This article is largely excerpted from a post published by our partner, Fledge at his blog here.
After hundreds upon hundreds of applications reviewed by The Land Accelerator and Fledge, there are a series of common patterns that lead to rejections, no doubt frustrating the applicants, and similarly frustrating the screeners.
1. Team, lack thereof
The number one criteria that we seek out is a strong team. If you’ve can’t even convince a friend to call themselves a member of your team, then you are unlikely to convince an accelerator you alone are the right team. There is simply too much for one person to do to start a company alone. And in an accelerator, no one to bounce the multitude of ideas off of, and no way to divide an conquer all the meetings, research, etc.
Before you apply, at least find a volunteer to help you out. Try the local university. Attend entrepreneurial events. Seek online entrepreneurship communities. Find someone to join you, if only as a volunteer, before you apply to an accelerator.
2. The good, but tiny idea
A startup will consume all available time. That fact doesn’t change whether there are 2, 3, or more co-founders. Or 1 founder and a team of 10. Given this fact, why are you trying to start something so small? It’s fine to start small, but in the limited space of the application, explain how you intend to scale up.
If you are going to do something impactful, make the most impact you can.
3. Nice to have vs. need to have
Too many ideas are “nice to have” but not “need to have”. The simplest way to explain that is in analogy: aspirin vs. vitamins. If you have a headache or toothache or backache, and you have no aspirin (or equivalent), you will trudge down to the pharmacy/chemist to get some. If you run out of vitamins, you’ll put it on the shopping list and eventually get around to buying some.
Is your product an aspirin or a vitamin? Do customers know they have the problem you are solving, care about that problem, and are they willing to pay to have it solved? If so great. If not, you are selling vitamins.
Vitamins in the long term can be great, but as a startup, you don’t have a long term unless you can make sales today. So… if your solution is a vitamin, how can you tweak it to increase the urgency to make it resemble an aspirin?
4. The marketplace of ideas, meaningful travel, artisan products, and raising money for nonprofits
Filmmakers like to make movies about making movies. Authors like to have characters who are writers. Too many first time entrepreneurs fall into this same trap, proposing to build a marketplace/platform/community for other entrepreneurs.
None of the dozen such plans submitted to Fledge passed the screening. None have provided proof that there is a viable business model possible providing such a service.
Three other ideas that we’ve seen a dozen times:
a. Meaningful travel companies
b. Companies working with artisans in the developing world,
selling those products to American via an e-commerce website.
c. For-profit companies who help raise money for nonprofits,
taking a small percentage of the fundraising
Other ideas repeat on occasion, but these three are by far the most common. Like the marketplace, repetition makes these plans seem less viable, as the proof is that it is relatively easy to launch one of these companies, none of which have yet proven an ability to scale.
5. Belief, without proof
All entrepreneurs believe their startup will succeed. Most believe their idea to be the best in the world. We don’t dispute these beliefs. However, like any investor, Fledge requires more than belief. We require some proof that your idea could work. That there are customers with the problem you describe. That they care enough to pay for a solution. That there are enough of those people to make for a viable company.
We understand that there is a often a Catch-22 (i.e. a chicken-or-egg dilemma) in creating that proof. That it may take some money to build the product to make a sale, and you don’t have the money.
Unfortunately, your problem is one step larger, as some entrepreneurs either have some money or find a way to create that prototype without any money. In the end, as a startup, you before you can compete with the list of competitors in your competitive research, you first must compete with all the other startups seeking funding.
If you think it, it will fund is a common expectation, but not how the real world works.
6- What DOES Work: A Mission-driven business model
Behind the accelerator program, the Land Accelerator partner, Fledge, is an impact investment fund. We focus first on impact, then on potential financial return. More specifically, we invest in mission-driven for-profit companies, where the mission is embedded within the product or service (e.g. Whole Foods, Zipcar, Patagonia, The Honest Company).
We believe that is the best style of business model for impactful startups. So in terms of what does not get accepted, we look skeptically at the other two common models of X% of profits to charity (Ben & Jerry’s) or buy-one-give-one (Tom’s Shoes).
Our reasoning is simple. If the mission is embedded into the product, then the company needs to have only one goal, sell products. Every sale fulfills the mission. There are no mission-related distractions. No opportunities to balance financial and mission driven bottom lines. Less change of diluting the mission over time, or upon acquisition.
With the mission-embedded business model, the company can act like a fiscally-driven company, which makes life easier for fundraising, for recruiting, and for growing the business.
7- The eighth best applicant
Lastly, there is the universal problem of limited resources. We can only afford to work with a small number of teams in any one session (although we’re increasing that number in 2021 with our all-virtual webinar sessions.
The hardest rejection letters to send out are to the teams who ranked just “below the line”, one, two, and three spaces lower than the last invitation letter.
There seems to be more and more entrepreneurs each year, which only exacerbates this problem, despite more and more accelerators appearing each year as well. In addition, Fledge has seen a significant increase in quality of applicants rise session by session.
All of this makes it harder and harder for entrepreneurs to make it into the top 5%, leaving more than 95% of applicants in eighth place or below. And in the end, it doesn’t matter whether the ranking was 8th or 163rd, as they both receive the same frustrating rejection letter.
The Next Step(s)
To increase your odds of receiving an invitation to Fledge, before you apply, grab a copy of The Next Step: Guiding you from idea to startup.