups they have invested in.

Lesson 1: Check which accelerator fits your start-up stage

  • What are you hoping to achieve – Accelerators are built on the premise that they will take your traction and multiply it in a relatively short period with very specific levers being pulled on a weekly or bi-weekly.. You join an accelerator to dig deep and learn fast.

Lesson 2: Only join an accelerator if you are keen to dig deep and ready for an intense learning experience.

  • Do you have the time – While it sounds like an oxymoron, joining an accelerator is a major time commitment, and while a lot of the learning is around building focus, and strategy, some of the founding team will be taken away from what they were doing, to build out these more in-depth strategies and directions.

Lesson 3: If you do not have the time and are not ready for the commitment, I would refrain.

  • Compatibility – Aside from the stage consideration, you also need to think about the prerequisite experience, the accelerator you join should have. The accelerator you select should have a track record of great businesses in the portfolio, industry knowledge, country context, etc.

Lesson 4: Match your startup needs as closely as possible (country, sector, and stage) to the experience of the accelerator.

  • Value vs Cost – Please keep in mind that most accelerators will take 5% -10% of your company’s equity, so, ensure that you get value for your money. Go in with clear goals, and ensure that you extract all the value you have from the experts and the community you join.

Lesson 5: Weigh the cost and benefit clearly before joining an accelerator.

What exactly should you look for in a good accelerator, and better still, what should a good accelerator do?
  • Experts

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..

  • Community 

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.

  • Connections 

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.

  • Well organised 

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.

  • Great reputation

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.

  • Simplicity or Clarity

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. 

  • Content

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.

What will not happen
Here are a few misconceptions on joining accelerators:
  • Follow-on funding will magically appear – Joining a good accelerator with a good reputation and connections will significantly increase your chances of fundraising. However, it WILL NOT blind investors. The team will still need the prerequisite growth, great team, market opportunity, and knowledge of fundraising. The work is still 100% on you.
  • It is about free labor – Although founders get access to knowledgeable and experienced people, it is not a promise to redesign your business for you but to guide you and update mental models to what the most exceptional founders have done. Experts in accelerators will not work for you.
  • It is easy– It is certainly no walk in the park. You will be learning fast, testing fast, and failing fast. You will be learning new things and forced to rethink or solidify your business and the approach you are taking. It will be fun, impactful and not easy. You have to put in the work.

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.