Experts in the technology industry have outlined five key criteria that startups should have when pitching their business to startup accelerators and potential investors.
The experts made this known at the Sidebrief’s panel discussion titled ‘Exploring Accelerators as a Catalyst for Your Startup Growth.’ The panel enlightened participants about accelerators, and how they can be pivotal to the growth of early-stage startups.
Some of the criteria listed were a solid team – who are willing to learn, passionate about the problem they set out to solve, have an innovative mindset and are also obsessed about the customers willing to pay for the products.
“Whenever we assess applications from startups, we normally look out for how passionate and committed they are in solving the types of problems for the users,” Kelechi Achinonu, regional head at Hill Justice Accelerator, said.
She said having an innovative mindset is also another criterion because they have seen situations where founders, because of the success in fintech, keep trying to do the same thing repeatedly. “But within our space, if you are solving the problem, we will know.”
Oyin Solebo, managing director at Techstars Lagos, said having a learning mind-set is very important because as a founder nobody knows your business better than you, but that doesn’t mean that you cannot gain super valuable insights by being open, vulnerable, and sharing what is going on with a trusted advisor or mentor.
“Another area is traction and evidence that people are willing to pay for whatever product you are selling. This is super important because a lot of startups and founders especially from Nigeria are technical, they rush straight to making awesome products and technology, but they have not proven that anyone will pay,” she added.
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Solebo also stated that if you don’t have the product or technology but that if you have an excel spreadsheet that contains the data that shows customers are paying for something, she would rather see that because it gives her the impression that you understand the customers, you are taking feedback.
“When I give you the capital to build products, you will actually build something that people actually want.”
Startup accelerators, also known as seed accelerators, are usually business programs that support startup companies through financing, mentorships, and education.
They are becoming increasingly important in startup communities as they have the potential to improve the outcomes of startups and spill the benefits into the wider ecosystem.
Accelerators use their relationship with investors to make introductions for startups, which help make investor conversations easier and reduce investor skepticism which can be instrumental to a startup’s growth. They can also be a validation check for early-stage startups.
“For us when looking at businesses, the first thing we watch out for are the founders because at the early stage of businesses, they are the custodian of what the business would look like,”
Ayobamigbe Teriba, venture sourcing lead at Founders Factory Africa said. “We look at their pedigree, the excitement and attraction to the problem, the ability and also the temperament to work with more people across different classes, their wavelength and work.” he added.
In the much later stage of startups, Lexi Novitske, general partner at Norrsken 22 said the things they are particular about are having consistent margin expansion. “So, showing that gross margin is ticking up and it is doing so on a monthly basis.”
She said they look at metrics such as the cost of customer acquisition, lifetime value of the customer, business model, customer retention among others.
