Both Telstra and BlueChilli recently announced a reduced commitment to startups — the latter following in Microsoft’s steps and shifting its focus from startups to scale-ups. So, what does the future hold for the organisations supporting startups and entrepreneurship?
With entrepreneurial ecosystem growth comes the profusion of incubators and accelerators. It is a standard in every country and every ecosystem.
But, beyond the offering, what are the actual levers that these structures will pull, in the coming years, to distinguish themselves from each other and prove their relevance? What actions will be implemented to attract and meet the needs of entrepreneurs who are increasingly opportunistic and selective?
The challenge here is to look at what the incubators and accelerators of tomorrow will look like. We can draw conclusions based on mature ecosystems, programs that have survived and initiatives with positive results.
Here is the secret sauce. The programs that last understand that to last/survive/grow/thrive, it is essential to adapt your offer and focus on one thing: being useful to entrepreneurs.
KISS, right? (Keep it simple stupid.) Nothing more, nothing less.
Incubators and accelerators, whatever their form may be, will have to reinvent themselves to not only last but keep being relevant — especially given the growth of scams and useless offerings aimed at milking what little money and resources wannabe entrepreneurs, or wantrepreneurs, have.
There are four main factors that will shape the entrepreneurial support offer of tomorrow: specialisation, hyper-personalised support, accelerated access to a strategic network, and the ability to conduct very early-stage intelligent sourcing.
Let’s take a closer look, shall we?
To stand out and gain the trust of entrepreneurs, accelerators would be encouraged to position themselves on specific themes or verticals. Rethinking their model would therefore initially require increased specialisation.
This is especially true for later-stage (or more mature) startups. You cannot address and support a B2B startup producing a SaaS software suite for large companies in the same way you would a startup developing an innovative medtech solution. This is possible — and can be successful, as demonstrated by various accelerators such as River City Labs and ilab — but usually for startups considered as ‘early-stage’.
Yet, most of the existing structures are not focused on any specific technology or sector, with a share of the ‘specialised’ programs lacking depth too. The focus and positioning must be clear to attract entrepreneurs but also acquire sufficient visibility and image with investors.
As such, accelerators need to be built as businesses themselves are — with a clear mission, goals and skilled staff to really deliver — and not fall into innovation illusion.
Will startups end up ignoring incubators?
As most likely stated by the ministry of bleeding obvious, there is nothing worse than being told what to do by someone who has not done it once before or who does not understand the issues in the sector. That is why entrepreneurs give expertise a great deal of importance. It comes from specialisation.
Get SmartCompany FREE to your inbox every weekday.
Most corporate programs (innovation ‘bubbles’, incubators and accelerators) fail before they start because of the people in charge. This is true for all organisations.
When entrepreneurial accelerators are treated only as businesses or a corporate department, without actual skills, understanding and expertise, they usually end up on the firing line of startups. It does not take much. Usually, empathy is a fantastic start, but it often ends up being too much for many organisations.
Regular tailor-made support
Another requirement that entrepreneurs share is to benefit from personalised and consistent support. Founders need to know their interests and needs are taken into account individually. Providing space and internet access is one thing. Offering a shoulder to cry on, a brain to pick and more, regularly, is a gamechanger. Founders need regular follow-up and advice. Whether reviewing the projects, the work done on their prototype or the validation of their product-market fit, consistent and personalised support is essential. This includes weekly or monthly meetings to review achievements, direction and potential issues.
Such support also involves the personalisation of introductions, for instance. Using the same programs for everyone no longer works — the standards easily reach their limit. It is impossible to provide quality support without taking into consideration the different levels of development and maturity of startups.
Understanding that nowadays, entrepreneurs act in a ‘pick and choose’ dynamic is essential to provide an adapted service offer. But startups are not our property.
Access to a robust network
To stand out, incubators and accelerators maintain their proximity to research laboratories, experts and potential investors. They sometimes form industrial and commercial partnerships, highlight the references of the startups they have supported, and the successful fundraising rounds having occurred. The notion of network or ecosystem is key to a successful structure.
Entrepreneurial success often depends on a founder’s (or founding team’s) ability to mobilise the right networks to benefit from experiences and advice. This is a crucial opportunity for accelerators to address, offering entrepreneurs quick, strategic and personalised advice and contacts.
This involves, for example, mentoring sessions during which seasoned entrepreneurs tell their stories and share their experiences around real, and sometimes harsh, truths. An unfiltered dialogue will go a far longer way than lengthy ‘how-to’ (not fuck up) presentations by even the most ‘experienced’ member of a corporate startup accelerator.
Offering financing solutions
Tomorrow’s accelerator will facilitate access to private and public funding. The search for financing is a crucial issue for founders. Startups need two things: money and sales.
If sales cannot cover the money need, they fall into the search for funding. Typically, it is often more challenging to find funds in the first rounds of an investment than in a Series A or B.
The role of accelerators, at this point, is to cultivate a relevant network of business angels, local structures and VCs to assist the startups in their search for and choice of investment. Beyond introductions, potential contacts, demo days or pitch nights, accelerators must play a key role in facilitating discussions by showcasing startups, on stage, to a range of investors.
For structures benefiting from a bit of history, developing an investment structure is also an important step, not only to solidify the future of the structure (and trust in it) but also open an ‘easy’ opportunity to validate and help known startups grow. Opening the investment vehicle to alumni also offers a fantastic opportunity to keep engaging them differently. On a side note, an accelerator must remain in contact with its alumni, for their skills, their network but also their cash.
The earlier a (promising) startup is identified, the better. While this sounds obvious, it is also a key to lasting as an incubator or accelerator. While some media divas may offer coverage value, the real benefit for such a structure comes from identifying founders and startups before they make headlines.
As such, the accelerator must set up a strategy combining content marketing, participation to conferences, partnerships with companies and universities to identify projects and quality profiles at a very early stage.
The idea is to be there, from the outset, to support entrepreneurs ‘rise to power’ and thus help establish their reputation while building privileged relationships with these future leaders.
To the future and beyond! The incubators and accelerators of tomorrow will not be limited to a confined space, and logic, as they are now. They will evolve and follow a path of creation of shared value.
The future of entrepreneurial support, therefore, seems to belong to those who will be able to create links between the different communities through personal contacts, hubs and benevolent interconnections with members of the ecosystem with the sole aim of helping startups to succeed.