Introducing Changes for Cicada’s Accelerator Programs
Running in parallel for a richer experience and a new investment approach for flexibility
At Cicada, we’re always looking for ways to better help deep tech founders.
Last year, we ran our first vertical specific deep tech accelerator programs, GrowLab in agrifood tech and MedLab in medtech, and they made a splash in the early-stage deep tech startup landscape.
Applications for MedLab and GrowLab launch next Monday May 6 and we’ll be announcing more details about the next intakes shortly but we thought to share a few key changes that will make them better than ever.
Aligning GrowLab and MedLab to run in parallel
In 2018, our programs were run distinctively separately, GrowLab between May and August and MedLab between October and February. Founders loved the program (founders gave NPS of 85 and 82 for GrowLab and MedLab respectively which we’re very proud about) but we know that there’s things we can do to make it even better.
Alongside being highly mentor-driven programs with some of the best players in the business involved, our accelerator programs reply on the tacit knowledge and personal experiences shared between founders.
That’s why we’re increasing this surface area this year and will be running our programs in parallel. This is why we think it’s going to be great:
- More companies is better for everyone We noticed that the most important knowledge gained during GrowLab and MedLab are broad commercial skills including leadership, team, sales, etc. Simultaneous programs allow for these experiences and learnings to be shared between medtech and agrifoodtech founders.
- More (friendly) competition Seeing others winning is a great motivation to push harder. More companies gives more chances for big wins to inspire one another. In fact, we’ll be having a weekly all hands with all 12 companies (six from GrowLab and six from MedLab) to share networks, celebrate wins and put our heads together to overcome challenges.
- More energy A dozen startups sharing space and working on their businesses together gives an unreal buzz.
The benefit of vertically focused programs is we’re able to go very deep and specific into the key and critical elements that other programs won’t and can’t delve into.
But you might be thinking that understanding how medical reimbursements work won’t be relevant to a company building on-farm robotics! Medtech and agrifood tech are still very different.
This is why MedLab and GrowLab will continue to maintain their own dedicated program team, separate pools of mentors and domain experts. They will be distinctively seperate but we’ll bring cohorts, experiences and learnings together where it makes sense.
Changing how we invest
We are changing how we invest into two components: a Program component and a Cash Investment component. We’ll explain how this works further below but it will essentially mean Cicada investing its time and money to receive between 3.6% to 4.8% of each business that participates in a program.
Program equity
We back ourselves in how our programs adds value to each of the companies that participate in them. Across three cohorts, over $16m has been raised by companies from Cicada’s accelerator programs and the increase in valuation has been in multiples from the time of our initial investment.
Our non-cash investment is significant and includes a dedicated team to work with you, bringing together events for you including investor and demo days, arranging field and customer visits, access to our on-site facilities such as hardware maker space and wet labs, as well as an additional three months of space after finishing the 12 week program.
In exchange, we ask companies for 3% equity upfront to participate in the program which will be diluted at any future capital raise the company is able to complete. This is common stock, the same type you hold as a founder, so if you sell the company we only get paid when you do. No liquidation preferences either.
A new way of investing
Valuing a company at an early stage can be hard, sometimes even harder in deep tech when validation of science or customers can take longer. In the past we’ve made a straight equity investment ($30k cash for GrowLab and $50k cash for MedLab) with a standard valuation for each company (A$600k post-money for GrowLab and A$1m post-money for MedLab). This means really early-stage companies feel very happy while companies who might be a little further down the track may not apply.
So we’re changing how our cash is invested. We are using a convertible note to invest our cash in your business, $30k for GrowLab and $50k for MedLab. Depending on the valuation a company raises at, this will determine how much equity Cicada our cash investment will convert into. This will be around 2% of the business based on what we typically see post-accelerator startups raise at.
If you want more detail on how this works and how we invest, we’ve published our term sheet along with a plain english explanation of what it means for you.
Combining the Program component with the Cash Investment component leaves Cicada roughly with an equity stake of between 3.6% to 4.8% after the conversion of the convertible note. Naturally this is indicative and will be dependent on the specific terms of a company’s funding round.
We’re excited about the changes we’ve made for Cicada accelerator programs and think it’s going to make it an even better experience and outcome for deep tech founders. Hope you do too.
