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Ask HN: How to solve short term cash flow problem going into an accelerator?

3 points by toddrew ↗ HN
My startup has been accepted into Start-up Chile. The $40,000 is paid out as reimbursements so to get the money you need to first spend the money.

Because of this, without a $10k-15k buffer, the first few months are going to be slow to ramp up cash flow.

I'm getting a government severance payout soon which would cover it, but it probably won't go through until we're well through our time there. I've had a couple suggestions on the best way to solve this problem.

What would you do?

5 comments

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chmike
I would have thought twice in the first place to join an accelerator. What do you get in return for these $40K ? Will your startup get this money back at least 4 to 5 times with what they offer ?

A startup should earn money ASAP and any investment should be strictly limited to what can facilitate or increase money earning. I really doubt an accelerator has much value in that (except YC). Note my opinion is based on the accelerators I saw here where I live.

onion2k
My company (http://www.usablehq.com/) has been through an accelerator (http://ignite100.com). The money we got was useful, definitely, but that's not why we did it. We could have bootstrapped. The main advantage of an accelerator is that you get to put your ideas in front of a stream of very smart people who each have experience of building companies. You get to learn from their mistakes. That's tremendously useful. In 3 days of the Ignite programme we pitched to about 40 entrepreneurs, and many more during the rest of the 13 weeks. Those people are now amazing contacts, fantastic mentors, and in some cases, investors in subsequent rounds. I genuinely believe Usable wouldn't be in the position it is now without them.

Getting to revenue ASAP is important (in some cases, it depends on the business obviously), but focusing entirely on that will distract you from opportunities that improve what you're offering in the long term. Ultimately, if you're bootstrapping, most of the time you're focussed on cash-flow, and that means you'll miss some important things. Accelerators are a straightforward way around that issue.

Sidenote: The YC thing... YC is amazing because Paul Graham et al are very, very good at picking teams. It's an endorsement from people who really know what they're doing. As the start-up accelerator business grows we'll see similarly trusted recommendations from some of the people choosing teams at other accelerators, and consequently that side of the value will increase. Most accelerators are too new for that to be the case now.

toddrew
Your answer doesn't make sense to me.

Why would you have thought twice? It's $40,000 equity free seed capital they give us.

Did you mean: What did "they" get in return for the money?

chmike
I misunderstood. I thought the startup had to pay that.