12 Month Startup Accelerator

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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?

Comments

8 responses to “12 Month Startup Accelerator”

June 4, 2015

Lance

Roll it dog.

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June 4, 2015

Rob Forman

I love the idea of weekly dinners, along with the weekly email. Kyle, our CEO, has consistently sent one and it bakes in a ton of great accountability.

I think demos might even be possible every month, given the modern tool chains. Even as an engineer, I’m amazed what we can do when pressed with a deadline. Work truly does expand to fill the space.

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June 4, 2015

Shea

David, I’m ready – when does it start? How do we apply?

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June 5, 2015

Dave Williams

I definitely agree that the existing model doesn’t work. How about a 3 month program and with guaranteed funding available for the top teams and concepts based on the viability of achieving $250k+ in the first 12 months. Also, I like the idea of not restricting the program to companies that have to be in the incubator as it could open up the potential candidates in cities where you need to work with more experienced founders versus college grads. Ideally, even reserving greater capital for the higher potential startups, possibly up to $250k to provide greater early runway and momentum.

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June 5, 2015

Jevin Maltais

Awesome. We need to make the focus on generating revenue, not raising capital.

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June 5, 2015

Jim Berkowitz (@jberkowitz)

I like the idea – In my experience, there are always Startups who are not ready for angel investors on Pitch Day… they haven’t had time to achieve product market fit and are struggling with their business model. More time and more structure at a 1 year Accelerator program may help.

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June 5, 2015

Marty Fleischmann

All great points, and maybe could have entries every six months so there are always some new and some veterans in the group. In this case could have a March and September start with 6 weekly dinners at beginning of each term then biweekly. Emphasis on building customers and revenues vs just hype or money is great.

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June 5, 2015

Himanshu Pagey

Reblogged this on The only heman in tech.

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