It’s been an exciting week at Vitosha ACCELERATE: after kicking off our investment and acceleration program earlier this month, our team got together (virtually, mostly) to process, review, and select the first teams that will join ACCELERATE.
It was motivating to read through multiple great applications; so many in fact, that it was impossible to approve all of them. While a number of the very best are currently being notified of our offer and next steps, we thought it would be a great opportunity in the meantime to share some insights on what the selection process looks like, and which tips and tricks can improve a team’s chances of making the cut.
To start off, it deserves to be said that the overall level of the teams was impressive. Outright mediocre applications were very few, and the vast majority was on the good-to-great scale. Within that spread, what makes a team stand out, are three core indicators that are analyzed by our team, during every application: Opportunity, Traction, and Team.
Nikola Stojanow, Partner at Vitosha Venture Partners
How big is the Opportunity?
Many different words are used to describe Opportunity: market, problem, inefficiency. At Vitosha, we look through different lenses:
- Is this a big enough opportunity? Either lots of customers have to experience a need to solve this problem, or a few, but with substantial readiness to use and pay for a solution.
- Is this a venture-grade opportunity? This is where we try to understand the scalability of the potential solutions to the problem. For instance, people like to eat, and selling them sandwiches is a way to solve that problem. However, lots of companies are selling sandwiches. It’s a saturated market. And opening one more sandwich shop will not additionally resolve the problem, even on the scale of a single city. Automating the process, or otherwise technologically improving it, could be a venture-grade business however.
- Whose lunch will your team be eating? Problems that nobody is solving are usually problems not worth solving. The sweet spot for great startups is to offer a new solution to an existing problem. This means that a strong team should always know who they’re competing against. Not just other players in the same field, but legacy solutions to the problem.
- Is the problem serious enough? There are a lot of things in life that could be improved, but the need to do so depends on priority. A well-known investor once called this “sell painkillers, not vitamins”. Successful startups aim at problems that are in dire need of solving, not those whose solution can wait.
What have you achieved so far (Traction)?
Here, companies are roughly divided in two buckets; you have built a minimum-viable product (MVP) already, or you have't yet:
If you don’t have an MVP, we assess at how far your team has come along in customer validation. Have you shown that you talked to enough users? Have you prototyped mock solutions to understand their needs? Have you analyzed various approaches to solving the problem?
- If you do have an MVP, validated by initial users, we look at how you got there, what metrics you’re using to track and improve growth, and how much validation you’re using from these first users for your next steps. Often after achieving MVP, teams realize that either market assumptions were wrong (not a big enough problem), or willingness to pay is low (solution is not a painkiller, but a vitamin). Your willingness to analyze such outcomes and identify a viable business model is crucial to us.
This point is put last, not because it’s the least important; but quite the opposite. If Opportunity and Traction fall in place, we want to be sure there is a team that prioritizes this project above everything else, and has the right qualities to see it through good times and challenging ones:
Focus: is the team going to work on this startup full-time? In a big way, acceleration programs that offer investments do so in order for the team to not be distracted by other work. This is no different at Vitosha ACCELERATE: Focus and dedication are a must.
Skill sets and headcount: Does your team have the necessary skills to build a product or service for the opportunity you’re aiming. This is different for each company, but there roughly has to be someone who can build, someone who can market and sell, and someone who knows the customers’ industry/needs inside out. Often, good teams have one person per each skill need. Sometimes, impressive individuals within a team combine two or more of the qualities. It rarely, almost never, happens that one person has all of the above; most of the time single founders are also a no-no because it’s questionable whether they can make anyone else enthusiastic about the startup.
Attitude: This is where we ask you to record a 1-min video of you and your team. Venture growth is a people business, which is why responsiveness, enthusiasm, creativity, and good vibes are what is being looked for. We’ll be working together with you intensively for a number of months, and will be partners for a long time thereafter if all goes well. A generous, inquisitive, positive attitude is what we seek in all applicants.
To sum it up: Opportunity, Traction, and Team are the core components of any promising early-stage startup. Our experience is that it takes a unique outlier to be excellent in all three; however, almost all really great startups are excellent in at least two of the three. If we see a team shine in just one, it means they’re likely not ready yet, and have to do some work on at least one of the other two pillars. So if you haven’t applied yet, keep this in mind, and if you have, our team hopes this overview will help you to move in the right direction before our next conversation.