Guest Author – Eugene Vyborov, CTO, YayPay (A 500 Startups Batch 20 Company)
Among the 180+ independent accelerators around the world, American programs hold sway and considerable appeal. Getting into a US-based accelerator is a dream for many startups, especially ones that are based outside the United States. It’s easy to see the attraction: accelerators offer access to the American ecosystem of innovation, collective wisdom of successful entrepreneurs, visibility to prominent VCs, and a trip to the US, all in one package.
From reading cover stories in magazines, one might buy into the idea that once a company is accepted into a prestigious accelerator program, its path to success is clear. The reality is far from it. As I have previously mentioned in “5 Things International Startups Should Know Before Joining a U.S. Accelerator,” acceptance into a top program is just the beginning. My earlier article was based on my experience at Techstars Boston. Now that I have completed Batch 20 at 500 Startups, I am ready to share my thoughts on what it takes to maximize the opportunities and deal with the challenges that come with joining the 500 Startups family.
Let me begin by saying that accelerator programs like 500 Startups are highly competitive. Thousands apply, 30-50 get in. In fact, you have a better chance of getting into Harvard than joining a new 500 Startups batch. If you have been accepted, you definitely have a reason to celebrate. Now, the real work begins.
Here is the thing. Accelerator “freshmen” tend to overlook the need to build a solid foundation in terms of logistics, mental shifts, and financial reserves. By accepting the invitation to join 500 Startups they have signed up for a marathon – and the sooner they begin training the better. Participants must trust the process that is built by experienced investors and entrepreneurs, but they must also come prepared. From having been a part of both Techstars and 500 Startups, I can tell you that the accelerator process is powerful, but it has no magic. All any accelerator can do is accelerate the path the company is on, for better or worse. There are things founders can to make sure they are on the right path – before they pick up the speed.
What does that look like? I have interviewed 3 fellow founders and Marvin Liao himself as they prepared to wrap up their journey with 500 Startups’ Batch 20. Here is their advice:
1. Focus on bringing a great product.
An idea, no matter how brilliant, does not cut it. Some programs (like the Y Combinator) will consider applicants in early stages of development, but both Techstars and 500 Startups require that you have a functional product that’s ready for the market. There are some exceptions (a highly innovative idea, or a proven team with strong credentials and a solid track record) but they only confirm the basic rule.
The “functional product” requirement means that you must have a product and it must be good. The accelerator process will fuel evolution and improvements, but your starting point must be sufficiently strong to allow the product to morph without crumbling. Invest your pre-accelerator time and money into making a product that people love. Resist falling in love with the technical aspects of your product, and get the market to fall in love with the way it solves their problem – before you go any further.
2. Come prepared for the expense.
The cost of participating in the program is covered by the portion of the accelerator’s investment in your company that is held back to cover office space, event facilitation, and other expenses. That is convenient, but it is only a part of the story. Alexey Zenivoch, the co-founder of Belarus-based Friendly Data that builds natural language interfaces for databases, spoke for many of his batchmates when he reflected that San Francisco is expensive. Travel and living expenses can really add up, especially if multiple team members choose to travel to the US and stay for the duration of the program. The investment is well-worth it for the right company, but alumni recommend you consider the whole cost to avoid any surprises.
3. Have a plan for integrating what you learn with the team at home.
The three international startup founders we spoke with all brought several co-workers with them. In the words of Ragnar Sass, the founder of Clanbeat out of Estonia, the ability to include teammates was a “deal breaker” that helped him choose 500 Startups above other accelerators. If your company hopes to break into the US market, it is critical that everyone on the team understands the Silicon Valley, he said.
“I believe that this area is the best environment for developing your business. 500 Startups is also friendly for the non-founders. It is very important that everyone on the team actually understands the Silicon Valley.”
-Ragnar Sass, Clanbeat (Estonia)
That brings us to an important point: few startups can afford to re-locate their entire team to the US for the duration of the accelerator program. You will need a plan for sharing what you learn with your home-base team to bring them along. “Translating” the Silicon Valley culture and conveying the less technical ideas and changes can be difficult. You must have a way of “converting” the knowledge and bringing everyone together, even while you are separated by geography.
4. Get comfortable with networking.
Participants repeatedly state that networking opportunities are some of the key benefits of participating in 500 Startups. And yet, that networking won’t happen by osmosis. You must have a plan for reaching your mentors, building relationships, and establishing connections that will be strong enough to persevere after graduation.
“It’s all about the people. You can meet your new friends and a lot of very smart people. 500 gives you access to strong mentors who help you understand your real market, give you feedback and advice on how to work with your clients.”
-Alex Zenovich, Friendly Data (Belarus)
The good news is that the 500 Startups program is custom-built to encourage collaboration. Because participants share a co-working space, they get to see each other’s victories and defeats. Don’t under-estimate the power of random conversations over lunch!
5. Remember that “sales” is not a dirty word.
500 Startups is strongly focused on customer acquisition. Whether or not you’re a technical founder, you must understand that just building a great product is not enough.
“Openness to learning sales and marketing is really important. You need to have a mindset for it.”
-Marvin Liao, Founder, 500 Startups
Distribution is the name of the game, and organizers structure the content around helping each batch of companies get to their customers fast. Every startup gets a distribution mentor, but you won’t experience traction until you absorb the idea that “selling” is key to your company’s success.
Bonus advice: beef up your English skills!
If you don’t have a high degree of comfort with the English language, there is a limit to how much you will get out of the program. Marvin Liao shared that he would love to see more foreign companies go through the 500 Startups, but the language barrier prevents many great companies from applying. When international teams are present, their conversational facility with English makes an enormous difference on their ability to build the network and maximize their progress.
“Two-thirds of this batch are from the US and a third are from overseas. I do not have a quota. We like international companies, some of our best teams are from overseas. The biggest part is whether they speak English. If you don’t speak English, you won’t do well here.”
-Marvin Liao, Founder, 500 Startups
500 Startups: Lessons learned
Don’t think of joining a US-based accelerator as a binary “yes/no” proposition. The answer may well be “not right now”. Timing matters, as does the degree to which your product is ready for the market. Your team must be open and ready to absorb the volume of sales and distribution learning that has been described as drinking out of a firehose. The application process is highly competitive, and if your team and product have known gaps you may be at a disadvantage compared to companies that are further along in their development. Consider your financial situation as well – your total investment will be greater than just the cost to join the class.
Lastly, think about what happens after the program. Many participants aim to maintain at least some presence in the US after graduation. Mark Masongson, the CEO and Co-Founder of Canadian-based UrbanLogiq, said it best:
“Now that we have access to this network, we cannot close the door on that.”
-Mark Masongson, UrbanLogiq
Marvin Liao has seen companies have success with maintaining an overseas development team and a US-based sales and marketing team.
“The best companies are the ones that keep the engineering team home, but double down on the sales and marketing front in the US.”
Marvin Liao, Founder, 500 Startups
“I won’t say that it’s easy, but we have seen enough examples,” Marvin said, citing the success story of TalkDesk that has a development team in Portugal and a sales and marketing team in San Francisco. The badge of “500 Startups portfolio company” does not come without sacrifice, but it is well worth it!
Eugene Vyborov is technology entrepreneur, geek, Co-founder and CTO of YayPay – Batch 20 company that uses AI and machine learning to accelerate cash flow and automate accounts receivables.
About the Guest Author: Eugene Vyborov is technology entrepreneur, geek, Co-founder and CTO of YayPay, a 500 Startups Batch 20 company that uses AI and machine learning to accelerate cash flow and automate accounts receivables. Follow YayPay on Crunchbase, Twitter, or Linkedin.