Category: Incubators

What is the problem accelerators are solving?
There is currently a preoccupation with accelerators in the entrepreneur world resulting in a large increase in programs. Arguably, the result of this frenzied growth is that ‘entrepreneurship’ is as commoditized as college. Unlike college, it is extremely hard to know which programs are adding value and which ones are wasting everyone’s time. This doesn’t mean investors aren’t in the know and they are favouring the programs they like – example, YC or TechStars.

It could become (or has already become) virtually meaningless to be an accelerator born internet entrepreneur so why would you give up 6-12% of your company to do it? For investors it is really hard to cut through the noise. I think this is because few people actually know why accelerators exist at all. In some cases I fear that the people that are creating new ones aren’t likely clear on why they are creating these programs either.

How does anyone know which ones work? What problem are they solving? What metrics should they be tracking in order to get better at what they are doing?

Defining the problem(s) accelerators solve.

There are three problems I think accelerators are trying to solve:
1. Investors need to identify talent.
2. Talent needs to find the right investors and coaches.
3. Education system failure.
The first is a relatively easy problem to solve. It is hard for investors to identify talent at an early stage, accelerator programs offer a filtering tool for investors as they can take the top talent that applies and narrow it down to those that have the highest potential based the criteria of the particular program. If an investor trusts the filtering job done by the accelerator than that accelerator is providing value.

A suggested metric for this: measure how many alumni of a program receive funding, from what type of investor, and in what time span?

The second problem that talented people and teams have is finding the *right* investors and coaches. By the right investor I mean someone that will give you enough money and coaching that you can slowly de-risk your startup a little more and build momentum as you grow towards being a sustainable business. Founders need coaches to apprentice under while they build their company. The right investor is someone who will put in enough of their own money and time and they can help you get your business through the major milestones it faces. This likely means that party rounds are bad. What I think should be the goal are 4-6 investors and/or an individual (not a VC) has a 1/2 to 1/3 of the total round.

This should result in the person(s) who put in significant capital also have a board seat and have their sleeves rolled up ready/able to help.

A suggested metric: track who put in the most personal money in the round and are they on the board of directors or some other significant role in the company? How much time a week/month do they spend with the founders?

The failure in education is a much harder problem to solve. Is it the traditional silos that are limiting education or is it the expectation that you go to school to be trained for a job or a bit of both or something else? Is the failure the education system (K-12) or is it the students or both? In higher education you have environments that are designed to encourage independent thought that is backed by facts and thinking. You should be exploring and developing your networks.

At no other point in your life will you be surrounding with that much leading edge research and thinking. Just because a school doesn’t hand you your first startup with funding and office space does not mean the education system is failing entrepreneurs!

There is also already a process for very smart people to apprentice under others that have already developed their ability to take massive amounts of information and focus it on an outcome. It also happens to come with a filtering mechanism built right in that improves the likelihood that the person that finishes is relatively in the top few percent. It’s graduate school. The process is not perfect but it is a process that works.

Educating people is hard. Coaching people is harder still. If an accelerator is going to solve the failure of the education system in educating entrepreneurs it should take that part very seriously and not dismiss the education system as having nothing to offer.

A suggested metric: Does the accelerator have qualified educators and coaches that put in a significant amount of time (more than 1 hr a week) with each entrepreneur? Are there measurable outcomes expected on the entrepreneur? Are there consequences for not meeting expectations?

Accelerators should be more than marketing to the entrepreneur and placing them in a zoo for the public to see them in action. Education is serious business and it is about people’s future. Entrepreneurs need to have realistic expectations and enter with a clear idea of what they want out of the opportunity.

Everyone around accelerators is still learning about how to make them work and figure out for whom do they exist. It is an exciting time in education — just be sure to track stuff that matters while you run the experiments!
November 7, 2013
The Pending Talent Wars
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Did you know that accelerators are heading for a shake out? We’ve talked a lot incubators, accelerators and cyclotrons. And the proliferation of the accelerator model is generally positive, it started me thinking about a possibility for slightly different model. One that Kevin Swan Follow @kevin_swan posted an insightful comment on the talent shortage for Canadian startups. I don’t think I’m the first to propose this, but it starts to make sense. Incubators/accelerators don’t need to only hasten the formation, creation and ideation of companies. They are fertile grounds to accelerate people. And it’s not just incubators and accelerators, companies participate in HackDays to find talent.

Need proof?

Vuru acquired by Wave Accounting

Vuru founders Cameron Howieson and Yoseph West reached out to the Wave Accounting team for advice on building a free, web-based financial services tool. Over time, the two companies traded notes as Wave took on a an informal advisory role, and that led to a sense that Vuru’s talent and direction were something that would be well suited to the Wave Accounting mission. — Darrell Ethrington, Aug 21, 2012 in BetaKit

Vuru was a 2 cofounder team in the FounderFuel (full disclosure: I am mentor in FounderFuel and I now employed by Wave Accounting investor OMERS Ventures). They were building a “investment tracking tools aimed at managing personal finance, which is not something Wave currently offer[ed]”. It was a great fit, a team that had the entrepreneurial culture to make a difference at Wave and a product that filled a known product roadmap gap.

Algo Anyhere acquired by 500px

Ok, before Zach Aysan slaps me for being totally incorrect. AlgoAnywhere was not in an incubator or accelerator program. But they had raised a seed round and were building very interesting technology.

The 500px founders met Algo Anywhere at their Pixel Hack Day last year, and were impressed by what the team brought to the table. Algo Anywhere’s tech was originally intended to be sold on an SaaS basis, providing companies with the data crunching power of sophisticated recommendation algorithms, without the need for those to be developed in-house or hosted on a company’s own servers – Darrell Ethrington, July 9, 2012 in BetaKit

The interesting point here isn’t about incubators or accelerators. It’s about founders of early-stage companies looking for relationships and gaps in the market left by other players.

Pulpfingers acquired by 500px

It seems that 500px has been strategically acquiring companies. It looks like both Pulpfingers and Algo Anywhere were part of the PixelHackDay (see photo from TechCrunch). Which gives 500px access to see designers, developers working in their domain space. It’s a great way to round out the product roadmap, Pulpfingers was a iOS discovery application. And they aren’t alone. Hootsuite acquired Seesmic and Swift.

Built to Last versus Built to Flip

I’m not arguing that founders should be looking to build companies to flip. There is lots of conversation about building lasting value. I’m arguing that companies that have raised capital to scale are looking for alternative methods to acquire talent. Get access to the API, build a meaningful service, acquire shared customers and go forward, it’s Biz Dev 2.0 (as Caterina described back in 2006). What’s new to the game for Canada (well Canadian startups) is that for the first time since RIM we are starting to have web startups that are reaching scale and are able to acquire talent, teams and companies. The goal isn’t to look for a acqui-hire or a manquisition, but to look at where working with an existing company or API gives you immediate access to distribution or monetization that you might have to work harder to build on your own.

I’m betting that companies like Wave Accounting, 500px, Influitive, Hootsuite, Shopify,Freshbooks, Top Hat Monocle, Wattpad, Upverter, Chango, Fixmo, Desire2Learn, Lightspeed are all actively looking for teams that are building on their APIs or filling product gaps (it becomes a buy versus build decision).

If I was a developer or looking to get into an incubator program, I’d start looking at the hackathons and APIs that are aligned with my vision where I could accelerate customer adoption.

Events
APIs and Developer Starting Points
Find an API (be it local or otherwise) that aligns with your vertical, figure out if you can solve one of your immediate challenges (like distribution and customer acquisition). Maybe strike up a conversation with the product teams at shop. But build something that delights customers and users! Go! Now!

Who has something built on one of the above APIs?
December 13, 2012
Startup “ecosystems” in Canada are doing well but…

Editor’s note: This is a guest post by Jesse Rodgers. Follow Jesse on Twitter Follow @jrodgers. This post was originally published on November 21, 2012 on WhoYouCallingAJesse.com.

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The Startup Genome released another report mapping top startup cities but this time a bit more specific than it’s heat map from April of this year. Canada did well depending on how you interpret it with Toronto at #8, Vancouver at #9, and Waterloo at #16. In its previous report, Startup Genome ranked Toronto at #4, Vancouver at #16, and Montreal made the list at #25. Oddly Waterloo wasn’t listed in the previous ranking but made it into the top 20 in the new report while Montreal remained outside of it.

Focusing on my Ontario centric nitpick – the separation of the Toronto and Waterloo “ecosystems” when they are anything but separate is not going to give an accurate picture of Canada’s awesome startup communities. They are unique communities but their strength comes from how they work together in the same ecosystem. The emotional energy (and money) burned in defining how they are different is holding Canada back from an even better and sustainable growth curve. That energy is in the report.

In the report:

“Toronto competes for startups with regional competitors such as NYC, Boston and nearby Waterloo.”

Then in the Waterloo profile:

“In the near future, it will be interesting to see whether Waterloo is able to hold on to its talent base or whether it will be sucked into Toronto.”

Would you say that about Palto Alto sucking talent to San Francisco and vice versa? No. It’s the valley. A huge area that is far more developed but very similar to the Toronto – Hamilton – Waterloo. The problem, I think, is that at some point in the past when local economic development groups were competing on a similar scale for tax dollars (and manufacturing plants) they narrowly defined regions (Golden Triangle, Golden Horseshoe, etc) where everything above the escarpment is barbarians and the urban modern folk live below next to the cold blue lake.

There can be (and there are) distinct communities inside the larger Toronto – Hamilton – Waterloo ecosystem. Each community has its strength. Each success in the larger ecosystem helps the entire ecosystem.

The big problem the ecosystem faces (in Toronto):

Startups in Toronto receive 71% less funding than SV startups. The capital deficiency exists both before and after product market fit. Toronto startups receive 70% less capital in Stage 2 (Validation) and 65% in Stage 4 (Scale).

The ecosystem most likely lacks a sufficient quantity of all kinds of startup capital sources: angels, super angels, accelerators, micro VCs, VCs etc. As a result Toronto startups rely more on self-funding, or rounds from family/friends.

The other big problem (in Waterloo):

Waterloo has a funding gap (96% less in the second stage) for early stage startups before product market fit, probably due to a lack of super angels and micro VCs. There are high numbers of accelerators and much lower numbers of super angels and VCs than SV.

Solving the funding problem in Toronto also solves the problem in Waterloo, more companies that able to find the money and the talent to scale in either or both communities helps both or am I missing something?

Building a strong economy, community, and ecosystem isn’t a zero sum game.

November 22, 2012
7 Ways To Rock a Startup Accelerator Mentor Day

Editor’s note: This is a guest post by serial entrepreneur and marketing executive April Dunford who is currently the head of Enterprise Market Strategy for Huawei. April specializes in brining new products to market including messaging, positioning, market strategy, go-to-market planning and lead generation. She is one of the leading B2B/enterprise marketers in the world and we’re really lucky to be able to share here content with you. Follow her on Twitter Follow @aprildunford or RocketWatcher.com. This post was originally published in August 31, 2012 on RocketWatcher.com.

I spent the day yesterday at FounderFuel for their Mentor Day. If you aren’t familiar with FounderFuel they are a very successful startup accelerator based in Montreal. And what a day it was – 8 startups pitched and then did roundtable breakout sessions with over 50 mentors including VC’s, angel investors, entrepreneurs and senior executives. Here’s my mentor’s perspective on how a startup can really get the most out of a day like that:

1/ Pick your Target Mentors Ahead of Time: 50 mentors is a lot and they represented a wide cross section of folks that have deep experience in different consumer and business markets, and have a range of skills from technical expertise to sales, marketing, finance, and legal experience. Selecting a subset of the mentors with experience relevant to your business will help you target your discussions.A handful of the teams that needed marketing help reached out to me by email before the day and that helped to make sure that we connected at the session which I thought was pretty smart.

2/ Ask for Feedback on your Pitch: The mentors are both experienced pitch artists, and listen to pitches a lot. What better folks to give feedback on what worked and what didn’t work with the pitch you just gave? In this case the companies are all still in the early stages of the accelerator program so it’s a great time to get feedback that will improve the ultimate pitch you give on demo day. The feedback will also give you a feel for the differences in what an Angel investor might be looking for over what the more traditional VC’s are looking for in a pitch. “Tell me one thing that would have made my pitch better” or “What was missing from my pitch?” would both be great ways to start that discussion.

3/ Ask for Specific Help: The mentors are ready and willing to help but they can’t guess what you need. Coming with a set of specific requests helps shape the discussion in a way that is most helpful to you. Don’t be afraid to ask for specific introductions – even if the folks in the room don’t have the answers you need, chances are they know someone who does.

4/ Listen, Ask Questions (and Filter later): – The mentors yesterday came from really different backgrounds and had worked in a broad range of industries (consumer, gaming, retail, enterprise, financial services). Sure we’re all smart folks but you wouldn’t believe how different our opinons were about questions the startups were asking. For example, at my session with Openera – a tool for automatically organizing files and attachments – we got into a discussion about selling to consumers versus enterprises as a starting point. I ALWAYS tilt toward enterprises when people ask me that because I know/love enterprise sales. The mentor beside me, Yona Shtern, the CEO from Beyond the Rack on the other hand thought selling B2C (or B2C2B) was just fine. Only Openera can decide who’s got smarter advice for their business (yeah OK, in this case it’s probably the smarty-pants Beyond the Rack guy but hey you get what I’m trying to say here). Another example – in the discussion with InfoActive (a very cool tool that lets you easily create beautiful interactive data visualizations), I immediately saw the applicability to creating interactive marketing materials. I’m a marketer, that’s the obvious use case for someone like me. The mentor beside me (James Duncan, CTO at Inktank) on the other hand saw the value in selling to IT departments that needed a way to easily create good looking dashboards to help IT communicate to the business side of the house. That’s a great use case that a marketing person like me would be unlikely to immediately think of. Both ideas might be worth investigating but only InfoActive can really decide that. Avoiding “mentor whiplash”, as the FounderFuel gang refers to it, is a critical skill for startups in accelerators that have deep rosters of active mentors. Remember too that time is limited so you don’t want to waste it having a long debate with a single mentor over a specific point. Listen, probe a bit if you need to, and then move on. You can always schedule follow-on time with a specific mentor to explore an idea later.

5/ Take Notes: You put a couple of CEO’s a VC, a senior exec and a CTO at a table together and guess what happens? We talk. A lot. Not only that but the conversation moves very quickly from one point of view to the next. Some teams were recording the sessions but the room was loud (did I mention we talk a lot?) and figuring out who said what later might be a challenge by voice alone. Having someone taking notes is a good idea to make sure that you’re capturing ideas as they are flowing.

6/ Work the Edge Time: By far the best way to get 1 on 1 time with a mentor yesterday was to do it over the break or over lunch. That also gives the mentor a chance to ask questions they might not get a chance to in a round table session.

7/ Don’t Forget Everyone’s a Potential Investor : The VC’s are easy to spot (and there were a lot of them there) but most of the mentors I talked to are also doing a bit of angel investing as well. For companies at this stage anyone that’s willing to invest time with your company might also be likely to invest cash as well.

So there’s my advice. I’m sure the other mentors all have different opinions – yep, we’re funny that way.

August 31, 2012
Thoughts about accelerators
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Most people love to just give advice as if it’s set in stone. These thoughts cannot be applied to every startup, use your own judgement and do you own due diligence.

Rewind to 2009, we had a stellar year. We had created Tether.com from a simple idea to millions of dollars in revenue. I evaluated various aspects of this success and realized we were paid huge dividends because we made a significant difference in the way people were able to work. At the young age of 21, I faced two options:
- Retire
- Continue creating disruptive products and change the world
Luckily (or unfortunately) I took the second option, creating products that would hopefully disrupt markets. I decided the market I wanted to disrupt was computer programming.

Some rights reserved by archer10 (Dennis)

Being from Nova Scotia, a small province not really known for its stellar technology, I was faced with two options:
1. Fund my own startup out of pocket, or
2. try to raise money.
We’re known for lobsters, which is a far stretch from computer programming. Raising cash locally was a stretch, particularly given the very early stage of the business. And while it feels like a feeding frenzy in the Bay area, most US-based investors wouldn’t know where Nova Scotia is on the map (while Jevon [LinkedIn, @jevon] is trying to change that, outside of Boston many might still have a hard time finding us) and putting capital into an early company in a location they don’t know felt very unlikely.

The best option was to self-fund Compilr with the expection to go from initial idea through to revenue much like we had previously done with Tether.com. We had an idea, we had a team that was capable of building, we had users signing up to use the service (our user base had grown 13x in a 3 month period), but we had no revenue. And we were running out of cash. Getting people to pay turned out to be very challenging. More challenging than it was with Tether.com.

At some point, I realized that I needed help. The help probably wasn’t cash. Raising millions of dollars in funding, wouldn’t solve our problem. The money could extend our runway, give us more time to increase our output on features, bug fixes, but if no one would pay for the product – it didn’t matter.

If money alone wasn’t the answer, maybe it was accelerators that could help (I hear there might be an incubator/accelerator bubble or something). I applied to Y-Combinator with a video from my beautiful rented apartment in Dominican Republic, but ultimately was turned down. I applied to a local entrepreneur competition, Compilr placed 3rd but sadly there was no financial benefit. At this stage the product went to the back-burner, the development team focused on other projects, the question was: what to do next?

“You miss 100% of the shots you don’t take” – Wayne Gretzky

An angel investor introduced me to Seedcamp. And while Seedcamp was Europe focused, they had a strong portfolio of very early stage software companies. Long story short: I applied, invited to pitch in New York, and was accepted to the program. Going to an incubator was a big decision. I was getting mixed advice from my mentors, with some mentors telling me “you are an idiot for valuing your company so low” and others saying “Seedcamp had over-valued the company given the traction”.

It’s a hard decision, but ultimately I decided that the small percentage I was giving up Seedcamp was a good fit for Compilr and me. Seedcamp was providing value to help Compilr, and if I was successful we could return the favor so they can invest in other entrepreneurs. It felt good, like a fair trade.

I’ve determined that startup accelerators can provide returns even beyond the bottom line (or the post-money valuations). Here is what entrepreneurs should expect from an incubator:

Validation

When an accelerator says, we like your idea and your team and want to give you a small bit of cash, this is significant validation. I think this is the death row for most startups. If your team doesn’t get any validation, will it just become a “back-burner” project. Accelerators can help provide entrepreneurs early, meaningful validation.

Exposure

Always insure that your accelerator is able to provide you with adequate exposure. Every time we were involved in a Seeedcamp event we saw about a 30% increase in traffic, which was easily identifiable from those particular events. Accelerators are press whores, they want just as much exposure as you. Weasel your way into anything that could be related to you.

Accountability/Focus

Being a single-founder with a crazy idea, accountability sometimes goes on the back-burner. As a founder/CEO sometimes you have ideas that are completely inaccurate and have no foundation. Having a team that can slap you around a bit, when you decide you want to pivot from an online IDE to an online garden center is a great asset.

They don’t solve your problems.

My reason for joining an accelerator was simply, if I get enough smart people looking at my business, I’d get to revenue faster. The fact is you could have the most brilliant advisers or mentors helping you, but they still can’t solve your problems. They just aren’t connected into the industry like you. In the end you need to make strategic decisions on where you want to go.

Competitiveness

Joining an accelerator, is always competitive. Being apart of an accelerator provides a degree of competitiveness. When your teammate just raised $910k from top US investors and you haven’t done shit, you instantly feel like you want to go out and raise $2m.

Prepare to insult everyone

The worse part of having really great mentors, is when you are in a rut, they’ll tell you “they told you so”. If you didn’t follow a mentor’s advice they may shun you, they may refuse to give you advice on the “basis that you don’t follow it”. The biggest problem if you take one mentors advice, you will insult another.

Can I help? If you think I can help, shoot me an email: [email protected]
July 3, 2012
Extreme Demo Day
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Extreme Startups has announced the Demo Day for the first cohort of companies. We’ve written about Extreme Startups in the past, we’ve covered some of the cohort including Shoplocket, and we think a number of cohort qualifies as Hot Sh!t (Jeff Lawrence (LinkedIn, @datajeff) of Granify; Michael Curry (LinkedIn, @mikecurry) of Verelo and Andrew Louis (LinkedIn, @hyfen) of ShopLocket).

Companies presenting at Demo Day are:
Get a ticket or an invite

There are no shortage of events for startups in Toronto, ranging from the originator but currently offline DemoCamp to the reinvigorated SproutUpTO. But DemoDay is shaping up to be an exciting event, with a full house, I heard that there were over 400 confirmed attendees with a large number coming in from Montreal, New York, Boston and the Bay area.

The demos are happening on June 19, 2012 from 1-4pm. There is a post demo social happening starting at 8pm. StartupNorth is proud to be supporting both the demo event and the evening social.

[gravityform id=”8″ name=”Extreme Startups Demo Day” title=”false”]
June 14, 2012
Meaningful metrics for incubators and accelerators
Editor’s Note: This is cross posted from WhoYouCallingAJesse.com by Jesse Rodgers, who is a cofounder of TribeHR. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.

Some rights reserved by Nathan E Photography

Incubators and accelerators are businesses just like the businesses they intend to help develop as they travel through the startup lifecycle. As with any business, there are indicators that they can measure to give them a better idea of how they are performing besides the big public relations buzz around a company being funded.

You need to measure these numbers so that when a success happens you can hopefully gain some insights on how to help the other companies better. The problem is that even though the model of an incubator or accelerator is generally known, how to take 10 companies and have 10 successful growth companies come out the other side of the program is not.

The issue of what metrics to use is an important but complicated problem to solve.

Set the baseline at the application process (pre-program)

There are far more applicants than slots offered in an incubator or accelerator program. However, it is at this point that a program is gathering it’s best intelligence. You need a baseline measurement at the start of the program that you can measure every team against. What you should be tracking:
- Who applied to the program that you didn’taccept (this is your control sample)
  - Track their progress on Angellist, Crunchbase, and/or go back to their web site in 3, 6, 12 months.
  - Keep a ratio of who is still in business and what their status is.
- Maintain, in a CRM system, information on the applicant founders and their team members.
Measure the incubator/accelerator clients (in-program)

At this point there are X number of startups with Y number of founders and maybe Z employees. What you want to measure are things that demonstrate they have improved (or not) and which are things you would expect to see improve as a result of the services provided by any incubator or accelerator:
- Current customers and revenue per customer (for most that will be 0 at the start) that will work across revenue models: CAC, ARPU, churn rate.
- Sales funnel – do they have leads? How many? Are they qualified leads? What are they worth?
- Average user growth in the last month.
- What mentors or advisors did they meet through the program? What role did they take with the company?
Run these numbers at the start and at the end of the program. If you are a pure research focused incubator, ignore this section. You have a much longer time to see success – but few are truly research focused.

Monitor the graduates: Alumni (post-program)

This is a very important thing an incubator/accelerator can do — build and maintain its alumni connections. These folks not only help at every stage of running future programs but their success lifts the profile of the program, just like how alumni of prestigious business schools make the business schools prestigious.

There should be reporting milestones at a set interval (probably financial quarter based) where you gain the following insights on the company:
- Customer growth percentage: CAC, ARPU, and churn rate all expressed as percentage growth.
- Sales funnel growth expressed as a percentage.
- Average user growth in the last month.
- What mentors or advisors are currently active with the company?
Ideally you should have a position that is equivalent to a close advisor or board observer with the company once it graduates from the program.

Defining success

If an incubator or accelerator program is successful, the graphs should be heading up and to the right at a much faster pace than they would have been had startups not entered the program.

The only baseline data I know of is from the Startup Genome. In their report they explain the stages and the average length of time it takes a company to go through them. For an incubator or accelerator to demonstrate that they work, I would expect a successful company to move through the stages faster than the average. I would also expect them to fail faster than the average.

Tracking metrics puts a lot more overhead on an accelerator. It is likely more than they budgeted for to start. However, if you want to know if the program is successful it is worth the investment of an admin salary to track and crunch data. This is just a baseline, track more and figure out what the indicators of success are for you.
June 4, 2012
ShopLocket makes selling online easy

Editor’s Note: This is a guest post by Katherine Hague (LinkedIn, @katherinehague), co-founder and CEO of Shoplocket.com, a startup that has recently launched and which aims to help people sell anything from anywhere in minutes. Part of our efforts to highlight and support entrepreneurs and projects from Ladies Learning Code.

After 6 months of hard work, we’re excited to announce the launch of Shoplocket..

ShopLocket is a simple solution for anyone wanting a quick and attractive way to start selling online without the overhead of running a storefront.

Think of it as a platform powering popup online retailers. It’s Lean Retail. Much like Lean Startup or Lean Manufacturing. It’s a platform for online retailers to find “a plan that works before running out of resources”. Just like CafePress automates the creation of customized goods, ShopLocket makes it easy for makers to sell online without investing in inventory or ecommerce solutions. It’s a way, much like restauranters testing new menus and concepts in food truck, popup restaurant or underground markets, ito test the sales of products online.

Shoplocket Cofounders Katherine and Andrew

During summer of 2011, I had the idea to have some quirky t-shirts printed to see whether I could manage to sell them online. I had a pretty decent blog following and a solid network so it occurred to me that if I posted them for sale on the blog, that people might buy them. For only one t-shirt, signing up for a full storefront solution seemed a little ridiculous, especially since I didn’t even know if I’d sell one to cover monthly fees. At the same time I wanted my product listing to look well designed and professional. These were really great t-shirts, and I couldn’t imagine myself just throwing them onto a marketplace like kijiji or craigslist. I couldn’t figure out why what seemed like an easy e-commerce problem like “I only have one product to sell” was actually so hard to solve.

Using ShopLocket, sellers can be up and running in minutes and can embed their products directly on any website, or share a link to where we host their product. In some cases, ShopLocket will serve as a customer funnel for larger online stores, helping new sellers figure out whether they’ve got something worth selling. But for many others, ShopLocket will be all they ever need. For these sellers we’re a replacement for back-and-forth email transactions with buyers and unprofessional marketplaces. Think of us as the ideal “display case” for your new product.

We’ve been in beta with about 1200 users. We’ve been accepted in the first cohort at Extreme Startups. We couldn’t have gotten to where we are today without the incredible support of the Toronto startup community. We’re now gearing up for our Demo Day on June 19th.

April 25, 2012
There are two types of startup incubators in the world: YCombinator or TechStars
Note: This is a guest post by Jesse Rodgers who is a cofounder of TribeHR. Jesse specializes in product design, web application development and emerging web technologies in higher education. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.

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Incubators and accelerators [Eds note: and cyclotrons] have but one purpose: move startups along in their life cycle at a faster pace than they would normally and increase the likelihood of a return by providing that service. If you are a startup looking at applying to an incubator you need to understand that the differences in how these programs differ go beyond the money they give you in exchange for equity.

An oversimplification of the incubator/accelerator space is to classify them as either a Y-Combinator (YC) or a TechStars (TS). If you really look at the booming world of incubators for high tech startups you see a model that either based on education and peers that is driven by a strong personality (YC) or a model that is more institutional, follows a script, and feels less personal but is more in line with how VC’s work (TS) (I would place 500 Startups right in the middle between YC & TS which is arguably representative of a third type). There is plenty to be found about the differences but here is a bit of a deeper exploration into the differences.

Startup lifecycle

Startups have a number of key phases in development that is best outlined in Fred Destin’s presentation on startup lifecycle.
1. Start
2. Launch
3. Build
4. Chasm
5. Scale
With the 12-14 week cohort models, like YCombinator and TechStars, the focus should be on moving through starting and on to launch phase. There may be some that get into a build phase. The incubator or accelerator hopes that once they are done a 12-14 week program the startup will be in a much better position to move quickly through the build stage and at least take on the chasm phase.

Where I see the key difference between YC and TS is that YC seems to be able to get companies to go through stage 1 to 3 and they accept companies mainly in the start phase. TS seems to not attract a cluster of companies in a particular phase or not care about what phase a company is in.

The basics of an incubator/accelerator (whatever you want to call it)

Within the execution of any incubator or accelerator program there are, in my mind, 4 core stages in a typical cycle:
- Recruitment
- Onboarding
- In the program
- After the program
Within each of these of these stages there are a number of specific activities that all incubators do but in general they aren’t all that different.

Recruitment

YC currently leads the thought leadership with Hacker News, Paul Graham’s (PG) blog, and it’s success. Applicants fill out a form and once told they have an interview, travel to YC in Mountain View for an interview. They get just 15 min with a small panel and the panel does a bunch of tricks to the founders like carrying on side conversations – there are a lot of blog posts about that.

TechStars has adopted a more consistent process over it’s many affiliated programs (it appears) but they lack YC’s Hacker News or thought leadership (although they would claim otherwise). With Techstars there appears to be an affiliation with the Kauffman Foundation and the role they are taking in promoting the incubator model in general they have made themselves an authority in the space. From people I know that have been in the program it is a fairly standard process similar to raising Angel capital.

Onboarding

I am not sure on TS on-boarding but YC has a very short interview to decision to start of program window. YC has a little book that is like a long Wikipedia article written by Paul Graham that offers insights and baseline knowledge. From what I have been told the YC machine is pretty much immediately available to you when they say “you are in” — startups decide when to tell others. What is really interesting is that YC doesn’t announce it. They generally let a company know they are YC funded on the interview day but they don’t make a big announcement or anything.
Not having a big incubator announcement is a key difference here though. I will assume that with TS it is just like YC in that they have decided to fund you, they are now available to you. However, TechStars (it appears) doesn’t approach announcing the cohort in the same way as YC — they announce them ahead of the program.

In the program: peer mentorship, startup culture

Each program runs for roughly 3 months, 12-14 weeks, where mentorship, various events, and a demo day to close it off normally occur. Each week is important given that each team only has 3 months. Over three months there are phases you can generally identify:
- Teams becoming familiar with each other, their mentors, and what they need to do (first 2 weeks).
- The heads down getting stuff done phase (8-10 weeks).
- Funding mode going into Demo Day (2 weeks).
Other incubator programs are fairly similar with any given week involving office hours (optional or required) and a speaker/dinner. The office hours are used to check in and place goals on the teams. Throughout the term there are demo nights, which are used by YC as a way to put peer pressure on other teams that might not be moving as fast as others.
Where they differ here is in the education of the founder(s). From everyone I have talked to that has gone through YC it seems to me it is a very challenging but rewarding relationship for a certain type of founder. That would make sense as a certain personality type will work best with Paul Graham’s way of doing things and will excel. I am not entirely sure it is simply a hacker/coder persona as most assume. I think it is a personality and learning style that goes a bit deeper.
TechStars has a co-working model with parts very similar to YC. The key difference is that TS doesn’t have the Paul Graham approach to educating founders so you will get very different details depending on who is running the program. TS also gives the startups a place to work where YC leaves them to find a house and work out of it.

After the program: Alumni network

The key value any incubator or accelerator provides after the program is the alumni network of companies that are now a few steps ahead (depending on the age of the incubator there could be alumni with very large companies) of the current cohort in the program. Over time these alumni are your best mentors and connectors.

It is at this phase where the greatest value is for the startup, I believe. You now have access to what the old folks call a big rolodex (social graph) that will open many doors which essentially leaves it up to the entrepreneur whether their company will succeed or not. There are few to no barriers, generally speaking.

Any alumni of YC or Techstars still have contact with the folks in their cohort and all cohorts along with Hacker News. Techstars Network is so big they have a conference just for alumni while YC taps its alumni for all kinds of things. Also, founders seems to find going through the program a second time is different but just as valuable. These massive networks of successful alumni with a flock of high profile admirers is very similar to that of Higher Education alumni networks, so much so it convinces me that this entire process is a form of higher education.

Programs that work copy YCombinator, even TechStars did

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The current culture of education focused incubators started in my mind with YCombinator (started in 2005). I believe what we are seeing with the success of YC and TS is new take on graduate school. Both are different, both work, and people can have strong opinions either way. They feed a need that I don’t think people outside of incubators quite understand yet, learning to be a founder is really hard. Being a successful founder is even harder. The bet is that if you help young founders focus on what is important they will see success earlier or just simply see what success looks like.
If you are looking at an incubator anywhere (there are lots of great programs out there) you need to understand that the money is secondary. You need to find a program that will fit with the way you learn and has companies that you want to work with. It is just like how you picked your University or College except this time it can cost you a lot more (in equity) if you are successful.

Note: This is a guest post by Jesse Rodgers who is a cofounder of TribeHR. Jesse specializes in product design, web application development and emerging web technologies in higher education. He has been a key member of the Waterloo startup community hosting StartupCampWaterloo and other events to bring together and engage local entrepreneurs. Follow him on Twitter @jrodgers or WhoYouCallingAJesse.com.
February 13, 2012
Five-tool Players

I loved Moneyball (the movie). I also especially love sports analogies as they relate to technology and startups. While well-blogged about (Fred Wilson, Dave McClure, Dharmesh Shah), I believe these analogies are representative of what it takes to create and build a successful startup. While the premise of the book is to evaluate players based on data and metrics, I couldn’t help but tie back to the old school style of scouting in baseball to the current process we’re going through in selecting our cohort.

According to Wikipedia, in baseball, a five-tool player is one who excels at (1) hitting for average, (2) hitting for power, (3) baserunning skills and speed, (4) throwing ability, and (5) fielding abilities. I believe the same can be said for entrepreneurs.

Hitting for Average : Selling to Customers

In Moneyball, Billy Beane and his sidekick focus their team (the Oakland A’s) on one thing – getting on base – because getting on base equates to scoring runs, which equates to wins. In the startup world, scoring runs is the equivalent of getting cash, and this cash comes from customers.

Every entrepreneur needs to sell to customers. They need to generate revenue aka cash. It doesn’t matter if its enterprise customers, direct to consumer, professional services, white labeling, etc. Ultimately, if the startup is successful, they will sell to customers (which could also mean acquiring users). Effective hitters know where to hit the ball – pulling the ball, going opposite field, hitting gaps. Effective entrepreneurs know the gaps in the market amongst their competition and capitalize.

Hitting for Power : Selling to Investors

Chicks dig the longball. So how do you generate a huge amount of cash for your startup in one shot? You sell to investors. Entrepreneurs should also be able to successfully pitch VCs, angels, and other shareholders. This gives their companies cash in normally larger amounts than when selling to customers. It takes a special person to be able to raise from VCs. It takes a lot of time, energy, and follow-through.

A note on specialists here. In baseball, there are power hitters that specialize in hitting homeruns. Traditionally, these are the most popular and most sought after players because they have a halo effect around them. They fill seats, sell jerseys and advertising. They are the top billers and they usually can do no wrong (unless they cheat). In startups, this is also true because some franchises (VCs) want their own cleanup hitters at the top for the same halo effect.

Baserunning Skills & Speed : Hustle, Agility, and Speed

Running the bases in baseball is critical. If you can’t run the bases effectively, you’ll hinder your ability to score runs.

In startups, it’s critical to have that hustle and agility. This is all about opportunity maximization once the ball is in play. This means stretching a single into a double (crosssell / upsell, bigger contracts), stealing when possible (customers from your competition), and generally reading your competition in real-time (intuition and nuances of selling to both customers and investors).

Throwing Ability : Teamwork

This relates to the internal aspects of a startup. Can you lead and work within a team? Can you hit the cutoff man e.g. delegate when is the right time to do so?. This is about being affective with players on your own team to maximize the position you play. The most effective early stage startups I’ve come across have a good team rapport and play to each others’ strengths. Especially early when there is generally chaos, playing the position you’re best at (product, sales, marketing, customer services, QA, IT, etc.) and knowing your limits is critical.

Fielding Abilities : GTD

Every entrepreneur can get things done, and similarly every baseball player can catch a flyball or field a grounder. But the gold glove entrepreneurs are the ones that excel at cranking things out and simply getting things done across a broad range of domains. JFDI (thanks @msuster)! To borrow an American football analogy, this is the blocking and tackling that is the unglamorous and often overlooked aspect of entrepreneurialism.

Intangibles

There are definitely other things that make a successful baseball player and entrepreneur – experience, drive, fire, luck, durability, clutch ability, personal circumstances. Most things have to align for someone to be in the big leagues in baseball and technology.

Scouting

Over the last year as a VC, I’ve seen a lot of entrepreneurs with different combinations of these tools. Some were very effective at selling to customers, but just could not raise a round from VCs. Their pitches were too technical, they got into the weeds too much. They needed more sizzle. They were great at selling to customers, hitting their singles and doubles. But when it came to closing a round, they only had warning track power and process became that much more drawn out and painful.

On the flipside, there were companies where the only thing the CEO could do effectively was raise VC money. This left their companies with a lot of cash in the bank and a high valuation. Now they need to execute and build a product that would attract and acquire customers. Stay off the roids and start bunting if you need.

We are currently scouting players for our franchise. Are you a five-tool entrepreneur? If so, APPLY and come see us at Sprouter today. We’d love to help you develop into an MVP.

February 10, 2012