5 main mistakes when applying for an accelerator

Now a huge number of start-ups in the market go from fund to fund in search of investments. There are a lot of ideas and projects. And in order to increase the conversion of quantity into quality by at least 1%, the main mistakes of startups with which they come to invest in their projects will be given below.

1. The market is incorrectly estimated


Perhaps this is the main mistake, since this is the first thing the idea begins with. When evaluating applications, we often see how the applicant, offering a perfectly suitable idea, does not understand what market he is targeting. In simple terms, he does not understand who his client is. Examples are different. Cashback service for purchases in online stores, where the startup as the market volume gives sales figures in these stores. Moreover, it is clear that not all buyers are ready to take additional steps to get a 5% discount. It’s probably impossible to find the exact number of such people, but you can make an assumption, a hypothesis - investors will appreciate your logic. Another example, a service for users of public transport. The startup gives a figure according to the Ministry of Transport, how many people travel by transport. But in the discussion process, it turns out that only 40% of people have access to mobile internet. Accordingly, the target market for the application is immediately 2.5 times smaller, not to mention the fact that there will certainly be other filters. Or another example, a startup confuses the concepts of client and user. The client is the one who pays us. In the case of the advertising model of monetization, this is clearly manifested. And the target market, respectively, is not lovers of cars, plants, pets, toys (insert your own), but specific advertisers in these categories.

2. Incorrectly analyzed competitors


Probably one of the most frequent misconceptions when the applicant, having come up with some idea, is looking for an identical player in the market. and if he doesn’t find one, he immediately concludes that he has no competitors. This is not true. It is necessary to build not on your idea, but on the need that it solves. Most likely, people already somehow satisfy this need in other ways, using other services. Even if you do not have direct competitors, with a probability of 99% there are indirect ones who also solve the problem of finding a fellow traveler on the road, a partner for sports, choosing the right gift for a psychotype or a way to exchange things.

Sometimes there is a different picture: a startup doesn’t correctly identify a direct competitor. Suppose there is a service that greatly simplifies the process of accepting payments on the site, offering to sell anything and anywhere. First of all, a startup starts as a competitor of payment aggregators, such as Robokassa or Money.Online. But in fact, here the project enters into a fight with the Ecwid service, which also allows you to sell anything anywhere, just does it a little differently. That is, a direct competitor is not one that looks more like you, but one that solves the same problem for the client.

3. Wrong project economics


The goal of any business (you will be surprised, but a startup is also a business) is to make a profit. Point. No matter how simple it sounds, believe me, very often it seems that for startups this is news. They come inspired by their idea, which is certainly good, but it is important for the investor to understand that the entrepreneur is firmly on his feet and is ready to take responsibility for the funds raised. No financial plan will give full guarantees of execution, but the investor wants to see that at least in general terms, the numbers converge, and these figures are justified. Even when you have nothing, no income, no expenses, you can conditionally guess your potential audience. For example, by looking at the number of requests in Yandex. Having this figure, we can move on to Unit Economics. It conditionally consists of marketing and monetization. That is, you are trying to answer the question of how much one user brings me and how much I spend money on it - respectively, the two main indicators of Unit Economics are ARPU (average revenue per user) and CAC (customer acquisition cost). ARPU per month is equal to monthly revenue divided by the number of users. All marketing expenses must be included in the CAC: advertising, analytics, management, invoices, bonuses, kickbacks. Having calculated these indicators, comparing ARPU and CAC, you can understand, but is the idea profitable at all? Another important point. When developing your project, each new client is more expensive and brings less profit, this is an axiom, it must be remembered. The most interesting thing is the facial expression of a startup, when he himself comes to the conclusion that one user costs him more than he makes a profit. Something like: "Oh, it's a ticket to the Titanic." how much one user brings to me and how much I spend money on it - respectively, the two main indicators of Unit Economics are ARPU (average revenue per user) and CAC (customer acquisition cost). ARPU per month is equal to monthly revenue divided by the number of users. All marketing expenses must be included in the CAC: advertising, analytics, management, invoices, bonuses, kickbacks. Having calculated these indicators, comparing ARPU and CAC, you can understand, but is the idea profitable at all? Another important point. When developing your project, each new client is more expensive and brings less profit, this is an axiom, it must be remembered. The most interesting thing is the facial expression of a startup, when he himself comes to the conclusion that one user costs him more than he makes a profit. Something like: "Oh, it's a ticket to the Titanic." how much one user brings to me and how much I spend money on it - respectively, the two main indicators of Unit Economics are ARPU (average revenue per user) and CAC (customer acquisition cost). ARPU per month is equal to monthly revenue divided by the number of users. All marketing expenses must be included in the CAC: advertising, analytics, management, invoices, bonuses, kickbacks. Having calculated these indicators, comparing ARPU and CAC, you can understand, but is the idea profitable at all? Another important point. When developing your project, each new client is more expensive and brings less profit, this is an axiom, it must be remembered. The most interesting thing is the facial expression of a startup, when he himself comes to the conclusion that one user costs him more than he makes a profit. Something like: "Oh, it's a ticket to the Titanic."

4. Wrongly analyzed their benefits


In this paragraph, it is even fairer to say "just not analyzed." Most often, a startup based on some purely subjective reasoning draws conclusions and offers them as truth. For example, the most popular expression in the questionnaire is: “our interface is more convenient, more beautiful, more modern, etc., than that of competitor X”. Why? What is more convenient? How to compare it? We have not heard a clear simple answer to these questions. Again, how wide was the focus group that showed it? Here's an elementary tip: try next time at this point to compare one specific action on two sites. How many clicks it took and how long it took. At least these indicators can be compared and shown to the investor. There is another situation, probably the most common, it’s really more convenient for you and the advantages are undeniable. Only these advantages are not needed by users for nothing. Very often found. Or another option, “we have many different functions” - but at the same time you will understand the “fig” system.

Separately, I would like to note the services that unite the two groups of users. For example, online education. On the one hand, lecturers, on the other - listeners. Here you need to consider utility for both groups. Even if your service has significant advantages for one group, but for another the benefits are not obvious - the project will not be accepted.

As for beauty and modernity, I have heard more than once that old, old-school, unattractive designs often show a much greater conversion. So this topic is better not even raise.

5. The questionnaire is illiterate


This item is the last but not the least. They say "meet by clothes" - here is exactly the same principle. Even before you begin to cite facts about market assessment and competitor analysis, the investor already has a first impression of you. And the importance of the first impression, I think, does not need to be explained. Under a competent questionnaire / presentation it is assumed not only spelling literacy, which is also important, but a completely form of presentation of your thoughts. Another saying to the place: "Brevity is the sister of talent." Sometimes the simple question “what problem your project solves for the user” - the startup will give out 300 words of text about the convenience of the service, unique technology, etc., and you have to think up the answer yourself. The investor wants to hear a simple formula: “for users (X) we offer (Y) using (Z)”, where X is the target audience, Y is the problem, Z is your service. For example: “For people living in conditions of limited finances, we offer a showcase of material values, where the user can set a goal and save money online in it, while receiving various bonuses.”

Of course, these are not all the mistakes. This is what lies on the surface and is striking to the investor. But by avoiding these 5 mistakes, you are guaranteed to raise the chance of success. We can say that these are errors in form and not in content, that is, errors in applications, not in the projects themselves.

If we talk about mistakes in the content of projects, you can just look at what startups most often redo when they have a “pivot”. Two things - reorient to another market, or change the monetization strategy. That is, these two points are incorrectly chosen - the main mistakes in the content of the projects.

Also popular now: