Guest author –
Hi, I’m Michael Rivera. I’ve started (and exited) two companies in my career. I’ve been an early-stage venture investor, advisor and mentor. I’ve recently joined with three brilliant Stanford grads to launch an LA-based accelerator dedicated to consumer products in the health & wellness, toy, and home goods verticals. I just took 500 Startups Bootcamp for Accelerator Managers (April 24th – 28th) and here are some of my reflections.
During the weeklong Bootcamp for Accelerator Managers, Dave McClure, Christine Tsai, Bedy Yang and the 500 Startups team shared all the successes and failures they’ve had after running 40+ accelerator programs. They were transparent, hilarious, and incredibly inspiring.
It. Was. Awesome.
(Except the part where Dave McClure told us we were crazy for running accelerators and would probably fail. The truth hurts! Thanks, Dave!)
For five days, I sat with my batch mates as we learned about accelerator investment theses, accelerator marketing and positioning, and the accelerator application process among many topics in information-packed sessions. These sessions conveyed best-practices for every facet of accelerator operations and management.
Here are three of the changes we’re making to our program after attending #500BAM:
1. Shifting our mindset from an accelerator to a fund with services.
By starting a private accelerator, we’re really starting a Seed Fund with super-charged value-add components. We owe it to our investors, our strongest performing cohort companies, and ourselves, not to spend limited resources on the worst companies. It sounds harsh, but we’re accelerating the good companies and we’re accelerating the bad companies.
We understand this with greater clarity now so we’re developing internal metrics to identify our least promising cohort companies and develop a process to allocate resources to them accordingly during our program.
2. Paying more attention to timing.
We know that the success of the first fund will determine whether we raise a second fund. We hadn’t fully thought through the timing of LP capital calls and how that impacts fund IRR/LP ROI. So now we’re mapping LP capital calls against our cohort start dates and anticipated follow-on investment windows. Though this may seem like a minor point, any incremental improvement on IRR/ROI is critical, especially for a new fund.
3. Engaging partners and sponsors.
We realized we were focused on our accelerator program to the detriment of our sponsors and partners program. As 500 Startups has proven in the private accelerator space, it is crucial to engage corporations, governments, and NGOs via sponsorships, partnerships, and events. If you’re not, you’re leaving tons of operational revenue on the table.
We’re now in the process of developing a fully integrated corporate outreach and sponsorship program. Not only will this strengthen us operationally, we’re further developing relationships with potential exit partners for our cohort companies. As Venture Partner Zafer Younis put it in his session on corporate partnerships, it’s a “win-win-win.”
Although I think the challenges that face me and my team are going to be the hardest of my career, after my time at #500BAM, I feel energized and focused. I received invaluable, personalized advice from the very best accelerator operators in the world. I have #500BAM resources and materials to reference as we move forward. I am a part of the 500 Startups ecosystem.
Perhaps most importantly, I have a stronger support network of like-minded accelerator managers. My batch mates hailed from Europe, the Middle East, South America, Asia, and all corners of the United States. We are men and women coming from a mix of private, government, university and corporate accelerators.
Some of us have yet to welcome our first group of companies; others have been operating their accelerator for years. And yet our diversity – in all things – was our greatest strength. In truth, we learned as much from each other as we did from our friends at 500 Startups.
If you’re in the accelerator ecosystem, there is nothing else like #500BAM in the world. I encourage you to see for yourself next year.
Thank you to Michael Rivera for contributing to the 500 blog. For more insights from Michael, follow him on Twitter.