Breakthrough Bootcamp PT. 1
Is your company struggling to break through? If so, you should consider applying to an accelerator program. Airbnb, SendGrid, Mobclix, ShopLocket, Onswipe, Reddit and Dropbox are all graduates.
In exchange for equity – anywhere from six to ten percent – accelerators provide technology startups seed money, education, mentorship, workspace, publicity, and last but not least, access to investors. Typically just three months long, accelerator programs expedite the learning process, helping companies avoid the mistakes and struggles commonly experienced in the first couple years of life.
Since the first accelerator, Y Combinator, launched in 2005, the number of accelerators has grown – there were up to 20 by 2009, and up to approximately 200 globally by 2013, according to VentureBeat. Accelerators have even hit the mainstream, popping up within educational institutions like Stanford and corporations such as Disney, Nike, and Kaplan through partnerships with Techstars – the #1 accelerator in the world.
So what’s the secret behind the success of accelerators? How do they identify the potential “breakthroughs” to invest their funding and mentorship into? How do they help develop an idea, in order to maximize its value? All in all, how do they enable startups to become breakthroughs?
MISC explores these questions with the help of some of the most successful accelerators in the world:
/ David Brown, President of Techstars – Launched in 2006, the Techstars program has spread to 6 US cities and London. A pioneer of the accelerator industry, Techstars’s average funding per graduate is approximately $1.7 million and 80% of their graduates are still active today.
/ Carlos Eduardo Espinal, Partner of Seedcamp – Launched in 2007, Seedcamp has become the “most connected international seed investor in the world and is Europe’s leading micro seed investment and mentoring program.” Seedcamp has invested in over 118 companies since its inception.
/ Marcus Daniels, Managing Director of Extreme Startups – Since 2012, Extreme Startups has funded 19 active startups, becoming known as “Canada’s premier startup accelerator.”
/ What constitutes as a breakthrough idea, in your opinion?
Carlos Eduardo Espinal: Breakthrough ideas aren’t determined solely by investors. An investor can have a view as to what the market needs, but at the end of the day, a breakthrough idea is determined by customers. Customers are the ones who dictate when something is successful, and that’s why many times investors can get it wrong: because they are trying to guess what a customer will like (or not). As such, I look for founders that are in touch with their customers and can give early indicators that their product or service is well received with their customer group.
Marcus Daniels: Extreme Startups looks for breakthrough ventures, not ideas. Almost all great startup ventures have morphed from the original idea. The idea needs the potential to truly be innovative commercially, attract a rockstar team that can translate the idea into a venture that can dominate its huge market, and provide significant value to all key stakeholders. Typically, we see breakthrough ideas as the by-product of meshing several great ideas to a specific market by an amazing founding team.
/ Is it ever a case of loving the founders and not loving the idea, but investing in them anyways?
David Brown: Many times. We say internally that the criteria are: team, team, team, market, progress, idea. So idea is #6 on that list. Great founders with a terrible idea are much better than the other way around. Some of our most successful companies have pivoted mid program. And a couple of great founders discovered that their idea wasn’t on the mark and they changed their product and went on to be huge successes.
/ During the program, do teams experience a breakthrough moment? Or is it a steady evolution?
David Brown: In terms of how we work on those pivots or “breakthroughs,” our curriculum focuses the first month on product/market fit. We describe it as pointing the arrow in the right direction so that in month two you can fire. It’s in that first month that, while you’re testing product/market fit, you sometimes discover that the idea wasn’t as good as you hoped. It sounded great, but when you went out and showed it to potential customers they said they weren’t interested. Figuring that out early is important so when you fire the arrow and work hard on execution, you’re sure that it’s setting off in the right direction.
Carlos Eduardo Espinal: Usually it’s a steady evolution, but occasionally there are breakthrough trials. I use the word “trials” because rarely is it a one-off success, but rather a small bet – like a campaign or website change – that leads to higher conversion, which then leads to analysis on the “why” and then further refinement of this small victory.
/ How important is the culture of the accelerator?
David Brown: I think it’s the core of Techstars, putting them in a communal environment where they have access to each other and mentors… of course at the end of the three months, it’s a little bit like getting your kids out of the house; they’ve got to fly and be free on their own. Our goal here is to teach them how to be successful on their own rather than the more traditional incubator that might keep them over a longer period of time and help them every step along the way.
Photo: “Bootcamp Design Challenge” by Waag Society
This article is part of the Breakthrough Issue