One of the first accelerators in Hungary, iCatapult launched in December 2012, but the actual, hands-on work started back in August. It has been more than a year and half since we have started the daily operations and got our hands dirty. At the beginning, there were many ideas about execution, each with its own set of assumptions. Finally iterated our way to a model that we were willing to go with. Our one-line pitch represents this model the best: iCatapult is a global business development accelerator for CEE tech startups. This one liner represents our vision and embodies our major commitments. iCatapult focuses on global technologies. We believe that many non-US startups have the potential of going global from day one. They just need the boost to avoid cultural, language, financial barriers and the lack of a cohesive network.
In the past year and half we have learned a lot, and we will continue to learn. Here are 10 lessons based on our experience, we hope you will find them useful:
1. People only talk Lean
A lot of people claim that they are running a lean startup, but very few of them actually do so. Why? Because it is a lot harder than you think it is. For many technical founders running lean experiments means they have to move out of their comfort zone. Doing customer development, getting out of the building, getting rejection from customers, hearing the truth about their product, cold calling is just scary for them. You can see the fear in their eyes.
2. Make complex simple
Many startups overcomplicate things. They have a feasible idea, but they are so caught up in it, that they just cannot see things objectively. If it takes more than 2 minutes to tell people what your startup is doing, than it is too complicated. We have seen projects with insanely complex MVPs that were scheduled to be ready in 2-3 months. Sometimes even further down the road. You are either going very slow, or doing something that is much more than an MVP. Overall, probably less than 5% of people who claim lean development actually understand lean terminology for what it is.
3. Be data-driven
Let me give you a quick convo first. Me: “Do you guys have a simple analytics system set up? Do you know what users do inside the product?” Team: “No. But we are logging everything. We have all the information. That is much better than what any analytics tool can do.” Classic example. Happened multiple times. We all have to understand this: logs are data without context. However, you need business insight. You will not become data-driven solely by collecting data. If you can not act on the data you are collecting, you are not data-driven.
4. Think DNA, not NDA
If an ICT startup wants an investor to sign an NDA before revealing anything, that is a red flag. Starting off with an NDA is never a good sign except for special cases in life-science and energy startups. Even there, execution typically beats patent. Asking for an NDA shows loads of assumptions about the world ‘out there’, shows insecurity and a false sense of what business is about. You should think about having a good DNA instead. That’s why we focus on equal partnerships. Aligned goals and cooperation lead to full commitment.
5. Draw lines in the sand early on
Having initial assumptions is critical. Writing them down is equally important. It brings in sobriety. If you skip these steps you are missing out on an important and valuable validation opportunity. You have to draw lines in the sand early on. It will help you simplify your thoughts, ideas and create an ability to backtest everything. It is crucial for startups and the accelerator itself.
6. Understanding business models is critical
Many startups are outstanding in creating products, but they usually lack the business perspective. This one usually boils down to the insufficient knowledge of business models. Sooner or later you have to understand how these models work, so why don’t you deep dive into them right at the beginning? Learning about how models work on the fly is much more painful. It will also create a lot of tension in the team. That is why we would love to see the understanding of business models get to another level.
7. Hiring is a pain
If startups want to scale they need to hire talents. In the past few months this has turned out to be more challenging than we ever thought. Even if you offer a fair share of equity, SOP, great environment, good vision you’ll most likely be struggling to unlock a great talent or find a raw diamond out there. Talent shortage is most likely everywhere, not just in Silicon Valley.
8. Unbalanced teams don’t perform well
Unbalanced teams are more likely to fail. The most common missing skillset is the business mindset. That’s why most startups turn to us: to help them develop their business. But it must be noted that not only business guys need to have this mindset, but all founders. They all have to be entrepreneurial to some degree. They all need to do customer development. They all need to understand the laying foundation of their own startups. You need to build the structure of the startup for stormy weather, not for a sunny afternoon.
9. Retain knowledge
There are many great minds out there, acting as advisors, mentors. The knowledge is transferred through lectures, presentations, workshops, bootcamps, one-on-one mentoring or even casual talks. But knowledge sharing means hardly anything if it is not retained. Retention is more important than sharing. It is always sad to see that how many opportunities are missed by startups because they did not retain the knowledge that was shared with them. Take notes, go over them occasionally, challenge others to review your work or habits.
10. Accelerate to create value
The purpose of any accelerator or business development company is to create value. Value creation is usually interpreted as shareholder value created, thus returning money back to investors. Hopefully more than what they have invested. However the way these accelerators are created the money generation part only kicks in after many years even if you focus on early exits. We are taking all this into consideration when evaluating progress. Early exits are an important part of our model, but in fact, they are only a lagging metric. Fundamentally, we have to believe that with our help the startups we are working for and with create value. At an accelerated pace.