We’ve all heard about successful startup accelerators like Y Combinator and TechStars. The model is pretty straightforward: ~$100,000 investment for ~6% of the company, 90-day intensive program, and a Demo Day at the end to pitch investors. This model works well when a large number of the startups are able to raise money at the end of the program, often with little-to-no revenue. Many cities have accelerator clones of this popular model but run into the challenge that most of the participants can’t raise money and go out of business shortly after the program (failure is normal but it’d be great to see more success as well).
For cities that don’t have copious amounts of seed stage, risk loving capital, I believe there’s an opportunity for a modified version of the standard accelerator program focused on producing revenue generating businesses that are self-sustainable at the end of the program (e.g. $250k in ARR) or at least $100,000 in annual recurring revenue so that their chance of building an enduring business is high. Let’s call it a 12 Month Startup Accelerator. Here’s how it might work:
- Calendar year based cohorts (e.g. 10 startups that start on January 1st)
- $100,000 for 10% of the startup
- Shared office space (collaboration amongst the entrepreneurs is key)
- Weekly dinners for the first two months and then bi-weekly dinners for the next 10 months
- Weekly cohort-wide email of all the startups and their recurring revenue (peer pressure!)
- Quarterly Demo Days exclusively for angel investors and potential customers (the best type of funding is cash from customers)
- Overarching Goal: Be financially self-sustainable at the end of the program
A few differences with this model: 4x longer program, multiple Demo Days, and an explicit goal of generating enough revenue to be sustainable at the end of the year. Overall, the big difference is the focus on generating revenue vs raising money. Startups that generate six figures of revenue have a much greater chance of success than ones that raise a seed round.
What else? What are some more thoughts on the 12 Month Startup Accelerator?