When founders are driven to grow quickly, experiment with hypotheses, evaluate and learn from the results, and prepare for future steps, accelerators can help them on their way to success.
Before joining an accelerator, a two-month-old edtech startup IAWY, headquartered in Berlin, already had an MVP and a potential client who, however, was unwilling to pay. The team has experience in the education and lifelong learning niche and is building an AI tutor to help educational institutions boost student retention and reduce guidance costs.
Aleksandr Bratchikov, the founder of IAWY, said that working for a client who neither paid nor provided valuable feedback was a road to nowhere. The team felt their work was not bringing any value, while they were already making growth plans. They needed paying clients to validate their business model and test hypotheses. These goals steered them towards joining an accelerator.
Today startups have a greater likelihood of gaining traction if they focus on addressing global challenges, such as climate change, personal and mental well-being, social equity and inclusion, access to education, and more. In 2023, carbon and energy solutions received nearly 30% of all investments in European tech surpassing the investments in the finance and insurance niche during the same year, according to the “State of European Tech” annual report.
European startup accelerators tend to support startups led by repeat founders. Seasoned leaders excel at navigating challenges, attracting talents, and learning through experimentation. However, they often lack the capacity and knowledge in marketing, sales, and networking with investors.
Accelerators provide mentoring, boost sales, and transform founders
In 2023, the European tech sector saw the launch of 14,000 startups, surpassing the 13,000 created in America. Many startups, especially those in their early stages, often struggle with a lack of a clear vision on bringing their product or solution to the market and determining the appropriate sales channels. They may also struggle with setting up optimal prices, generating first revenue, and improving their products to capture larger audiences.
Accelerator programs provide support for startups in overcoming key bottlenecks, ultimately making them more investable. These programs not only address critical challenges but also connect startups with relevant stakeholders, including investors and mentors, offering additional benefits, such as:
- Swift testing of new ideas to gauge the potential success of a business
- Increased sales
- Growth in monthly recurring revenue (MRR)
- Improved customer retention
- Enhanced long-term value
- Facilitation of founders’ personal growth to expedite business development
One of IAWY’s primary goals was to secure paying clients, and just before the accelerator’s Demo Day, they signed their first paying customer who helped them generate their first revenue and gain a clear vision for post-accelerator growth.
Many startups are attracted by the significant cash infusion that accelerators offer at the program’s outset and post-program to fuel their development. However, what matters most is not the funding itself.
Startup founders seek alignment with the accelerator’s team and collaboration with like-minded individuals. According to Alexander Anastasin, co-founder of YUNG Sidekick, an AI session note automation platform for mental health professionals, it is beneficial to work with people you can connect with from the first meeting, sharing similar values. This cohesive team dynamic not only bridges existing gaps but also offers valuable financial support for the startup’s growth.
Working closely with experts and mentors’ support is the most crucial aspect of an accelerator’s program. Startups receive hands-on guidance in marketing, product development, sales, and more. Usually, mentors bring fresh perspectives, challenge the team’s opinions, and help them shape and test hypotheses more efficiently to onboard more paying clients.
A value-adding program doesn’t have to come from a renowned accelerator; boutique accelerators can stay laser-focused on delivering results and the expected value. These smaller accelerators, like their larger counterparts, assist founders in discovering scalable sales channels and help them earn more from selling a product or service than it costs to make and sell.
Be wary of a uniform approach to startup development
Partnering with an accelerator isn’t always straightforward. Firstly, there’s the equity aspect. Many accelerators request equity in return for support and resources, necessitating a trade-off where founders give away a portion of their business.
Accelerators might have a one-size-fits-all roadmap, which won’t guarantee the right fit for a startup’s unique vision or needs. Even the best ones can have structured programs and mentorship that feel limiting. A founder looking for more than having a fancy name of an accelerator on their LinkedIn should carefully choose a program among European accelerators.
Unlocking the program: What makes a startup a good fit for an accelerator?
Accelerators often seek early-stage startups that they can make investable and present to investors. Startup founders should have a good grasp of their industry, be open to experimenting, and possess a global mindset for sustainable growth. They should also be open to experimenting and have a global mindset with the potential for sustainable growth, according to Daria Reutovich, COO of ULTRA.VC startup accelerator, who is involved in choosing startups for the next batch of the accelerator program.
A startup poised for success during and after an acceleration program should have a validated problem, a product or solution, and at least a tested MVP or initial revenue before applying. They should also be able to identify the bottlenecks they hope to overcome with the help of the accelerator’s mentors and financial support.
Accelerators evaluate founders beyond ideas. It’s a significant advantage when a founder already has connections within their industry. They should also have relevant market experience and be keen on learning business skills and personal development, not just focused on money an accelerator can provide.
ULTRA.VC is currently accepting applications from startups wishing to join the spring batch for a 12-week acceleration program. Founders who are eager to experiment, transform, and grow their businesses are invited to apply before February 25 to collaborate with the accelerator and make a real social impact together.
Read the orginal article: https://www.eu-startups.com/2024/02/how-accelerators-can-benefit-startups-and-help-solve-global-challenges-sponsored/
