How to Get Into a Startup Accelerator and Secure Series A Funding

In the good old pre-pandemic times, when the economic climate seemed calm and predictable, it was quite a challenge for a startup to earn its first million. Since then, the world has lived through the Covid crisis, and it’s still hard to say what will happen tomorrow. That’s why launching a startup in the current situation is like walking across a minefield. Blindfolded.

But if you are one of those entrepreneurs who are ready to accept the risks and do everything possible to achieve success, it’s best to have realistic expectations.  

There is a low chance a startup will grow to a million in revenues without prominent financial support. If a company doesn’t have solid capital from the start, it can get funding from outside resources such as venture capitalists, business angels, and accelerators.

However, attracting funding is not an easy thing to do either. According to the data provided by a business fundraising platform Funderra, only 0.91% of all startups in the US receive financial support from business angels and only 0.05% from venture capitalists. But those startups that succeed have greater chances of surviving during the periods of turbulence and then skyrocketing their growth.

It may sound like “mission impossible,” right? Well, if your team and you believe in the idea and its potential, and you can support this belief by a detailed business plan, it’s worth trying. And numerous startup accelerators will offer you a helping hand.  

Accelerators help to focus on the most significant aspects without wasting time and to avoid a number of money-consuming mistakes. 

First things first: you need to find a suitable startup accelerator. The choice can be based on the following factors:

Once you’ve chosen the accelerator that you believe will help unleash your startup’s potential, it’s time to think about ways of joining it.

This process has already been observed in thousands of videos, books, and articles. And although there’s no single step-by-step instruction on how to get into an accelerator, there are reasonable considerations based on the startup founders’ experience. 

These recommendations include a coherent presentation of the startup concept, an introduction of the team members with the description of their roles in the project, objectives, possible mistakes, and achievements. The presence of serial entrepreneurs, experienced IT specialists, and brilliant marketers on the team will raise the level of your startup’s credibility.

All accelerators have their own list of formal entrance requirements. The fewer requirements they provide, the more opportunities there are for startups to highlight their advantages. Such freedom leads to high dropout rates for conventional projects but enables unique ideas to step forward.

The most promising startups, which were chosen for acceleration, are given 3-4 months of probation. Why is this so? Well, it’s true that the financial opportunities of accelerators are huge, but they are still limited. Moreover, this period is enough to have the projects field-tested and to see the teams working cohesively on achieving goals and reacting to emergencies. After a trial, investors can decide whether to give funding or not.

Each investor makes decisions using their own KPIs. Usually, the key criteria is dynamic growth, which shows a relative growth of business volumes. If a B2C-project’s MRR (monthly recurring revenue) used to be 3K$ and has grown to 20K$ by the time of the demo-day, it’s a great result for a Series A funding round.

Let’s look at another example. If a company had two regular B2B clients and after acceleration, this number has grown to seven, this is also a success. Investors appreciate positive qualitative changes, rather than quantitative ones.

As a rule, accelerators attract MVP (minimal viable product) startups that already have some core features and experience, because an accelerator is not a fairy godmother that will help solve all the project’s problems. Nonetheless, it provides an opportunity to level up the product, providing mentor support, improving the business model, optimizing sales channels, etc.

During these first months, each startup inevitably changes its original strategy thanks to the tough feedback received from the accelerator. A team that lacks flexibility and is unable to follow a mentor’s advice will not be competitive in the tough ever-changing market.

The majority of investors would agree that a good team is a startup’s most valuable asset. That’s why it’s better to make a proper introduction of the team members, highlighting their level of expertise and emphasizing personal achievements, than to go into the nitty-gritty of deeptech-developing.

It’s OK if the first achievements are small: nobody expects a startup to hit a million in revenues after Series A funding. But if the team used all its expertise to create a product and this product has a number of paying users even at an early stage, then it definitely has potential for further growth. And accelerators will be there to provide the necessary financial resources and help increase the client base.

Investors evaluate startups only in the context of the market: even the most advanced technological solutions are pointless if nobody’s going to pay for them. As such, it doesn’t make sense to continue investing in further development. An accelerator can help a startup avoid such a situation. A team of experts and mentors will help the founders clearly show the practical value of a product.

The key qualities of a successful investor include the ability to instantly understand a startup’s essence, to catch its vibe, and to quickly find the required sources of funding. If an investor is a business angel, a startup would benefit from their experience in a relevant industry and their extended network of contacts; if it’s a venture fund, it might have a high level of expertise in some particular field (e.g. B2B-services for providers). Moreover, a current investor can help find the source of financing for the next round, effectively becoming a startup’s booster.

Preparing for the demo-day it’s important to understand that the only purpose of your presentation is to attract an investor. That is why every phrase you articulate during the pitch should help you achieve this goal and extra words should be thrown away. Make sure you follow the mentor's advice during the preparation.

The slides should contain a simple message. The goal of pitching is to enamour an investor with the product and to show what the team has achieved during acceleration. It’s all about selling the idea of the startup’s progress. Demo-day is a turning point for a startup when the project can attract investors and an accelerator will help to create a favorable atmosphere.

One more tip for those preparing their pitch is to be honest and to accurately showcase all of the project’s upsides. For example, if the founder has 10 years of business experience and only 5 of them are in the particular industry, it would be a big mistake to say that he has “10 years of business experience,” without providing details.

An investor is the startup’s business partner. You can’t just attract funding without convincing your future partner of your sincere desire to achieve success and join the list of the top 1% of startups. A smart move is to ensure support from a successful accelerator, otherwise, it doesn’t make sense to even enter the race for a million.