Jeff  Carter

Last night I had the chance to preview some Excelerate Labs companies. If you are going to the Demo Day next week, I think you will be happy you came. The class is very creative and well prepared. I have already dispersed some material to a few target customers, downloaded some of their apps and put them on my phone.

Often times, many wonder if accelerators are worth it. My answer is, “It depends.”. It depends on a lot of things, but if the lab has the track record of Y-Combinator, TechStars, or Excelerate then I’d say they are worth it. Those are the three places I am familiar with, so I cannot comment on any others. My friend Raman Chadha probably can though.

Some accelerators aren’t worth it. Why? What should an accelerator do?

From the investor perspective, accelerators should polish the business so it has a revenue model. Or, if it’s a no revenue model company, point the business on a path to get viral customer acquisition. Figure out what the costs of running the business are and how to anticipate the costs of scaling. Getting a rough timeline is a good idea. General business planning.

They should also teach you how to pitch. Raising capital is the second most important thing for a start up. Getting customers is the most important thing and a good accelerator will focus you on that.

Once the firm graduates from the accelerator, it should have a clear idea where it’s headed and it should have intense focus. It should have goals and start to try and attain them. It should have one or two people it trusts to take problems to, mentors they call them.

The aforementioned accelerators do all that and sometimes more. In return, they take a small equity piece.

What do bad accelerators do? They don’t prepare companies for what awaits them. They give you mentors that can’t mentor, or they don’t create meaningful connections for you. They take your equity and leave you to die.

Poor accelerators will keep you busy doing tasks. But those tasks aren’t relevant to your business. They seem more like really bad basic training rather than purpose driven exercises designed to stimulate either growth of your company or team.

Another characteristic of a good accelerator is the ability of the founders to admit when they make mistakes. I think great accelerators always learn from their classes, their mentors and investors that interact with them. They get stronger over time.

Jeff Carter

Jeffrey Carter is an independent speculator. He has been trading since 1988. His blog site, Points and Figures was named by Minyanville as one of The 20 Most Influential Blogs in Financial Media.