Transcript SEED Accelerator: The 90

SEED Accelerator:
The 90-Day Incubator
By
Ray Smilor, PhD
Schumacher Fellow in Innovation and Technology
Professor of Professional Practice
Neeley School of Business
Texas Christian University
Agenda
I.
II.
III.
IV.
Critical elements
Benefits to entrepreneurs/investors
Selected models
Lessons learned
I. Critical Elements
• Purpose – speed up product/company
development
• Results – better entrepreneurs, higher-value
ventures
I. Critical Elements
• Unconventional application process
– Targets selected groups of startups
– Requires team (not 1 person)
• Focused program to facilitate product
development
– 3 months usually
• Equity investment in startups
– Under $150k/often under $20k
• Mentor-driven
I. Critical Elements
NO –
• Business plan
• Rent or fees for services
• Physical space
Entrepreneurs work out of living quarters near
accelerator.
I. Critical Elements
Experience
1. Founders/Mentors
Networks
Expertise
I. Critical Elements
Distinctive
1. Focus
Targeted
Compelling
I. Critical Elements
Ownership path:
• 5-10% equity stake in 1st round of financing
• Successful companies → more rounds of
financing
• Stake reduced with each round
• Absolute value of stake increases
II. Benefits
For entrepreneurs:
– Mentors
– Connections
– Business support
– Product support
– Seed funding
– Access to future capital
II. Benefits
For investors:
– Faster product development
– Better quality deal flow
– Lower risks
– Quicker time to market
– Higher returns
2011 Rankings USA Startup Accelerators
Rank
Program
Location
1
TechStars Bolder
Boulder, CO
2
Y Combinator
Mountain View, CA
3
Excelerate Labs
Chicago, IL
4
LaunchBox Digital
Durham, NC
5
TechStars Boston
Boston, MA
6
Kicklabs
San Francisco, CA
7
TechStars Seattle
Seattle, WA
8
Tech Wildcatter
Dallas, TX
9
Dreamit Ventures
Philadelphia, PA
10
The Brandery
Cincinnati, OH
11
Capital Factory
Austin, TX
12
NYC SeedStart
New York, NY
13
Betaspring
Providence, RI
14
BoomStartup
Salt Lake City, UT
15
AlphaLab
Pittsburgh, PA
Source: Frank Gruber, “Top 15 U.S. Startup Accelerators and Incubators Ranked,” http://techcocktail.com
II. Benefits
Criteria for Top 15:
• 25% - Qualified financing events
• Companies get financed after completing program
• 50% - Success of companies that graduated
• 25% - Accelerator program characteristics
• Money startups receive, equity, support
III. Models
Y Combinator:
– Founded 2005 – Silicon Valley
• 1st SEED Accelerator
– Worked with over 380 startups
– 1 major venture capital fund
– “Y Combinator”
• From computer science
– “a program that runs programs”
• Metaphor: a company that starts companies
III. Models
Y Combinator:
– Invests on average $18k in large number of
startups
– Two 3-month funding cycles
• January/March and June/August
– Program: fast and intensive
•
•
•
•
Mentors
Prototype Day
Demo (Pitch) Day
Social events/dinners
III. Models
TechStars:
– Founded 2006 – Boulder, Colorado
• 5 locations in U.S.
– Works with 10 companies per location
– Funding from 75 venture capital firms and angel
investors
III. Models
TechStars:
– Invests $18k in startups
– “Perks”
• $100k convertible debt note
• In-kind support from range of companies
• Valued at $250k
– 3-month program
• Mentors
• Demo (Pitch) Day
• Social events
III. Models
TechStars:
Application form:
– Describe business in 140 characters
– Provide demo/prototype
– Explain:
• How you will make money
• Who your competitors are
• What keeps you awake at night
– Provide 3-minute video of team
III. Models
Tech Wildcatters
– Founded 2010 – Dallas, Texas
– Works with 8-10 companies at a time
– Mentorship-driven, micro-seed fund
III. Models
Tech Wildcatters:
– Invests up to $25,000
• $10,000 per company
• $5,000 per founder (up to 3)
– Two 3-month programs
• Spring/Fall
– Program – “Bootcamp”
• Mentors
• Pitch Day
III. Models
Tech Wildcatters:
– Selection Criteria
•
•
•
•
Technology: web/mobile/software/game
Majority of revenue from businesses
2 or more founders
Live in Dallas for 12-week program
– Application Form – 3 key questions
• What problem do you have?
• How do you solve it?
• How will you make money?
IV. Lessons
Proactive strategy:
Idea
Teams
Invest
ment
Mentoring
Develop
ment
Successful
Exit
IV. Lessons
• Align needs of startups with investors’
expectations
• Provide platform for growth via ongoing
mentoring
• Tie into entrepreneurs’ eco system
• Target training to accelerate product
development
• Provide seed funding while entrepreneurs
bootstrap