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Ask HN: Accept offer from startup accelerator?

Hi all, I am running a start with my co-founder (2 devs). We've done lots of freelance work together before and a previous startup which failed sadly. The previous startup went through a European accelerator. I am now faced with an offer for our new startup from a different European accelerator. There terms are approx 6% to 10% for around £20k ($34k). The startup has about £19k cash in the bank and generates about £4k to £5k a month. We want this startup to do well and get big. We are not marketers and this is what we need help with most. We know a few people we can get help from friends / network. We have both quit our jobs and will soon work on the startup full time. It has been bootstrapped for the past 18 months and we could only work on it part time. Questions: Would you accept the offer from the accelerator? Why? Would you go straight to an Early stage VC? Why? Would you continue working on it yourself for a few more months before to get a better valuation? Why? Anything else to consider? Other notes: - We don't think we've quite reached PMF - Our product is pretty much MVP, no bells and whistles - Our next goal is to concentrate more on Cust Dev I appreciate any quick responses as I have to make the decision soon. I am sorry but I had to post this with a new account.

jesusmichael 12y ago
Well... lets do the math... You have a valuation of 2-4x revenue. Sounds like a good deal just on those numbers alone... but if you need the money and they can offer you something you don't have like marketing assistance. Seems like the offer makes sense. No way to really tell if you will ever get a better valuation since we don't know what you do and what your financials are like. Money in the bank leads to more money in the bank...
neilsharma 12y ago
What was your experience like in the first accelerator? We're the advisors, mentors, and network any good? Is this one better? In general, there are too many accelerators out there that don't do a great job. You might run the risk of getting bad advice or dead-end connections that could run your company into the ground. Or it might be great -- hard to tell without more information. Sounds like financially speaking, you guys aren't in a bad situation if you're bootstrapping and being lean. Should at least be ramen profitable, which is a big success in itself. So you gotta now ask yourself how much more would an extra £19k do? Can you hire the people you want for how long you want them with that money, or do you need more? Would this accelerator legitimately help you raise more, or can you do that without em? I normally am against raising or applying to incubators without PMF. Too much unpredictability that can't usually be solved with more money -- just with more hustle. Then again, if running experiments, doing customer dev, or day-to-day operations require a large budget, then you might need the money simply to figure it out.
- dropsofhonesty 12y ago
  The previous accelerator was good. They helped raise some decent money after their initial injection of money. Mentors were great too and the connections we built were useful. It has hard to know if this one will be better. That is interesting that you wouldn't recommend and accelerator if you don't have PMF. Most start-ups that get into accelerators seem like they do not have PMF (judging from their website). However, I do see your point as you won't make the most use of your time.
  - neilsharma 12y ago
    Well, quality incubators invest in quality founding teams, not products with PMF. I'm a believer that in most startup cases, the founding team can find some early form of PMF with customer dev + building + hustle rather than money + employees. And if you do find PMF, raising money and getting into the incubator again wouldn't be a problem. In your case though, you might've already found it if your rev is recurring and growing at a decent rate.
ig1 12y ago
Who's the accelerator ? (feel free to ping me by email if you prefer)
JSeymourATL 12y ago
Wait for a better valuation-- You identified marketing as an area where you need the most help. Suggest engaging an independent marketing specialist or agency on a contract/interim basis.

jesusmichael 12y ago

Well... lets do the math... You have a valuation of 2-4x revenue. Sounds like a good deal just on those numbers alone... but if you need the money and they can offer you something you don't have like marketing assistance. Seems like the offer makes sense. No way to really tell if you will ever get a better valuation since we don't know what you do and what your financials are like. Money in the bank leads to more money in the bank...

neilsharma 12y ago

What was your experience like in the first accelerator? We're the advisors, mentors, and network any good? Is this one better? In general, there are too many accelerators out there that don't do a great job. You might run the risk of getting bad advice or dead-end connections that could run your company into the ground. Or it might be great -- hard to tell without more information. Sounds like financially speaking, you guys aren't in a bad situation if you're bootstrapping and being lean. Should at least be ramen profitable, which is a big success in itself. So you gotta now ask yourself how much more would an extra £19k do? Can you hire the people you want for how long you want them with that money, or do you need more? Would this accelerator legitimately help you raise more, or can you do that without em? I normally am against raising or applying to incubators without PMF. Too much unpredictability that can't usually be solved with more money -- just with more hustle. Then again, if running experiments, doing customer dev, or day-to-day operations require a large budget, then you might need the money simply to figure it out.

dropsofhonesty 12y ago
The previous accelerator was good. They helped raise some decent money after their initial injection of money. Mentors were great too and the connections we built were useful. It has hard to know if this one will be better. That is interesting that you wouldn't recommend and accelerator if you don't have PMF. Most start-ups that get into accelerators seem like they do not have PMF (judging from their website). However, I do see your point as you won't make the most use of your time.
- neilsharma 12y ago
  Well, quality incubators invest in quality founding teams, not products with PMF. I'm a believer that in most startup cases, the founding team can find some early form of PMF with customer dev + building + hustle rather than money + employees. And if you do find PMF, raising money and getting into the incubator again wouldn't be a problem. In your case though, you might've already found it if your rev is recurring and growing at a decent rate.

ig1 12y ago

Who's the accelerator ? (feel free to ping me by email if you prefer)

JSeymourATL 12y ago

Wait for a better valuation-- You identified marketing as an area where you need the most help. Suggest engaging an independent marketing specialist or agency on a contract/interim basis.