So, you want to start a startup incubator or accelerator?
Over the past few months I’ve jumped on calls with universities, business schools and community organisations around Australia, Asia and even Germany all wanting to launch a new startup ‘program’ (I’ll use program here to include workshops, mentoring programs, incubators or accelerators). Each time it struck me just how much there is to think about as an organisation and how difficult it can be to get going.
For context I started INCUBATE at the University of Sydney as a final year student back in 2012 when literally only a handful of universities around the world had such a program (the leading one at the time being StartX at Stanford, also started by a student). It is a story of a ‘bottom-up’ initiative as opposed to ‘top-down’, when led by senior executives (and typically much more expensive!).
Since then it has grown into a professional program with a suite of entrepreneurship offerings including a pre-accelerator, mentors, full-time staff, and an accelerator program that has funded and supported over 110 startups –– one of the largest in the Asian Pacific Region. It’s also important to note that we started in this an ‘underdeveloped startup ecosystem’ and not Silicon Valley where support and funding can be far easier to come by!
What I’ve chatted about on the phone is a good checklist for anyone looking to start a startup program within their organisation, be it corporate or Higher Education. As a result I’ve developed these topics into a series of online masterclasses too.
The things we talked about it are the bare essentials but important to think about:
What is your philosophy around entrepreneurship?
This is a big and first point to consider. It’s important because you need everyone to be on the same page if you want to have a successful program. This should answer the type of entrepreneurs you want to support and the types of businesses you believe they should be building.
Each of these answers is unique to each organisation (there is no right or wrong answer):
- Will you choose more innovative ideas over traditional small business ideas?
- Will you have a focus on new technology and across what sectors and why?
- Do you prefer or think a more successful outcome is a business that employs 1000s or a business that employs less than 10?
- Is there a local ‘secret sauce’? What are the natural advantages in your market? Can you enhance that through the program?
Side note: We launched an introductory 2-week online course on ‘Creating Startup Programs’ where we chat about this and other fundamentals. Check it out!
What are the outcomes you want to achieve in your program – what does success look like?
You need to have a strong sense of what a successful startup looks like exiting your program and beyond. Will they have paying customers? Or will they be investment ready? Or is it the entrepreneur has built the confidence to take it the next stage?
Whatever the outcome its important to think about how you can go about turbo-charging their development and growth. Short cutting common problems (e.g. legal and IP) and helping the founders avoid crashing unnecessarily.
- Think about how you can help cut down what would take 12 months by themselves as a solo entrepreneur to 3 months in your program
How can you ‘bias towards action’?
In year one of the program you want to bias towards action. Take on a ‘launch and iterate’ approach. The best learning happens when you launch a program and test various program components e.g. combining participants/founders and mentors in a room and watching what happens.
Aim to run a short program design sprint and then to run your first cohort or pilot program as fast as possible. Avoid extended planning and committee meetings with people that will probably do not care about what you actually do (but will probably take the praise and accolades!).
This is easier said than done in some large organisations but your job is to figure it out and get it done –– just like your startups will need to do. So this is as much a test of your ability as it is the environment you’re in.
Things you can try:
- Run a ‘launch event’ to see how many people turn up and show interest in the program –– who are they? Did you know them? Are you surprised by the quality of their ideas/exisiting businesses?
- Run a pilot program with reduced funding to test how your program flows and whether the first group of mentors are a good ‘fit’
- Create a online interest or application form and just get it out there to just see who applies
How will you select, recruit and structure mentors?
This is a non-obvious but most important part of your program. The mentors literally make or break the program as your startups will rely on their advice and connections. Choose your mentors well.
Think about:
- What stage your mentors are at and what stage of entrepreneur are they helping e.g. some mentors love helping students with ideas, others think it’s a waste of their time
- Have they actually been in a startup? You want entrepreneurs not senior executives of big fancy companies (honestly, their skillset is useless) and ideally, if you can get them, mentors that have started, scaled and sold a business
- Aim to get some mentors across your core functions of the business e.g. a founder/CEO mentor (worn all the hats and started from literally nothing), operations mentor who has grown with the company and knows a what a good team looks like, and product/technology mentor that has built and launched a real product and had customers use it and love it
Side note: Check out the masterclass around ‘Designing Effective Mentoring Programs’.
How will you design and structure the program?
This is the hard part and where I recommend you get an experienced program manager to consult or join the team. Do not hire a traditional consulting firm to help you with this –– they do not get it (and will charge you way too much money).
A common mistake to presume that running and designing an accelerator program is easy and anyone can do it. Creating an ineffective program is theatre. Building something that is impactful is much harder. Consider:
- The stage at which you want to help the entrepreneurs e.g. pre idea-stage, idea-stage, exisiting business or post-investment
- Is this more about about the individual students/employees (how they should think about entrepreneurship and test their ideas) or this is about helping committed individuals that are working on an exisiting idea become founders?
- Is the time period in which you want to help them is 3 months, 6 months or more? Don’t worry about labels, if it is a incubator or accelerator, just work out how long you can support them with what resourcing and then work from there
How will you resource the program in the first 12 months?
This is also tricky and where organisations typically underfund e.g. only volunteers or overfund e.g. let’s create a whole new department and hire 50 people.
At a bare minimum I recommend hiring a full-time program manager (paid versus volunteer is a contextual question but I recommend paying them!) and a close group of experienced mentors which can be volunteers in the beginning.
You’ll also need to consider a temporary space (great way to get going versus funding a new building and waiting for that) and a budget for events e.g. catering and the like. A lot of startup programs are essentially event management companies but for founders and their startups.
- Who will lead it and make program decisions e.g. pick a program manager, don’t leave things up to a committee
- Who will support the entrepreneurs (typically and often better to be a different person) e.g. entrepreneur in residence
- Who will be volunteers and who will be paid? Startup ecosystem, unlike other industries, relies heavily on goodwill but that doesn't pay the bills.
What investors are there in your ecosystem and how you will you involve and interact with them?
Most university-based programs will be reaching out to investors for the first time. This is great but you need to build the relationship. They will be the ones funding your most promising startups.
Keep in mind not all investors are startup investors. You want a mixture of professional startup investors e.g. venture capitalists and ‘casual’ startup investors e.g. angel investors.
A few things to think about include:
- Do they invest in very early stage startups e.g. seed or pre-seed stage?
- Are they actively investing right now? Have they had any standout successes?
- Do they have a good reputation among founders?
- Will they make a good mentor too or are they just a ‘bucket of money’?
Side note: We just launched a new 2 hour masterclass on this topic too.
If you can answer some of these questions above you’re off to good start. I love to chat about these things and always happy to give my perspective so feel free to reach out at hello@emerginginnovation.com.au.
