Article provided by Katie Mills, co-founder and director, StateZero Labs
It goes without saying: starting and growing your own company is no walk in the park.
That’s why, for ambitious founders, joining an accelerator can be an attractive proposition, providing an antidote to what is often perceived as a lonely journey. Add in the well-advertised bonuses of access to capital, connections and mentoring, and accelerators have quickly become the go-to choice for early-stage companies. With cohort acceptance rates often lower than 1.5 per cent, it’s actually easier to get into Harvard.
But it comes at a cost. On average, accelerators require startups to give up between six and 12 per cent equity, often before founders have had a chance to build any momentum. Considering the expectation of scale, growth, and well, acceleration, it’s unsurprising many startups don’t make it much further than their ‘graduation’.
We can agree, that everyday pressures are taking their toll on founders, not only physically, but also mentally. According to a joint study by BGF Ventures and Streetbees, founders are susceptible to a range of health problems as a result of the demanding startup lifestyle. Over 25 per cent of founders work more than 60 hours a week. KPMG’s 2018 report found similar problems with work/life balance, stating 58 per cent of founders ‘relax’ for less than one hour a day.
At StateZero, we think it’s time for accelerators to step up and rethink what support for growth really looks like – collectively we can change this.
Holistic approach to wellness and mental well-being
In such a fast-paced environment, where speed is often synonymous with success, a huge amount of pressure exists on founders to deliver. However, while burnout is a very real threat, most are reluctant to admit when they are struggling – and this is a culture that needs to change.
How? Well a stigma only exists if a subject is avoided. Creating a safe space for discussion, where founders can share their journey and discuss lows, as well as highs, will pave the way to a healthier mindset.
A holistic approach involves physical, as well as mental wellbeing, so prioritising rest and encouraging movement is also crucial. And as startups often expand beyond a two person team, it becomes even more important to demonstrate from the top the importance of wellness for entire teams. We urge founders to lead by example; culture is an output, not an input, and it’s this that can lead to healthy transparency and happiness in teams.
Levelling the playing field of equity/valuation
In the current system, valuing a business at X amount early on, automatically sets expectations on that business. That doesn’t take into consideration the unique nature of the startup and the unique challenges that they may face. And here lies the problem, because startups are just that – unique. What if, and this might sound rather unconventional, accelerators refused to take equity for their seed funding upfront? By urging founders to give up less of their own equity until they have achieved product market fit, we’re planting the seed for mutual trust and respect by also offering a diverse range of new key players to take a seat at the table.
Diversity and inclusion within accelerators: let’s talk about culture
It’s a known fact that diversity improves performance. In the UK, with every 10 percent increase in gender diversity, EBIT rises by 3.5 per cent. Similarly, according to McKinsey, startups in the top quartile for racial and ethnic diversity are more likely to have financial returns above the industry average. If accelerators can implement and develop strategies around diversity and more importantly inclusion, then it will improve their ability to attract startups with more diverse teams.
And this focus on inclusion must start at the top. A 2016 JP Morgan report suggests that accelerators with more diverse management teams attract more diverse founders. With a focus on your internal culture, hiring strategies and inclusion at the centre of the business, more founders from diverse backgrounds will be empowered to apply.
It is time to challenge existing startup accelerators and shift the focus to place people at the centre of the conversation. More emphasis needs to be put on programmes that promote mental and physical well-being alongside traditional business metrics, putting equal importance on both. We should be investing in training on how to spot a founder in need, and start spearheading an open and inclusive attitude to diversity. Above all, the startup sector needs to ditch the culture of ‘growth at any cost’, because the costs can be pricey.
About the author
Katie Mills is the co-founder and director of StateZero Labs, the world’s first solution-led Blockchain Lab for startups. Bridging the gap between humanity and tech, StateZero Labs is a community focused accelerator; a mindset, a space, a platform and an ecosystem that gives everybody a fair shot at their moonshot. Interested in only blockchain enterprise ideas, its mission is to find, fund and further the potential of outstanding founders encouraging them to attack the world’s most challenging problems and exciting opportunities through advanced technology for practical use cases.
