General Question: Given that incubators are focused on early-stage companies, how far along should a startup be before it applies for consideration by an incubator? How strong must the team (and concept, plan, etc.) be in order for an incubator to consider a startup without a functioning product or sales/traction?
Our Situation: We currently have a kick-ass SaaS idea, a strong business plan, well-designed website comps, detailed tech specs, and compelling survey results from our target consumers. (Let's just assume all of this is true, even though you're naturally wondering if this assessment is objective.) We have a team of three -- two multi-talented business people, and one engineer -- all with graduate degrees from fancy schools. We each have varying amounts/types of experience working for different types of tech companies, but we haven't started any ourselves. (We realize that our educational credentials could actually be a deterrent if we don't have relevant street cred.)
Should we... A. Build our beta site and get some customers BEFORE we apply to an incubator?
B. Apply NOW to an incubator, with only what I've listed above?
We know that the strength of the team and traction are the biggest considerations for investors, but we're wondering if we already have what it takes to approach an incubator. Why are we considering this, you ask? If we get accepted into incubator now, and make good use of the funding and services offered, we could have a kick-ass beta product out to the world in two to three months, we'd have the cash to market it properly, and we'd have automatic access to a pool of investors for growth. If we do it on our own, it would probably take six months or more to launch the product, and it would be completely bootstrapped (i.e., it would take even longer to reach the public and get sales).
What do you think? Are there any other issues or alternatives we should consider? Are we ready for an incubator or should we wait?
Thank you in advance for your advice!
First, incubators vary a lot. That applies to how they select teams, what they're offering and what they take in return. So look at each one that interests you, and as, if and when you apply, show you understand and value their proposition.
Second, talent, energy, commitment and teamwork are high up in the list of what pretty much every general incubator (as opposed to, for instance, patent-led incubators) will be looking for. The idea, where you've got it to, and what you've achieved with it, are to some extent proxies for those critical attributes. Your pitch needs to demonstrate potential and achievement. But startups are a bit like pears - the time from 'nearly ripe' to 'mush' is less than you think. So yes, show you're working hard and focusing on moving forward. And no, don't divert all your energy into program applications. And no, don't get so focused on specific details you have to show that you miss the moment.
Finally, don't make incubation your goal. I've known people who have succeeded that way, by being so cussedly determined that they go again and again. But that's the edge case, and far more teams go off the rails because they lose connection with the real job of identifying and solving real problems for real users.
Good luck! Sounds like you're working hard and thinking too, so I'll be watching with interest!
What have you got to lose by applying? If you are accepted, more power to you. If not, then you should build the kick ass beta version without the accelerator.
Don't expect the $15K you get from the accelerator to be relevant. It's all about the connections and the focus you get there.
Either way, I would read about the lean start-up methodology, and start testing your assumptions as soon as possible.