Not interested in an accelerator program? Then still read this as these are the fundamental elements for proving your business concept, walking the financing route, and being able to develop and grow a sustainable, high-impact, and profitable business.
1. Highlight a Problem That is a Real, Big Problem
We recently got rejected from TechStars, which was no surprise since we cared more about social impact than profit. Even with a rejection, applying was a great experience, and they sent us a nice note that said “I’d like to stress that this is NOT a vote against your team or your idea“.
Regardless of the niceties, it’s a great practice to review why we didn’t make it in
“Your market is too small…“
This was the first response we heard from 3 different TechStars mentors. We knew after the first meeting that our company was not going to be a good for TechStars since our driver was social impact, not billion dollar market. But, other than our business not being a good fit, we still learned that we were not good at explaining our business.
Every business must be able to effectively explain who its customer is, and what problem the customer base has. In fact, we struggled to simply identify our customers. Can you answer this question concisely:
“Who is your customer?“
More importantly, can you articulate:
- Who is your customer (in 1 sentence of less)
- What is their need (that hurts them if they can’t fix it)
- How you are the only that can address their need (now, and into the future)
These answers are seemingly simple, but are very challenging to articulate.
2. Prove that People Will Pay Your Company to Solve the Problem
Ideas are cheap. Building is hard. Selling is hardest.
Accelerator programs like TechStars care as little about your idea as investors do, until you can prove that people are paying for it. So before you build anything or apply to any programs, put all your time and effort into testing your concept. If you can prove that people will pay for it before you build it, then you have an incredible chance of getting into any program, and more importantly, growing into a high-impact business.
Not sure how to test your business model and prove that people will pay for it? Here are a few resources to help you:
- GREAT article in INC about How to Road-Test Your Business Model, inspired by Steve Blank’s amazing book, The Startup Owner’s Manual
- INTERESTING video by Dan Shapiro at the Founder’s Institute with instructions how to test your concept at scale
- INFORMATIVE article in Venture Beat about product testing using Mechanical Turk
- CREATIVE graphic about testing and proving your model for $50 or less
3. Have a Team that is Worth Talking About, and Talk About the Things it is Doing
Ask any accelerator or investor mentor and they will all tell you the same thing: “Tell me what your company is doing, now what it can do… and not what is has done.” Talking about what you have done is no more effective than telling them about your great idea – it’s meaningless. Show your ability to develop customers, prove market, deliver product, iterate and grow.
We made a critical error in our TechStars application by never updating it. Instead, we submitted by the early application deadline, and then “set it, and forget it”. Any business, especially startups, are learning incredibly valuable information every single day. Sometimes, this information makes your company alter pricing models, re-prioritize feature sets, adjust financing models, etc.. This does not mean that a business should change its strategy daily, au contraire, but it does mean that you should be seeking out information, and making conscious decisions based on it. It also means that you should be sharing what you learn.
Specifically on the TechStars application, there is an easy way to update your application. If you aren’t making weekly progress and hitting significant milestones, then maybe you’re not the right fit for TechStars, either. But if you are, you should share updates in short, easy to digest updates. One mentor suggested we share these 3 things on a weekly basis:
- Customer/ mark updates: What else have you learned about your customers and market? Specifically, size, buying cycle, amount, and frequency, and how does this affect your financial projections?
- Product updates: What milestones did you hit this week, and what did you test, learn, change, and improve based on real customer feedback?
- Team updates: What major changes have happened to your team, and what have people delivered?
Yes completing these 3 steps is a ton of work, but its essential to the success of your business. Essentially, the key to getting into any accelerator / funding program has nothing to do with your idea and application, and everything to do with building and growing a company that hits a major need for a big market. So before you worry about your application, worry about your business, and use the 3 steps above to build a better one.