The Grind is a weekly column that asks a revolving cast of young founders to take us through the daily rigors of running a business, as well as offer up advice on how they achieved milestones or overcame challenges. Follow The Grind on Twitter with the hashtag #ENTGrind.
For almost three years now, I have been at the helm of an education nonprofit that I co-founded with five other friends in our Cornell University dorm room. Called Practice Makes Perfect, our company partners with schools and operates their summer school program in inner-city neighborhoods, supporting students from elementary school to college matriculation
Up until this past year, like many nonprofits, we relied on philanthropic dollars to carry out our work. But following the most recent recession, even funders looking for tax write-offs are hesitant to give to organizations whose sustainability is 100 percent reliant on donations. We needed to start thinking outside of the box, if we wanted to stay afloat.
This past April, we applied to be in the second class of Points of Light Civic Accelerator program based in Atlanta. The accelerator is not only the first of its kind to focus on civic ventures but also the first to engage in revenue-sharing agreements with nonprofits that possess earned-income models. Previously, the most common forms of investments in nonprofits have been through debt financing
A few short months later, I now wish we had better evaluated the program before committing to it.
While naturally we were ecstatic over the idea when the opportunity first presented itself. Who wouldn't be? We believed the promise of pitching to more investors, the opportunity to refine our business model, a $10,000 investment and a 12-week boot camp would take us to the next level.
But with all those resources, there are of course, trade-offs. The accelerator requires eight percent of our organization's revenue for five years -- until the accelerator's initial investment doubles or five years' time has passed.
If you are looking to join an accelerator, do yourself a favor and consider the following precautions:
Talk to the previous classes.
The first time we interacted with someone who had gone through the accelerator was after we had already signed off on the terms. The conversation at that point was more about how to get the most out of the experience and what they would have done differently.
Had we asked before we accepted the offer, our questions would have been different. We would have focused more on what organizations are best positioned to get the most out of this experience. Is the program best suited for startups that need help refining their business model, identifying customer segments, building product, raising more money or constructing a board.
Before you jump into an accelerator, make sure your goals are aligned with the program’s expertise.
Don't assume you'll receive additional funding.
This is one of the largest mistakes we made. At the time the accelerator started, we needed $70,000 to reach one of our internal goals. We believed the additional exposure we received that came along with being part of this accelerator would lead to add-on investment from foundations or corporations. Had we done our diligence, which entailed speaking to previous cohorts, we would’ve learned that none received any additional investments during the 12-week period.
As mentioned above, if you have specific expectations for an accelerator, contact others to see what they got out of the program.
Know your intentions.
Beyond them choosing you, understand why you’re a fit for the accelerator. More specifically, you have to be candid in asking yourself and your team what you want and from whom. And if what you want from them is not possible, then odds are the timing is off or there is not a mutual benefit.
For our team, the $10,000 investment eroded to just $4,000 after traveling to all of the mandated sessions across the U.S. -- leaving us precious few resources to fuel our burgeoning business.
Just ahead of our last week in the program, it became painfully clear that our expectations were misaligned with those of the accelerator's, making for an uneasy final experience.
Let us know in the comments.