How a pre-accelerator worked
This post was supposed to be simple. I’d list the startups in the Fall 2015 cohort of the Startup Next pre-accelerator program who were joining accelerators and/or raising a seed round. I expected to quickly patch together something like TechCrunch doing coverage of a demo day, with no real analysis or commentary needed. But just as I was beginning to think about how to introduce the teams and share their successes, an interesting conversation sprung up across the blogs of some of Silicon Valley’s loudest voices about the many options in front of young startups.
Sam Altman detected a rising trend of Y Combinator applicants that had other accelerators or pre-accelerators on their resumes, and essentially condemned them, saying it’s much harder for these startups to get in — and that they have worse track records than straight-YC companies. Dave McClure responded in a tone and with a strength that one expects from the iconically bald, brash, and generally NSFW founder of 500 Startups: applicants coming from other programs will be welcomed into 500’s open arms, and to avoid the specter of ecosystem “monoculture”, your program should too.
I’m glad to see this discussion start. But the distinction between a “safety” accelerator and a pre-accelerator seems unclear even to the startup world’s hallowed thought leaders.
I mean “safety accelerator” in the same way that one says “safety school” here in the US when applying to college: it’s not your top pick, but it’s better than nothing (and the funding might be your main driver to keep your rent paid). I hear about a new accelerator, often sponsored by a corporate, at least once a week. And while I’m sure that some will prove to be good over time, the track record of most are pretty abysmal (the distribution is that of a power law: a handful do extremely well and the rest don’t do much of anything, as is widely assumed but can be objectively seen in Jed Christiansen’s SeedDB).
In short, a pre-accelerator provides mentorship and education to bring a startup to the brink of growth, while a typical accelerator program trades seed investment for equity to make that growth happen.
And the smartest teams aren’t going to jump into the first accelerator program that they’re accepted into, especially not if it’s going to take the typical 5–7% equity stake in their company. (It’s heartening when I hear teams debate the merits of giving up precious equity from the most proven programs — obviously, not everyone needs to go into an accelerator.)
At the same time, the top accelerator programs now take teams at more advanced stages than ever before. Andrea Barrica from 500 Startups spoke at Startup Next and answered a question about their admissions criteria:
“If you’re not selected for 500, it’s likely because you’re not ready for us to help you grow a lot or aren’t going after a high growth opportunity.”
The latter isn’t news: they want startups with the potential for insane growth. But when she says, “you’re not ready for us to help you grow a lot,” it’s another sign that a team has to have more than an MVP or some promising customer interviews to be accepted. Today, teams need to be ready to tap into the accelerator’s particular focus on growth from day one. If you haven’t figured out who your customer is, forget it.
So there’s a lot that a startup needs to figure out before they’re ready to grow like a weed in spring. Usually, they’ll need customers, a pretty polished product, a strong pitch, etc. (They’ll also need a promising and credible team, but that’s not something that anyone can change in a short amount of time.)
But it’s hard for entrepreneurs to get to that stage if they’re isolated, and startups need support.
This is where the pre-accelerator model fits in. Instead of going into a below-average accelerator in hopes of finding mentors and community, a startup can join a program like Startup Next that takes zero equity, but is focused on giving them the boost that they need to get into a top accelerator program (or toward whatever their goal may be).
This is not theoretical. We accepted nine teams into our Fall 2015 batch, and the six who were aiming for an accelerator were all accepted. All teams are going strong on an upward trajectory and are attracting seed funding. You’ll notice that they have working products, traction, clear focus, and in many cases are poised for the type of growth that accelerators are looking for.
Here’s an intro to each of the startups in this Fall ’15 cohort of the San Francisco Startup Next program.
Birdly https://www.getbirdly.com/
Birdly intrigued me when I heard about their plan to do expense reports within Slack, but I wasn’t sure whether they had a passion for accounting. (Does anyone?) Once I met Quang Hoang at Web Summit in Dublin, I understood his bigger ambitions. Birdly is building an application layer to allow employees who use Slack to interact with enterprise apps like Salesforce and Zendesk.
Birdly is working away in sunny Los Altos while in the Winter 2016 batch of Y Combinator.
Casabots http://www.casabots.com/
Deepak Sekar showed up on the first day of Startup Next and declared that he was building a “cooking robot.” People were into it, but a little skeptical. Perhaps sensing this, he managed to get a giant, modified 3D printer from San Jose to San Francisco and into the basement of The Vault. It was autonomously sautéing green beans within an hour.
Deepak has grown his team to six amazing people and will be joining Amos Schwartzfarb’s Techstars Austin program this Spring.
The Catch http://www.thecatch.co/
There is a key issue for women in online dating: it sucks. More specifically, app-based dating services lack user engagement and follow through. Shannon Ong built The Catch like a 70s game show: the men are contestants who compete by answering questions to win the affections of the female, who’s in the driver’s seat of the communication.
The Catch is now live in the App Store and currently has a viral coefficient that had Anshul from Zynga practically fall out of his chair.
Choix http://sochoix.com/
Subscription boxes tend to take products from whatever brands will pay for placement. Not surprisingly, makeup boxes are full of crappy, widely-available wares. Ellie Bolus’ Choix (French for “choice”) ships high-end cosmetics in sample-sized portions to bring the makeup counter experience to ecommerce.
Choix was recently accepted to join 500 Startups’ latest batch.
Cocoon Cam http://www.cocooncam.com/
During the team’s weekly elevator pitch, the Next mentors would have to remind Pavan and Rubi to stress their credibility. Cocoon Cam was so excited to share their product and vision that they’d forget to mention that their team is ex-Tesla and -Apple, and other small details, like the fact that they’d demoed the product for President Obama at the White House a few months earlier. Cocoon is not just a video baby monitor. They’ve cracked how to measure heart rate and temperature without using a wearable of any kind (something parents aren’t keen on).
Now that they are slightly better at bragging about their achievements, we’re also excited to help Cocoon Cam brag that they’ve been accepted into renowned hardware accelerator Highway 1.
Learning to speak English has unique issues depending on your native tongue. Vu Van and her team is building tools based on the native language of the language learner. ELSA is hitting the difficulties people face with achieving proper pronunciation, an American accent, and understanding the idiosyncratic rules of native English speakers.
Vu and the team are now finishing Stanford’s StartX program and raising a seed round, following investment from 500 Startups’ Vietnam fund.
PiQ http://www.piq.technology/
One thing that impressed me when I saw PiQ’s application to Startup Next was that they already had a healthy, revenue-generating logistics system for retailers. Now, they’ve built a new consumer-facing retail engagement solution that gives customers coupons and deals when they scan content with the PiQ app — and retailers can also now offer self-checkout within the app.
While they’re completing a seed round, PiQ is piloting in over a hundred stores in Silicon Valley and Australia.
Wivity https://wivity.com/
We don’t do awards at Startup Next, but if we did, Alfred and Jörg would easily take away the prize for “most improved elevator pitch.” They didn’t struggle for no reason: Wivity is a complex and transformative idea in the massively complex world of IoT. Essentially, they’ve developed swappable wireless modems that look like SD memory cards, and can be added to any connected device (the duo previously developed a wireless standard for connected cars). Alfred showed up fresh from CES last month with a home fire alarm that had a Wivity card slot.
Wivity is filling out their seed round and bringing partners onboard — we expect big things to come in the future.
Vetary https://www.vetary.com/
The Vetary team came into Startup Next with a goal of helping pet owners. Through lots of hard work they’ve consolidated their focus on financing, helping pet owners find the credit they may need to treat their pet. After early success, Garrett Smallwood and his team have recently expanded the Vetary model into other realms of healthcare financing with Finrise, using multiple signals to better calculate financing options for patients and help improve their access to healthcare.
Vetary is in the current batch of NFX Guild (formerly Ooga Labs), a program focused exclusively on marketplace startups.
I’ve thought about why these teams made the progress that they did in the program. It wasn’t me (though I did at least keep an ample supply of Anchor Steam on tap each week). Or Sydney Lai, amazing as she is at helping make the Startup Next pieces fit together. The teams are of course ultimately responsible for their success, and there are two groups that make Startup Next offer its real value.
The first group is Techstars, who took Startup Next under its wing last summer. Their support has been invaluable and it’s incredibly exciting how Startup Next will continue to grow under its umbrella. (NOTE: Startup Next’s goal is to help all companies in their path forward, whatever that path may be, in the spirit of the aforementioned “Plays Well With Others” by Dave McClure.)
Most notably, credit should be given to our incredible mentors (including lead mentors Simon Cross, Chad Kaul, Kapil Kanugo, Doug Gould, SerenaKeith, Ugur Kaner, and Ari Eisenstat). I made an ask of dozens of serial entrepreneurs, angels, and builders, and I was overwhelmed by their support and enthusiasm to truly take these teams under their wing and support them over the five-week program. Our mentors from the Fall program have taken it upon themselves to recruit friends who’ll bring even more to our next batch.
Applications for the Spring 2016 cohort of Startup Next close on March 24th. Apply here
