Development of the ICT sector has triggered a mass creation of the entrepreneurial ventures, so called startups, characterized by an innovative idea with great potential to grow and lead to profit.
Startups cannot be defined as smaller versions of large companies, but must be seen as organizations that have their own organization and processes that make them viable. They can be presented as a kind of catalyst that translates ideas into concrete products or services.
Steve Blank is the pioneer of a customer development methodology that states that in addition to developing the product and service itself, one must take into account the business and marketing aspects of setting up and operating a business in order to be sustainable. He initiated the method of establishing 'Lean Startups', further developed by his student, Eric Ries, which defines startups as “institutions established with the aim of creating a new product or service under conditions of high uncertainty".
The Lean Startup model emphasizes that in addition to developing a new innovative product or service, it is also important to keep in mind what customers want and what they want to spend their money on (Eric Ries, 2011). The core of this model is the Make - Evaluate - Learn feedback ring: after creating a product / service, it is given to users who give their feedback, which is for startups crucial information they learn from, and create a new set of ideas to make the product/service redesigned and upgraded. Along with a growing number of startups, an increasing number of organizations have been set up to foster innovative activities in various fields of science and technology.
These organizations are known as incubators, or accelerators, whose main objective is to stimulate development of entrepreneurship and to assist entrepreneurs and their start-ups in the early stages of development. The primary driver of new entrepreneurial ventures is not the availability of money, or funding funds, or the degree of technological advancement, but the entrepreneurial agency. Incubators strive to maximize the potential entrepreneurial agency by providing services and support that will enable them to realize existing talent, expand potential, and put the idea into action. In other words, incubators represent the link between entrepreneurial leanings and the commercialization of the enterprise creation process. The American National Incubator Association defines them as economic development instruments designed to accelerate the growth and success of entrepreneurial ventures through a wide range of diverse business support resources and services.
The first incubators were created in the late 1950s in the United States (USA), but the concept itself began to evolve only in the 1980s. According to reports from the National Incubator Association (NBIA), there were 12 incubators in 1980. The first wave of expansion included developed countries, with America, the United Kingdom and continental Europe leading the way. Over the last two decades, the total number of incubators has grown significantly worldwide. According to the NBIA report, there are over 700 incubators today. In the last ten years, especially in the US, new forms of incubators have begun to emerge that are taking over the primacy of incubation models extremely quickly. These are so-called business accelerators, which are much shorter and more intensive than standard programs. They are focused on launching a business idea with great potential, in a relatively short and pre-defined period of time. They differ in particular from the following aspects:
- Intensive training and access to resources for a limited time (usually 3-6 months, even less)
- A limited number of carefully selected start-ups
- The goal is to stimulate rapid growth, for example, the company can focus on internationalizing the market during the program
- Provide access to investors (venture capitalists, business angels) who are willing to finance the expected growth of start-ups within accelerators
- Mainly focus on ICT technology sectors, Internet of Things, technological innovations in medicine, technology, in developing industries, etc.
YCombinator
YCombinator is based in California and started in 2005 by Andrew Levy Jessica Livingston, Paul Graham, Robert Morris, and Trevor Blackwell. Classified as accelerator, they have had 183 successful exit start-ups, and funded about 1,588 startups. Twice a year, they invest a certain amount of money ($120K) in a large number of start-ups (mostly 68). Carefully selected start-ups move to Silicon Valley for 3 months and YC partners work diligently with each company to shape and perfect their pitch to investors. Their stay in this accelerator culminates in a Demo Day where they introduce themselves to investors and thus have an exceptional opportunity to attract investment and capital. Some of the well-known companies that have gone through YC accelerator are Dropbox, Airbnb, Reddit, Zapier and Scribd.500 startups
500 startups, founded in 2010 by Christine Tsai and Dave McClure, categorized as an accelerator group. The total number of successful exits equals 155.500 represents a global fund to invest in Silicon Valley-based startups, which since its founding has invested more than $350 million in capital in about 1,800 technology startups worldwide. They have a team of 150 people and offices in 20 countries all over the world that manage an investment portfolio in 60 countries and speak over 25 languages. Different types of programs focus on different areas of business and differ between countries. In addition to investments, they support building sustainable moving ecosystems around the world and lead educational programs, events, conferences and partnerships around the world. Their investment team and mentoring network have operational experience at companies such as PayPal, Google, Facebook, Instagram, YouTube, Yahoo, LinkedIn, Twitter and Apple. The mission of this accelerator is to discover and support the most talented entrepreneurs and help them create successful companies.
Techstars
Techstars incubator was founded in 2006 by Brad Feld, David Brown, David Cohen and Jared Polis, in Colorado, USA. So far, they have had 98 successful exits. Through Techstar's global network of entrepreneurs, founders and their teams connect with other entrepreneurs, experts, mentors, investors, and others who help them grow their businesses. Techstars conducts its activity through 4 programs: Techstars Startup Programs, which inspires, educates and connects entrepreneurs, Techstars Mentorship-Driven Accelerator Programs, focused on intensive mentoring, Techstars Corporate Innovation Partnerships, which helps brands innovate products and services. The Techstars Venture Capital Fund is its venture capital arm.Immersive Accelerator
TVLP is the Institute of Technology Entrepreneurship founded in 2014 in Silicon Valley, California (USA) that includes among its team of mentors and instructors venture capitalists, serial entrepreneurs, and executives of iconic Silicon Valley tech companies. In the last 6 years TVLP has educated and trained entrepreneurs, scientists, innovators, and technology leaders from more than 42 countries, both individuals and large teams. Some of the world’s leading and most successful companies have improved the skills of their senior executives by attending a TVLP Institute program. The most comprehensive course of the Institute is the Flagship Program that represents an enlightening entrepreneurship 3-weeks accelerator and journey through
various aspects of startup development. The Flagship is boosted by the Venture lab that includes intensive preparation of pitch and pitch delivery to investors. Apart from the classes, the program includes meetings and site visits with venture capitalists, startup founders, and large companies along with networking events and special workshops creating a holistic experience. It gains a deeper understanding of the “most
entrepreneurial valley of the world” - Palo Alto, Menlo Park, Mountain
View, San Jose, and San Francisco. Non-equity contributions in the form of scholarships are offered to talented participants in selected fields and countries. Teams of 2-3 members receive a special scholarship. There are also aid for female founders and supported by Silicon Valley companies including BlueJeans Network, Inc. Admission is through a selection process.
Other opportunities: regional boosters
If you are not admitted to one of the above places, consider other valuable resources. Several overseas governments or companies have promoted accelerators and incubators in Silicon Valley. Giving the regional source of their application, it might be easier to be admitted. Some of them accept startups from all countries too. And as bonus they provide a strong connection with their home-country market.There is a German Accelerator, supported by German Federal Ministry of Economic Affairs and Energy, that is empowering high-tech German tech startups to successfully enter the U.S. market. Starting with an office in Silicon Valley, they expended to New York, Boston and Singapore branches, providing support to mid and later staged startups.
NewDo is a venture capital fund and accelerator with Chinese roots and offices in San Mateo. It is committed to delivering top-tier financial returns by supporting the world’s best entrepreneurs in becoming conscious leaders and building companies that create value for all stakeholders. The fund offer value-added services to portfolio companies and strong support to connect with Chinese companies for both supply-chain and enter the Chinese market.
Techcode was founded in 2014 and it is backed by China Fortune Land Development (CFLD), a giant in the Chinese real estate business. It is connecting three continents - Asia, North America and Europe. It is dedicated to operating incubators and integrating global innovation resources. Techcode has strategically partnered with government agencies of countries like Israel, Finland, Russia, Germany and South Korea, etc.
Techmafia is an intensive 3-month soft landing program in San Francisco, that is based on lean methodology and that is helping Russian and European companies get significant traction on the US market. Their investment activity accounts for more than 100 IT startup deals each year, constituting 80% of the Russian early-stage venture capital market. Entrepreneurs are spending 2 months in Moscow working on product preparation, adaptation and fine-tuning, and then moving to San Francisco for meetings with potential clients, feedback from investors, close work with US experts, a continuation of Customer Discovery, Customer Development
Nordic Innovation House is helping Nordic companies to get the most of their projects by developing it in Silicon Valley. With back up from Nordic Innovation and the Nordic Council of Ministers, they bring Nordic entrepreneurship, values, and their way of doing business to the global innovation ecosystem. Two main programs in Silicon Valley are REACH - Incubator program and TINC - Accelerator program.
ZeroPoint Ventures is a network of entrepreneurs who partner with growing companies to re-engineer their organizations for long-term, sustainable growth, and impact. They are focused on spreading the entrepreneurial spirit in New Zealand, following the Silicon Valley and Israeli approaches. Apart from the 1-week program, they also offer programs for the corporate sector.
How to be admitted
Admission to the above programs generally requires to fill up an application form and to go through other selection steps like a video interview or a demo. While you can learn about the admission process on each program website, some tips to get prepared are listed below.FILL UP THIS PART:
- what a VC is looking for is pretty much similar to the screening process done by the incubators/accelerators above. List the main items: problem, solution, market, team, differentiation. They should fit into a one page forcing you to use clear and short sentences. Cut what is not important.
- have a clear and engaging story about what you do and why it is important for you and for others
SO IF YOU ARE NOT READY, SUGGESTIONS:
- talk to friends and family to validate your project
- keep it simple and short (a grandparent should understand its main parts)
- find a niche
- find advisors
References:
- Blank, S. (2011, September 1). Why governments don’t get startups. Steve Blank blog. Preuzeto sa https://steveblank.com/2011/09/01/why-governments-don%E2%80%99t-get-startups
- Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. Currency.
- The American National Business Incubation Association. www.nbia.org
