The Inner Workings of a Startup Accelerator
Entrepreneurs love them. But what do they really get from joining a so-called “startup accelerator”?
To find out, Benzinga spoke with Ian Jeffrey, the General Manager of FounderFuel, an organization that Jeffrey describes as a “mentor-driven accelerator program.” “Twice a year we run a 12-week program in which we bring teams here to Montreal – teams from all over the world that are building products in Web, mobile, and gaming,” Jeffrey told Benzinga. “My primary responsibility is to organize the FounderFuel program and run it while the teams are here and while we're recruiting teams as well.”
During the program, Jeffrey said that young entrepreneurs come to FounderFuel with an existing product. “They come here and they're gonna work their asses off, and they're gonna have tons of opportunities that we create through the mentor network,” he said. “We have about 100 mentors that are contributing to the program on a volunteer basis. We created a series of events throughout the 12 weeks for the teams to be able to spend time with these mentors, get feedback for them, [and] get advice.”
In short, Jeffrey said that the teams “that cease these opportunities the best and execute on them the best” will make the most progress during the three-month journey to startup growth. “All the teams,” said Jeffrey, “are working towards the last major event, which is Demo Day.”
Showing Your Success
In discussing Demo Day, Jeffrey referred to it as a “huge event” with investors from all over the world. “All across Canada, New York, Boston, San Francisco, [and] throughout Europe as well,” he said. “We'll have anywhere from 500 and 800 people at this event. Each team will pitch their business to their room, which is kind of a launching pad of their fundraising initiative.”
“Really what we're doing is taking an existing company who has an existing product and helping them get to a point to where all they need is a real investment,” Jeffrey continued. “We're making them investment-ready, basically, and ready to take off and go full-speed ahead on their product.”
Early on in the program, Jeffrey said that FounderFuel brings all of the mentors to Montreal for a full-day event, allowing each team to present to the mentors as a group.
“Then we split the teams into different areas,” Jeffrey explained. “They each have their own table. And we put the mentors into groups of 10 people. As a group of 10, they'll go to the first team and they'll talk about the business for 30 minutes. Once the 30 minutes are up, we do a rotation so that it goes through the next team. They do this until they've seen all the teams in the room.”
In all, FounderFuel will have a dozen sessions with the mentors, each lasting 30 minutes. “They'll come out of this day with a ton of feedback,” Jeffrey assured us. “We call it the ‘Mentor of Speed Dating.' They're doing a bunch of things here, they're getting a bunch of feedback, and they're also identifying the mentors they think can help them the most. Each mentor has different experience. One mentor will not be able to help all of the teams.”
Thus, the event also gives mentors a chance to figure out which team they could be of the greatest use. “So the mentor identifies, ‘I can really help this team because of my past experience,'” said Jeffrey. “‘And I'm gonna have an official relationship with this team and say that I'm gonna work with them throughout the 12-week program.' From that point on they will have many meetings [and] make introductions to people in their network. Often the mentors will invest in the company as well.”
“We'll also do what we call, ‘Master Classes' twice a week,” Jeffrey added. “It's a talk – a discussion – where one of the mentors will come in and they will talk about something in which they are an expert.”
For example, Jeffrey said that FounderFuel will have someone discuss digital marketing or social media marketing, and have someone speak about what it takes to be a good CEO.
“It's a whole range of different topics,” Jeffrey continued. “The mentor will come in, talk about it, and usually stick around, have office hours with the teams afterwards, so the teams can begin their own business one-on-one with that mentor.”
Additionally, Jeffrey said that FounderFuel will provide its teams with a chance to speak to venture capitalists. “Every week we'll have at least one VC come in for office hours, and sit down with each of the teams and talk about their business, talk about how they need to consider certain things to be fundable,” he said. “We also have regular mentor office hours as well. So a mentor may come in on a Friday afternoon and spend the day with the teams.
“So there are tons of opportunities for the teams to connect with this network and get crazy feedback, and it's really a large network of people. It would almost be impossible for you as a single person, even in a career, to build that network. So we're really exposing them to people that will help them out in their business.”
How It All Came Together
“The mentors are all doing this on a volunteer basis,” said Jeffrey. “The mentors will do it for many reasons – the first is networking. It's a great networking source for them. They meet tons of new people. A lot of them will invest in these companies, so they're also sniffing around and seeing what kind of projects are happening.”
Finally, Jeffrey said that the mentors do it to give back, “because they've been through it before and they wished they had something like this when they were getting started.”
“We invest in every team that comes in,” Jeffrey added. “We invest between $20,000 and $25,000 in each of these teams. It's based on how many founders are in the team. A two-person team will get $20,000; a three-person team will get $25,000 – $10K for each team and $5K for each co-founder. In exchange, we take 6% of equity in the company.”
In total, more than two million dollars have been committed to FounderFuel.
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