Are Accelerators Just Paid Introductions in Disguise?

It was not so much a debate as a “frank exchange”.

I was exchanging emails with the founder of one of the larger startup pitch conferences.  He had asked me if I would promote his event with some of the DreamIt startups who are currently fundraising.  His events are pay-to-pitch and it’s fair to say that, as a general rule, I’m not a fan of that model.

I (politely, I hope) explained my reservations.  I’ve dealt with the issue in more depth here but the gist is that getting in front of key decision makers is a core competence for successful entrepreneurs.  If you can’t get a warm intro to early stage investors who, by and large, are some of the most networked people on earth, how will you get in front of potential customers, distribution partners, etc.?  Paying for access to investors often signals a lack of this core competence, and, more generally, an attitude that something so fundamental to their business should be outsourced.

When I was done explaining, he responded with this deceptively simple question:

“How is presenting at our program different then presenting at your demo day?  Those companies pay you with equity.  Couldn’t you make the point that if they need your services then they are [equally lacking]?”

Respectfully, I disagree.  There is a world of difference between participating in an intense 3 month program where you master key skills vs. simply writing a check.

Putting aside the heavy filtering that is a result of the intense competition for admission into the top accelerators – having seen the numbers first hand, I can confirm that it is statistically easier to get into Harvard than it is to get into DreamIt – that in itself virtually guarantees a better pool of demo day startups than pay-to-pitch presenters, anyone who has been through a top accelerator will attest to how much they have learnt.  In particular, the alumni who graduate from top accelerators leave the program fully capable of networking to investors, clients, partners, etc. Startups who use bankers or other intermediaries leave with some business cards.  It’s the difference between mastering a skill and renting it,  between going to med school or just going to the doctor.

But then again, I might be biased. 🙂

What do you think?

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About Andrew Ackerman

Andrew is recovering consultant turned serial entrepreneur, startup mentor and angel investor. He is the Managing Director at Dreamit, currently in charge of the Edtech accelerator program. Andrew is also a contributing writer to Fortune, AlleyWatch, The 74 Million, et. al. Andrew has founded two companies and has a keen appreciation for how hard it is to build a successful startup, even under the best of circumstances. He speaks Hebrew fluently as well as some Spanish, French, Japanese and JavaScript.

2 responses to “Are Accelerators Just Paid Introductions in Disguise?”

  1. The Anti-Cancer Club says :

    I think that raising money, particularly outside the major metropolitan areas where most high quality accelerators and angel networks are located, is not for the faint of heart. Gaining personal introductions (which are key even with platforms like Gust) requires major networking and sometimes networking takes you to interesting places.

    A brief bio: Wharton grad, moved to Reno/Tahoe to fly sailplanes (one of the best places to soar in the entire world!) A cancer diagnosis reorients my life and opens my eyes to a massive market opportunity that actually helps people. A global market > $3+ billion.

    I put together an extraordinary and experienced team with the passion to follow through on our plan and Boom! hit a brick wall. Were my ideas too advanced for the market? (3 years ago, yes; now the world is catching up). Did I have to go to Stanford to get someone in the bay area to even talk to me? (Probably, yes.) Was my age (50 something) working against me? It shouldn’t. I have experience and passion I couldn’t even imagine at 20.

    Networking, I was invited to a meeting in another city. Voila! I am no longer the crazy woman wanting to help cancer patients, but someone with deep insight into a multi-billion dollar market (Finally! Thank you!) Phase 2 of our plan fulfilled a major pain point for a number of medical systems and doors have started to open.

    I’ve learned that when it comes to raising money, you need to have real passion to sustain your vision. My company doesn’t fit a nice neat business category that hits all the checkpoints for a perfect portfolio. We’re different because we have unique insights into our market. We marry technology, entertainment and compassion to touch a global market and generate significant revenue and return. (I went to Wharton; Significant is a BIG number!)

    I’ve tried the pay-to-play routine and simply walked away poorer. Personal introductions are key. When we’ve finished raising this round of capital, I’ll perhaps have time to reflect on it all. In the meantime, I’m the passionate crazy woman who is networking her face off and slowly but surely, gaining the access needed to make a difference, touch the lives of many and offer a great return to my shareholders.

    My company? ThinkTLC. Contact me if you’re curious. pat@thinktlc.com

    • Andrew Ackerman says :

      Thanks for sharing. I’m happy to hear that you stuck with it. Pay-to-pitch is seductive – it feels like a shortcut through all the tedious networking – but for most people I speak to, it is a mirage.

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