Episode Summary
Executive Summary: This episode of 'This Week in Startups' launches a 10-part series on accelerators, featuring Steve Barsh of Dreamit Ventures. Dreamit, founded in 2008, runs a 14-week program for pre-Series A startups in health tech, secure tech, and urban tech. With 350+ graduates, a combined value of $2 billion, and a model focusing on customer sprints and investor roadshows over demo days, Barsh emphasizes deep mentorship, practical traction, and fair valuation. The episode discusses Dreamit's unique approach of not setting valuations upfront, its focus on big urgent problems, and the importance of founder readiness and network curation.
Main Topics: Dreamit's Unique Accelerator Model (Priority: 5/5): Dreamit operates as a venture firm with a pre-investment program, offering a 14-week hybrid (now fully virtual due to COVID-19) for pre-Series A startups. Unlike traditional accelerators, Dreamit does not set upfront valuations for its $500k investment right; instead, it invests at fair market value post-program. Companies receive advisory equity (about 1.5%) in lieu of cash for the program. The program emphasizes customer sprints (face-to-face meetings with ~20 potential customers) and investor roadshows over demo days, which Barsh considers a waste of time. Founder Selection Criteria (Priority: 4/5): Dreamit targets startups solving a 'big, urgent problem' (aspirin/antibiotic, not vitamins), with evidence of traction (e.g., $500k-$1M ARR, product-market fit, or solid trials). Founders must demonstrate a unique insight, deep competitive understanding, and team quality. The program avoids early-stage 'incubator' work (e.g., explaining cap tables) and focuses on companies that have already achieved initial smoke and are ready to scale. Barsh uses high-speed triage questions to vet whether a problem is truly painful and urgent. Go-to-Market Strategy and Pivoting (Priority: 4/5): Barsh identifies 'go-to-market strategy' as one of the most common weak points for startups. He defines it as understanding the first target customer, targeting criteria, and wedge strategy. He contrasts 'direct sales' (a sales strategy, not a market strategy) and encourages startups to think about pricing, risk-sharing (e.g., price guarantees), and avoiding the 'academic medical center' trap in health tech. He also recounts how SeatGeek originally entered Dreamit as a blogging platform, pivoted after de-risking assumptions, and rebranded post-program. Fundraising Process and Investor Sprints (Priority: 4/5): Dreamit's fundraising support is a third of the program. The process includes a bi-coastal investor roadshow where 15-18 curated meetings are arranged based on investor interest. Startups are prepared through mock VC interviews where they face tough, distracting questions. Barsh emphasizes that the goal is to 'stay away from no' in the first meeting, not to close. The key KPI is the percentage of companies raising a round within six months of the program (about 50%). Dreamit also offers a follow-on reserve (another $500k) for breakout winners. The Value of Accelerators: Advice vs. Anointing vs. Money (Priority: 3/5): Barsh ranks the three common values of accelerators: (1) advice/mentoring (top), (2) anointing/curation (middle), and (3) money (last). He argues that the real value is in intensive, customized coaching (not a mentor network), pressure-testing, and getting startups investor-ready. Dreamit's team, composed of exited entrepreneurs, takes full responsibility for a startup's progress. The anointing factor helps with downstream investors and customer access, but Barsh believes the quality of advice changes the company materially. Vertical Specialization and Network Effects (Priority: 3/5): Dreamit focuses on three verticals: health tech (digital health, devices, diagnostics), secure tech (cybersecurity, physical security, fraud), and urban tech (construction tech, real estate tech, proptech). This specialization allows them to curate highly relevant customer meetings (e.g., CISOs from major banks) and build deep relationships with downstream investors like HealthX and Fifth Wall Ventures. Barsh argues this focus makes them better than generalist accelerators and creates a reciprocal deal flow with specialized VCs.
Key Arguments: The most important thing an accelerator provides is deep, customized advice and pressure-testing, not money or brand anointing. Startups should focus on solving a big, urgent problem (antibiotic, not aspirin) and provide evidence of pain, not just a solution. Go-to-market strategy is often poorly understood; it's about targeting the right customer profile and wedge, not just sales tactics. Demo days are a waste of time; customer sprints and investor roadshows are more effective for building pipeline and closing rounds. Accelerators should be a pre-investment program, with fair valuation (not arbitrary pricing) and long-term follow-on support. Founders should evaluate accelerators by talking to past participants, especially those who were both successful and unsuccessful. Not all businesses should go to an accelerator; it's for companies that want to scale aggressively, not for side hustles or lifestyle businesses. Vertical specialization allows accelerators to provide deeper domain expertise and better customer/investor access than generalist programs. Corporate accelerators often lack the triage skills and real-world experience to properly evaluate startups. Safety and social distancing during COVID-19 are critical, but startups are essential to economic recovery, so business conversations remain relevant.
Data Points: Dreamit program duration: 14 weeks - The length of Dreamit's accelerator program, including two weeks of customer sprints and an investor roadshow. Total startups graduated from Dreamit: 350+ - Over 350 startups have gone through Dreamit since its founding in 2008. Capital raised by Dreamit companies: $800 million - Aggregate capital raised by Dreamit portfolio companies. Combined valuation of Dreamit companies: $2 billion - The total valuation of all companies that have passed through Dreamit. Percentage of Dreamit companies raising within six months: 50% - Approximately half of Dreamit graduates secure a round of funding within six months of completing the program. Typical number of investor meetings per startup: 15-18 - The average number of one-on-one investor meetings a Dreamit company gets during the investor roadshow (high watermark: 30-35). Typical number of customer meetings per customer sprint: ~20 - Startups meet with about 20 potential customers face-to-face during the two-week customer sprint phase. Advisory equity percentage: 1.5% - Dreamit takes approximately 1.5% of a startup's equity as an advisory fee, valued around $150k convertible security. Investment right amount: $500,000 - Dreamit has the right to invest up to $500k in a company post-program at fair market value. Follow-on reserve: $500,000 - Dreamit also reserves a further $500k for follow-on investments in breakout winners. Percentage of companies with prior accelerator experience: 20-30% - Barsh notes that 20-30% of Dreamit's startups have been through another accelerator before joining Dreamit. Year Dreamit was founded: 2008 - Dreamit was founded in 2008 by three Philadelphia-based entrepreneurs. Dreamit team size: 16 people - The full-time team at Dreamit, comprising experienced entrepreneurs, not a large mentor network.
Pivotal Quotes: "A lot of accelerators will say, 'Well, don't think of it as a valuation event.' It's a valuation event. So we float, right? We're not setting valuation. So whatever that lead investor comes in, we're going to decide if we're going to take our investment right." — Steve Barsh: Explaining Dreamit's unique approach to not setting a fixed valuation for its investment, avoiding the problem of forcing startups into a potentially down round through artificial pricing. "We beat the shit out of them. Our job is to find the best of the best and make them better. And we have companies that go through DreamIt that have been through other programs. A lot of our companies are two or three years old. They have five to ten people. And they'll sit down with us in the first week and say, 'The questions that you guys ask, when you do deep dives and we go through their deck and go through their pitch and go through their strategy, they'll say, " — Steve Barsh: Describing the intensive, pressure-testing nature of Dreamit's mentorship, contrasting it with more superficial accelerator programs. "We're looking for companies that solve a really big pain point and it's clear. We're looking for a company that has a solution that's based on a really interesting, unique insight. And then finally, the other thing is we want to understand that you understand the competitive landscape, what makes you unique, what makes you different. If those three things, those are probably the top three things that we're looking for." — Steve Barsh: Laying out the key criteria for a founder to get a 'heck yes' from Dreamit, emphasizing the importance of a big urgent problem, unique insight, and competitive awareness.
Implications: For founders, accelerators can be a powerful tool, but only if chosen carefully for domain expertise and genuine mentorship over brand. The episode reinforces that go-to-market strategy and problem selection are often weak points; fixing them early can accelerate growth by 6-12 months. For the industry, it suggests a trend toward specialized, investor-like accelerators that focus on execution and fair terms, moving away from generic, feel-good programs.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.