The no BS approach to getting into German AcceleratorMitte News
Following our successful acceptance into their Class of Fall 2018 we thought we’d compile our insights from our application experience, and share them with startups that would like to qualify for it.
German Accelerator is an acceleration program
German Accelerator is widely sought after, with startups from all over Germany applying to join the ranks of the organization. With offices in Silicon Valley, San Francisco and New York, German Accelerator Tech is a three-month growth acceleration program that supports German startups from tech-related sectors to enter the U.S. market. Their mission is to support these emerging companies by providing extensive hands-on mentoring, free office space, and immediate access to a top-notch network and vibrant community. The program is government-backed, but privately-run, and they don’t take any fees or equity for their involvement.
German Accelerator application process
EXTRA TIP: German Accelerator Tech program takes in quarterly applications, with the selection process taking up to 1.5 months from final deadline to final selection, so plan your application in advance.
There are three stages in the application process:
- The first questionnaire with a focus on business fundamentals and traction (pitch deck + 10 short questions)
- The second questionnaire focusing on your U.S. strategy
- An in-person pitch in front of a selection committee
After submitting the first application, some startups will go through to the next round. If you pass the second stage as well, you’ll be pitching in front of a panel of seven to ten judges (comprised of mentors from both the German and US German Accelerator offices) and observers (officials from the state ministry and German Accelerator team). In our case, 20 startups (including us) made it to the third stage out of over 40 applications. The process culminated in a finale, where eight winners were announced at the Celebrating Innovation event.
Let’s decode each of these stages.
First stage: Questionnaire on business fundamentals and traction
The 20 odd questions in this round are generic questions about your company, value proposition, business model, key customers, high level financials, and team.
Our accumulated experience in applying for previous other programs, awards, and events helped us greatly at this stage. It was relatively easy because we have put thought into and answered similar questions before, and knew what the organizers were looking for. We were not caught off guard by them. To share our insights, we have picked out and dissected 5 questions from both the first and second questionnaires for you:
What is your business model? How do you make money?
German Accelerator (or any investor) wants to be sure that you have thought through:
- How you make money in this business and
- What is the underlying economic logic that explains how you can deliver value to customers at an appropriate cost
Explaining how you make money, where your revenue is coming from, how you create value for users and how you are going to capture value in your revenue is key. Also, show your numbers. Talk about your CAC, LTV, and any other key metrics that are related to your product or supports how you get your LTV.
Associating your business model with an existing one also gives investors confidence that your concept has been tried, tested, and proven, and is not ridiculously out of this world. For instance, we made it very simple for the jury members to understand our business model by explaining it with a “Nespresso for water” analogy. Like Nespresso, our machine-and-cartridge concept for making mineralized water ties customers to us through direct sales for the cartridges that go into the machine, both online and offline. This keeps margins close and warm for us. Find existing similar models that have succeeded and simply fill in the blank. This also helps with comprehension; your idea becomes crystal clear to the judges with just five words.
Read this article – it provides more information on how to communicate a simple, effective definition of your business model.
Who are your main competitors and what’s your competitive advantage?
In a way, we are all creating a new product category in our respective industries here, but saying that you have no competition sends out a bad signal. Think of the word “competition” as a good thing. Find your closest competitors (direct or indirect), and explain how you compare, how you are better, and in what ways. Always explain your statements. Statements like ‘We have no competition’ and ‘No one can copy us’ reflect a certain naivety and lack of thought. If there is a need it is being solved. For example, before Uber, there were buses and taxis. They solved mobility but Uber solved it differently and better.
In our case, we are creating the world’s first smart home water system. There is no other home device out there that creates mineralized water like Mitte, but we do have the 200 billion dollar bottled water industry as the closest proxy and the water purification market as a distant second. We dissected both these markets to build our business case for this question.
Please provide an estimate of the market size of your addressable market in the US.
News flash: People don’t care about the exact amounts. Getting accurate figures up to 5 decimal points is not critical here because we all know that brand new markets are tough to estimate in size. The key is to show that the opportunity you are presenting is massive, look for genuine pull from customers and resist overestimating your markets. Spend time explaining important characteristics about the problem you’re solving. Namely, is the problem large? Is it urgent? Is it valuable? Read this article on what investors look out for with regards to this critical factor.
Please provide an application video.
This two-minute video does not have to be fancy. German Accelerator simply wants to know you (the people behind the company), so get the founders in front of the camera to talk about the team, vision, and product. Here’s our application video for your reference:
Who will be coming over to the US (founders strongly preferred) and what % of the first quarter will they be in the US?
Show commitment from the top level here, so think about this even before you start applying. If your founders are unwilling to be present or go to the US, and would rather send an intern in their place instead, then it raises a red flag – do not apply. A rephrase of this question would be: Do you even want to be a part of this? If yes, allocate top management’s time to this program. Commit.
Second stage: In-depth US-centric questionnaire
At this stage, the questions are a deep dive into what, specifically, you’d like to achieve through the program. The US angle is very important. Here are the top questions we’d like to highlight and share:
How do you plan on funding your expansion to the US, and based off your current cash on hand, how many months of runway do you have?
Being accepted into German Accelerator means that you’ll receive support through their mentorship, network, and be provided an office space. You do not get money from them per se, so they want to ensure that the selected participants will not run out of money during or right after the program ends. Otherwise, it will be a wasted opportunity. Hence it’s important to answer this question clearly and put their doubts to rest.
Also, keep in mind that fundraising can be a long process. If you’re thinking about entering the program and immediately getting funded after, this is most likely not going to happen. You should have at least three to six months of runway left after the program ends to put doubts to rest.
Who are your target customers in the US market?
German Accelerator is looking for companies that have done their research for the US market. They don’t expect you to go there and have things all figured out, but they would like to see that you have come prepared and taken the extra effort in knowing your potential consumers in the US, as they can be very different from your European customers.
Proving that you already have validation or traction from the market, such as a strong demand for your pre-order product, data from your users, or overwhelming support for your crowdfunding campaign – as opposed to simply wanting to test the waters – also puts you at an advantage. Showing that you’re not coming in unprepared (and most likely wasting the chance) is a boost of confidence for German Accelerator. In our case, we ran successful Kickstarter and Indiegogo campaigns with overwhelming support from US backers, and had proven initial traction that helped us to narrow down on our initial target group there. So conduct research on your US market, speak with users, and make an effort there before applying.
What are your primary objectives for participating in German Accelerator?
The objective is to show how well-prepared you are for this program. They want specific and require concrete details (keep your goals S-M-A-R-T). For instance, it could be closing x number of deals or building your distribution and supply chain.
EXTRA TIP: By now, you should have a clear, defined strategy and plan of action so you can hit the ground running once accepted into the program. We backed our answers up with specific actions and events that we want to take on in the US that would allow us to achieve our goals. For example, we mentioned our beta testing plan, the strong purpose of conducting testing there and speaking with customers on the ground, and emphasized the US market opportunity for our product. Leave all uncertainty, your ifs and maybes at the door. The point here is to show that you have a well-defined, tangible plan, and that you know what your next steps are.
Third stage: Make-or-break pitch and Q&A
This is probably the most important stage, where you can almost imagine biting down on the award trophy and setting foot on US soil.
If you’re selected to be a finalist, you’ll have to prepare for a ten-minute pitch and five-minute Q&A session in front of a panel of jury members and group of observers.
Picture this: You have never met any of these people before; it’s the first time that you’re presenting your company to them in person, under the spotlight and with time constraints. You need to cover every major aspect of your business and answer questions in rapid succession afterwards. It’s a one-way interaction format with no chance to correct yourself. This is the only opportunity for the judges to know the people behind the company and understand your business. It’s tough, overwhelming, nerve-wracking, and anxiety-inducing. That’s kind of the point. These factors simply mean that you’ll need to put in a ton of preparatory work beforehand.
Start off by assuming that the judges are completely new to your product. We used the Why-How-What approach to structure our pitch:
- Why: The problem that you’re solving
- How: Your value proposition (what makes you unique)
- What: Your product and its features
- Others: Business model, progress and achievements thus far, and future plans
Then dive into the continuous process of iteration and practice: rehearse, iterate, improve, rehearse. Over and over again. There is no silver bullet to winging this step. It is crucial that you’re extremely well-prepared in order to leave an impression in 10 minutes. We spent no less than a week doing so.
The key to delivering a killer pitch lies in what you take out of your presentation. By the end of it, you want to paint a full picture of your mission and vision behind the company, the product, validation that you’ve received so far, progress made, go-to-market strategy, market size…all the important information need to be there for a thorough evaluation of your application.
EXTRA TIP: Gain brownie points during your Q&A. Typically, five to six questions can be squeezed into this session, and the judges ask very reasonable and sensible questions that are tailored to each startup. For instance, we were asked on our future company vision, cash flow and product delivery timeline – important aspects for a young hardware startup that is still in the process of setting up manufacturing and production.
This is a good opportunity for you to anticipate the questions and prepare for them along with your pitch. We included these detailed bits of information in what we call “backup slides”, which were added on to the end of our pitch presentation. Lo and behold, we managed to anticipate most of the questions asked and had a backup slide for each of them (and more), and received many compliments on our session. This allows your Q&A to be very swift, seamless and effortless; it’s a nice way to end off a well-delivered pitch.
Lastly, if you’re not a single founder company, it’s good for all founders to participate in this pitch and divide the areas of responsibility and chances to speak. Especially for tech startups, make sure that you’re putting one business and one tech person on stage.
The finale: Announcement of winners at Celebrating Innovation
The following day, German Accelerator announced the winners (eight in total) on stage at Celebrating Innovation, an event in Berlin that showcased fast-growing German tech startups. Finalists for the program were also invited to display their products at the dedicated expo area. Each selected winner (including us) then pitched its company in a 60-second live pitch on stage, in front of a massive crowd of 400 attendees.
Since you won’t have a clue on the outcome of your application before the announcement, prepare for your one-minute pitch. This would be a good chance to get exposure in front of potential investors and business partners.
EXTRA TIP: If you’re interested in participating in German Accelerator, be sure to attend this event where you can get more information on the program, talk to startups that have applied, the program alumni, German Accelerator team members and mentors. It’s your chance to learn how it works and what scaling in the US offers.
We started our journey with German Accelerator in San Francisco in July 2018. By sharing this reference guide and our learnings from the selection process, you can be a part of this valuable experience as well. Do ask us any questions you have, and good luck!
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