The HACKcelerator Story: From Hackathon Project to Startup in 12 Weeks
The thought of investors and accelerators being interested in very early stage startups was unheard of just a few years ago. However, alongside its revolution of the hackathon industry in 2011, AngelHack also revolutionized the accelerator industry by creating a fluid model that connects hackathon winners to the resources they need to become full-fledge startups; coining the term pre-accelerator.
Let’s Start with the Basics: What is a “Pre-accelerator”?
There is a lot of speculation surrounding how to define a pre-accelerator and how this form of acceleration differs from traditional accelerators. The main difference between these two types of programs is in the different stages of the startups they admit.
Traditional accelerators such as Y Combinator, 500 Startups, and TechStars typically admit startups that are already established, with proven traction and a definitive user base in the market; often times these startups are incorporated with small amounts of seed funding. This important distinction has been discussed countless times in interviews and articles talking about such accelerators. While filtering eager founders through their tough application processes, accelerators find their startups through written essays and interviews. AngelHack’s introduction of the pre-accelerator has certainly made this process a lot leaner.
Put simply, a pre-accelerator takes on startups that are at an even earlier stage than pre-seed investment, and provides them with the resources they need to reach pre — or seed — investment level.
This process de-risks early stage startups, thereby acting as a more refined filter for accelerators who are looking for companies with a strong potential for success. For this reason, pre-accelerators became natural partners for full-time, traditional accelerators, providing them the cream of the crop startup talent with less of a hassle. AngelHack created and adapted this concept of pre-acceleration to remain the leader in this growing industry. The HACKcelerator is unique in several aspects. It not only showcases the cream of the crop to both investors and accelerators, but it most importantly brings home innovative startups from untapped tech hubs from all over the world. With yearly global hackathon competitions in over 50 cities worldwide, AngelHack has created the first and only pre-accelerator to fully dedicate itself to accelerating teams from hackathons. This is where the term ‘HACKcelerator’ essentially comes from. Only 2% of hackathon attendees make it through. Teams that enter the HACKcelerator are hackathon champions who have beaten an average of 250 attendees. Once admitted, the HACKcelerator takes on the challenge of de-risking these startups and developing their hacks from concept stage to live product in just twelve weeks.
Hackathons are flooded with the world’s most talented and brightest minds, many of which are overlooked. Investors have always seen hackathons as great opportunities to source deals with talented hackers, but there typically wasn’t a formal process which guided these deals. Enter AngelHack.
Approximately 79% of AngelHack’s hackathon attendees consist of developers and designers, with little to no background in business development. This makes these talented hackers vulnerable as founders, sometimes leading them to accept investment from individuals who provide little to no value aside from the checks they hand out. In their book Angel Capital: How to Raise Early-Stage Private Equity Financing, Gerald A. Benjamin and Joel B. Margulis warn entrepreneurs against falling into this trap. They discuss the importance of bringing on investors with an extensive industry network which can be leveraged for potential customers, additional investment, and connections for suppliers or distributors.
Being the largest and most global developer ecosystem, AngelHack found itself in the premier position to provide this missing value. Teams who join the HACKcelerator gain access to AngelHack’s extensive network of mentors, business partners, and community leaders who can add value to their experience. Teams also get to enjoy being spotlighted to our engaged community of 50,000+ of developers and innovators, who are always on the lookout for the tech industry’s Next Big Thing.
Milan Koch, AngelHack’s Director of Incubation and Acceleration, summarizes the measures taken to de-risk the HACKcelerator teams below.
“After screening over 300 early stage deals per year as potential investments for funds or accelerators based in the Silicon Valley, I found that — for investors at this stage — attractive startups have three key success factors in common:
1. A team with a high ability to execute; technical expertise were favored over business expertise
2. A Minimum Viable Product that focuses on core features, which can be developed to include more advanced features later on
3. Proof of customer validation and early traction or growth, that proves existence of demand in the market and the ability to scale the business”
Because our teams are admitted straight out of hackathons, the HACKcelerator has a distinct advantage of vetting raw technical talent. However, AngelHack does partner with technology giants in the industry to provide additional guidance where needed. For example, this year, AngelHack has partnered with HP’s Haven OnDemand team to provide technical support for the HACKcelerator teams throughout the program.
Taking the need for a minimum viable product and proof of customer validation into consideration, the program follows a three-phased, business and tech balanced curriculum, that leverages AngelHack’s extensive network of global developers, entrepreneurs, and investors to produce startups from hacks that are attractive to investors.
The HACKcelerator also follows a performance-based model to ensure the graduation of top-flight startups. Participating teams have to meet weekly milestones to reserve their spot on the stage at Global Demo Day.
Where’s the proof? In the pudding.
While pre-accelerators don’t generally boast the high portfolios traditional accelerators do, AngelHack’s HACKcelerator has experienced a lot of success in the area.
With a startup portfolio valuation of $28,000,000, the highest in the pre-accelerator market, and acquisitions from tech giants such as Google, and industry innovators such as BOX, AngelHack is the highest valued pre-accelerator in the industry.
But the biggest proof of success is seen in how quickly the concept has been adopted globally. Solo companies have sprung into existence to join the pre-acceleration movement, and larger companies, such as 500 Startups, have created pre-acceleration programs of their own. The entry requirements of such companies vary vastly, with the HACKcelerator remaining as the only pre-accelerator working with hackathon winners.
All in all, AngelHack continues to seek new ways to increase opportunity for passionate innovators in the ever-changing tech industry.
For a full list of Global Demo Day participating teams, visit: http://globaldemoday15.com/.
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