Accelerator

For a long time, not knowing anyone blocked a founder earlier than not having money did. A team without a product could not get a meeting with a venture capital firm. A firm invests money it holds on behalf of others, so it needs numbers before it starts a review, and a team at this stage has none. That left the angel investor, an individual who puts personal money into early companies, and those people are reached through introductions.

So the first few months of a first-time founder tended to look the same. Ask a former colleague for a warm intro, hear "come back when the product is out" in the meeting that intro produced, and go ask for another intro because there was no money to build the product with. A founder on their second company got through this in two weeks. A founder on their first spent half a year. The gap came from connections, not from the quality of the team.

An accelerator turns that connection into a product. Instead of handing over money and leaving, it keeps the team for a fixed stretch of time, opens paths to investors and to founders who have done it before, and takes equity in exchange. The check is small and the percentage is high. The trade rests on a judgment that capital is not the only thing an early team is short of.

Teams are admitted in batches, spend three or four months together, and stand in front of investors at the end. A fixed calendar and a cohort moving at once are what separate this from an individual investor.

A batch runs through four stages.

1. Applications and selection. Applications open for a few weeks, interviews follow, and ten to twenty teams get in. With no numbers to read, the judgment falls on the team and the problem. Why are these two people working on this, and what did they actually build over the last three months.
2. The deal. The check is commonly between $20,000 and $150,000 for 5 to 10 percent of the company. There is no basis for pricing the company yet, so the paperwork is usually a SAFE or a similar instrument that defers the valuation, or a standard set of terms the program applies identically to every team in the batch.
3. The program itself. A desk, weekly mentoring, and the standing homework of reporting metrics every week. Having the rest of the batch sitting one table over does more work than it sounds like it would. When everyone can see what everyone else shipped this week, slow progress is impossible to hide.
4. Demo day. In the final week, investors are gathered in a room and each team presents for about five minutes. Deals are rarely decided there. The real use is collecting cards and spending the following weeks in individual meetings.

Something usually rides along with the equity: the right to invest again in the next round to hold that percentage. This is where an accelerator's returns come from. The money is not made on the first 5 percent but on following the few teams that work and keeping the stake intact.

This is the stop a team hits while crossing from pre-seed to seed, with no product yet or one that just launched. A company entering the program is typically two or three founders with a few dozen users. It leaves with a deck, a few months of metrics, and a list of investors to go meet.

Three things are worth checking before picking one.

1. Whether graduates actually raised afterward. Ask for the follow-on rate by batch and most programs will give you a number.
2. Whether the mentors spend time or only lend their names. A roster of thirty mentors with two mentoring sessions per batch is a brochure, not a resource.
3. The equity terms. The same 5 percent for a $40,000 check and for a $160,000 check prices the company four times apart.

The cases where it does not fit are just as clear. For a team already generating revenue with investors asking for meetings, 5 percent is expensive. What that team is short of is the size of the check, not introductions, so it is better off going straight to a round where the same equity buys far more money. The three or four months the program takes are also months not spent on the product, and that belongs in the calculation.

"They got into this batch. Demo day is in November, so they'll run the round after that."

The program's calendar has decided the team's fundraising calendar.

"Forty thousand for 5 percent puts the company at eight hundred thousand. Is that reasonable at this stage?"

Dividing the check by the equity gives you the valuation the program assigned.

"They finished the program but nothing followed."

The batch ended without leading to the next round, and cash is running down.

In Pagedeck's first year, Grace got into two programs at once and had to choose. One offered twice the money. The other offered less but had worked with several companies selling collaboration tools. Grace asked both for their last three batch rosters and contacted the graduates directly.

The answers made the decision. Several teams from the larger-check program said contact dried up after demo day. From the smaller one, the same line kept coming back: five investor meetings were already booked the week after demo day. Pagedeck picked the smaller check and closed its seed round two months after the program ended.

The most common mistake is reading admission as the end of fundraising. The acceptance rate is low and the news is public, so it feels like a result. The money that actually arrives is roughly a tenth of the next round, and its purpose is to cover the four months the program takes. Read it as finished, spend those four months entirely on the product, and you start meeting investors the day after demo day — which, at the three months it usually takes to get from a first meeting to money in the bank, leaves you two months of runway.

Pricing the equity against the desk and the mentoring is the other one. Those two are the visible parts, so the arithmetic is natural enough. But what carries the price is the introduction to the next investor, and the fact that those investors read the program's name as a signal that the team has been filtered once. Keep the arithmetic as it is and you conclude that 5 percent is steep next to the cost of office space, while never checking the number that actually varies between programs: how many graduates went on to raise.