The new way to launch your start-up or early-stage company has hit the entrepreneurial landscape like a hurricane. Business Accelerators and Incubators cover the landscape as it seems that every city, state, major university and country has joined the fray of early-stage venture capital companies like Y-Combinator, DreamIt, Idealabs, and MassChallenge to help you “accelerate” the growth of your company, or “incubate” your early-stage concept or idea.
When the state of Massachusetts does a joint venture with MassChallenge to run a 4 month accelerator program for the best digital healthcare start-ups, and then puts up over $250,000 in “no-equity taken” prize money to the best companies to come out of the competition, you might scratch your head and ask why?
It’s actually simple: Small businesses create over 65% of all new jobs in the US, and Massachusetts wants these digital healthcare companies to make their state their home.
The goal of the accelerator is to help a startup do roughly 1 year of business growth in just a few months. Incubators, on the other hand “incubate” new and disruptive business concepts and ideas with the hope of the idea budding into a business model and a company. Accelerators focus on scaling an early-stage, ongoing business, while incubators are often more focused on disruptive concepts and ideas.
I now have personal experience with a business accelerator. And this is my perspective.
In October 2015 I co-founded a start-up digital health and wellness company. Last May our MVP software application –CoupleWise— was a few months from completion. I was doing the rounds in search of early-stage seed capital when during research I came upon an ad for MassChallenge UK’s accelerator program—with 500,000 British Pounds in prizes to the top 20 companies—and since MassChallenge is a non-profit organization, the prizes came with 0% equity.
So I entered CoupleWise along with over 1,500 other companies from 49 countries and was awarded 1 of 100 Finalist slots. The home for the accelerator was the coolest shared office space in southeast London. The program launched early September and ran through the end of December.
The basic formula for accelerators is a combination of the following:
- Free shared office space for the term of the program.
- Cash prizes for the top companies in the “cohort.” Some, like Y-Combinator in California, take an equity stake in your company, while others, like MassChallenge in Boston (they have several other locations including London, Mexico City, Switzerland, and more), take no equity at all.
- A local and large network of business mentors available to “mentor” each of the businesses. Each business is expected to interview and connect with 2 to 3 mentors for the term of the program.
- Strong relationships with local and regional angel investor networks and other early stage venture capital companies.
- Partner with local and regional major corporations who offer business experts as mentors, and access to purchasing and business executives for potential business contracts.
- An ongoing program of 4 to 8 weekly seminars and training sessions with some of the best business experts in the region. Each week covers a different aspect of business: legal, tax, corporate formation, business strategy and planning, marketing and branding, social media, design, advertising, sales, budgeting and sales forecasting, even presentation skills.
- The 100 Finalists work together in a “family-style” office environment, we are also
expected to pitch in and support each other with whatever skills we can offer each other.
I took the Finalist role in London because I had experience building a UK market for my first software company, and the market for CoupleWise in England is just as large as in the USA. Additionally, we were in the market for investment capital and didn’t care if the money came from US or UK Angels—or so we thought.
Tune in for Part 2 coming in March as I cover the rest of the story!
Godspeed all my small business friends!
Dan Gallo, Managing Director, The Allasso Group, CEO & Co-Founder, Relationship 2.0 the developers of http://CoupleWise.com