Secure the Bag: Accelerators 101

Alpha to Accelerate Your Startup’s Fundraise

Founders know the path to funding can be — let’s not sugar coat it — brutal. This is especially true for female founders, who only raised 1.9% of VC funds in 2022 (source). It takes a special kind of grit and grace to raise capital when it seems that the odds are not our favor.

To help female founders navigate fundraising, SheFi is hosting a number of conversations with mission aligned investors. My goal is to empower female founders and teams with knowledge, resources, and inspiration as they strive to create impactful and successful ventures in the Web3.

Today, we are sharing some truly indispensable alpha from our conversation with Gabriel Anderson, Founder and Managing Partner of Graph Paper Capital, an early-stage accelerator and networked ecosystem. From accelerators, to different funding avenues, to getting your company from zero to one, we’ve covered it all.

I highly encourage you to listen to the full conversation with Gabriel from our Twitter Spaces below to not miss out on any of his practical advice and alpha:

• part 1

• part 2

Maggie: To kick things off, what are accelerators?

Gabriel: Accelerators provide early-stage or pre-seed companies with investment capital, mentorship, and a supportive community of entrepreneurs. Their primary goal is to condense a year's worth of company building into a three-month period by offering focused guidance and resources. Accelerators like Graph Paper Capital (GPC) aim to create highly engaged networks that facilitate rapid growth. Demo days are common in accelerators, but GPC focuses on teaching founders how to run successful fundraising processes rather than just showcasing their products. The main purpose of accelerators is to connect startups with a network of investors, particularly those who have previously invested in the accelerator's portfolio companies, to help them secure the next stage of investment and achieve significant traction.

Maggie: Since we are all about breaking things down, what is a pre-seed stage company?

Gabriel: The pre-seed stage refers to the early phase of investment in startups, typically characterized by projects that are in their early stages of development. These projects may have participated in hackathons, built a product, and gained some initial traction, but they have not yet achieved product-market fit or significant growth.

Maggie: What type of companies does Graph Paper Capital accept into its accelerator?

Gabriel: At Graph Paper Capital, we are interested in projects at their earliest stages, typically when there is some version of a product or a prototype. While having an idea is important, we prioritize teams with a strong foundation. It's beneficial if you have been able to validate your hypotheses by conducting market research, customer interviews, and securing a few early beta or alpha testers. This validation is crucial not only for attracting investors but also for your own understanding of the viability of your ideas and mitigating risks. The more compelling evidence you have to support your assumptions, the more confident you can be in pursuing the project as a scalable venture or a real business.

Maggie: Why would I choose an accelerator like Graph Paper Capital when examining my funding options?

Gabriel: Access and choosing funding sources depends on the stage of your product and progress. You may want to explore options like grants and hackathons can provide non-dilutive capital, meaning you don't have to give up equity in your company. This approach offers more flexibility and expands your choices. Hackathons, in particular, help demonstrate your ability to ship products within short timelines, potentially unlocking non-dilutive capital in those ecosystems. There are also angel investors, who are often experienced founders themselves, can offer valuable feedback, open up networks, and provide access to relevant ecosystem players. Accelerators encompass all these aspects, offering a community, early-stage capital, and investor networks.

Maggie: Tell us about how you architected Graph Paper Capital.

Gabriel: Over the course of four years, I built Tachyon, a Web3 accelerator incubated within ConsenSys Mesh, working with over 90 founders who raised a total of $150 million and achieved billion-dollar valuations. Throughout those four years, we also developed a robust network, comprising over 400 individuals in the cryptocurrency industry, including founders, legal experts, investors, and domain specialists. While reflecting on my experience building Tachyon, I had a significant realization. Time and time again, I saw that even 15 minutes with the right mentor can literally change the trajectory of a founder of or of a team. Our goal was to create a venture fund and accelerator that could generate the most impactful and leveraged network in the web3 space. To achieve this, we experimented with a unique approach: enabling our network members to invest their social capital alongside their financial resources, leveraging their networks, skills, and superpowers to support early-stage founders and builders.

To experiment and achieve this goal, we posed two key questions:

• Could we engage their network by allowing them to invest social capital and leverage their skills and networks to assist early-stage founders?

• Could we optimize outcomes by distributing financial incentives to network contributors based on their impact?

As we embarked on this venture, we aimed to experiment with network design at the coordination layer, constructing high-contribution networks that support our founders and leverage social capital among our network members. Our mission was to align financial incentives with social capital, and this served as the core foundation of Graph Paper Capital.

Maggie: Let’s pivot to some founder alpha. What do founders need to showcase to investors to improve their chances of receiving funding?

Gabriel: It’s all about traction. Founders get a lot of pushback, especially from investors, when there’s not traction. One of the common questions I receive from founders is, "What do I do if I don't have a lot of traction?" In such cases, my advice would be to prioritize traction as it solves many problems, particularly for early-stage companies. It is crucial to focus on building traction when seeking to raise funds or enter the market to secure capital. However, as the old saying goes, if you lack traction, you must sell the narrative, but ideally, having both traction and a compelling narrative is the key. We spend a lot of time in the last two weeks of GPC getting founder's ready for investor conversations and helping them with their story.

Maggie: If I am a founder struggling with traction, what strategies or tools might I use to increase it?

Gabriel: It’s all about customer validation. I would say, especially at the zero to one stage, before you have found a product to market, 60% to 70% of your time can be spent talking to users, putting product in front of users and doing customer research. The key is to focus on building a product that solves their problems and meets their needs. Rather than getting caught up in high-fidelity prototypes, it is more effective to create the highest-quality product that can validate the riskiest assumptions. Once you have the structure and shape of your product, you can start considering your go-to-market strategy. It's important to avoid jumping into the market without validating core assumptions and achieving a "wow" moment for users.

Maggie: What comes next in the process?

Gabriel: After that, you can focus on breaking down your go-to-market approach and executing it effectively. Every company or product, whether it's a protocol, ecosystem, or traditional tech product, competes on the same attack vectors: price, quality, delivery, and customization. Understanding which of these factors is most valuable to your specific users or customers is crucial. Defining your customer segments and understanding their needs, whether they are individuals, protocols, communities, or specific members, is essential for crafting your value proposition. Once you have clearly articulated and validated the value you provide to your target users or customers, you can start considering your channel strategy. It's common for early-stage companies in the crypto space to default to popular channels like Twitter or Discord. However, the choice of channels should be determined by the specific customer or user segment you are serving, the value proposition you offer, and the desired customer experience.

Maggie: What are you looking for in founders you accept into Graph Paper Capital?

Gabriel: The main thing we're looking for is exceptional founders who possess unique insights into their target market and can identify opportunities that others may miss. Building a company is hard, really hard. If you're a founder, you set out to do probably one of the most challenging things there is to do any act of creation takes a tremendous amount of effort and persistence and grit, and you have really bad days. You know, sometimes so like the weight of the world is on your shoulders. I think the best founders are the ones that can endure those really challenging times, but continue to stay there. Be focused on this North Star. There’s a saying I love about building companies and working with founders: “You look at the world, and you say there's something missing. You have the audacity to think that you can you can do something about it and that the world could be better because of it.”

We encourage you to listen to the full conversation Twitter Spaces below:

• part 1

• part 2

SheFi Summit Tickets Go On Sale Tomorrow

Bonjour from SheFi! We hope to see you in Paris for our inaugural SheFi Summit and afterparty on July 16, 2023 in Paris. Tickets go on sale tomorrow! All current SheFi members are allowlisted with their SheFi Membership Polygon NFT. If you are not a member, DM @maggielove_ on Twitter for the allowlist.

If you enjoyed this newsletter, please share with your colleagues and networks!