So you have a great idea that you and your Co-Founders keep going round and round with, trying to get things moving in the right direction? You are not alone.
Probably the most frequent conversation we have with Founders involves methods of execution. Founders are often obsessed with how quickly they can get their idea to market, and saving valuable time and money is top of mind. Often a foundation of knowledge of what the startup ecosystem is – and how startups can benefit – is lacking. While accelerating your idea is important, it’s most important to choose the right approach that will help you accelerate the right way! Let’s take a look at your options.
Startup accelerators provide intense, rapid education, mentorship and financing to early-stage growth-driven companies. Think about the start-up you recently read about who created a product and shared it in a “demo day” fashion six months after starting. Y Combinator and TechStars may be the most well-known global brands in the startup accelerator ecosystem.
Are startup accelerators effective? Absolutely. They provide a path for Founders to learn-by-doing in a short amount of time which allows for strategic pivots and a process for scaling. They are driven to help bring early-stage financing and improve the odds of success to the startup, but not without cost. In exchange, they often take equity and direct startups in their purview based on their mentors ideology.
Incubators have been around since the 1950s, but we tend to think about them in recent years as startup and/or tech-focused. Often Founders get them confused with accelerators, but there is a distinct difference. While accelerators are focused on growth in a set time frame (and are typically tough to get in due to application lead times and long waiting periods), incubators “incubate” ideas with the goal of defining a business model and company. They will often take a portion of equity in exchange for resources, and are characterized by a slower time to market.
Some incubators focus on specific markets or are general in nature. You can find incubators located in a co-working space, a university, or a specific department within a large enterprise. Some private incubators exist as well. Despite the variety, one thing is clear – incubators provide the education and support for an idea to take shape with minimal mentorship and minimal funding opportunities. Their value lies in the specific guidance they provide, nurturing an idea and supporting the idea as it grows.
While Founders should try to put off raising capital at the start, some seek angel investment as a strategic move for building value as soon as market entry is possible. Angel investors most commonly support early stage start-ups once an idea has been developed, whether through a prototype or beta version. They provide little education or mentorship and are known to fund early development before venture capital is raised.
One of the key differentiators of angel investors in the startup ecosystem is that they typically provide better terms than traditional lending institutions, leveraging their own wealth in exchange for equity or convertible debt. This can be an attractive way for Founders to give flight to an idea that has gone through early stage validation.
Venture capitalists provide what is commonly called series A financing to early-stage companies. This type of investment is geared to provide rapid growth for the purposes of obtaining significant market share, and often VC’s invest because they believe they can make a large profit if the company is successful.
In addition to funding, many VC firms today also provide guidance to achieve and sustain growth in the startups they support. They are looking for a strong management team, a unique market position with a significant market opportunity and an efficient, well-developed go-to-market plan. In this way, VC firms become a one-stop shop to startups while having some skin in the game in terms of the startups growth and success factors.
As you can probably guess from the variety of options that exist, there is no one best solution that meets every startup’s needs. There is a lot to figure out: what problems does your product solve, who are your customers, and how are you going to make money?
Ash Maurya shared an especially perceptive post recently in Adviser Whiplash. Ash shares that some of the top accelerators with successful entrepreneurs in residence advise startups in the most well meaning way but can often create more confusion by providing conflicting advice. This is because every startup is unique and there is no “one size fits all approach.”
At ON ITS AXIS, we developed a hybrid approach to startup acceleration that is steeped in the lean startup methodology with a core focus on what masters of entrepreneurship such as Reid Hoffman refer to as “the learning loop” – a constantly iterating process in which a startup figures out how best to do whatever it’s doing by observing itself in action and making the necessary course adjustments. We created this out of our work as intrapreneurs at large organizations, consultants at incubators supporting numerous startups, and advisers to entrepreneurs in different industries with varying skill sets.
Our lean process involves an end-to-end approach focused on strategic delivery through four distinct phases. In each phase we ask key questions, research, test, validate and move to the next phase. It’s a circular process and we look at problems from every angle – around the axis – to get to the solution. It’s a thorough approach but it isn’t lengthy or cost prohibitive; our solution empowers startups to go-to-market in an accelerated manner without sacrificing precious equity.
As you venture forth on your path to startup acceleration, make sure the team you partner with is not giving solutions, but rather asking the right questions to expose the right problems. Remember, this is your company and your idea is best solved by being curious, staying curious and making adjustments based on real observations.
About The Author
Shelley Iocona is a product strategist helping startups and enterprises innovate. Her approach to building great products is based on the belief that ideas should be validated using a lean approach before development begins, and that having the right team is pivotal to a company’s success.
Before founding ON ITS AXIS, Shelley held leadership roles at companies such as Outcast Media (now Verifone Media), Yahoo, Connexity (formerly Shopzilla/Bizrate), DIRECTV, and led product strategy and lean product development for numerous start-ups and incubators.
ON ITS AXIS is a full-service consultancy consisting of technical, business, marketing and product experts with a talent acquisition and staffing arm to help accelerate your biggest opportunities. Get in touch with us to learn more.