Tech Innovator, Storyteller, and Mentor Andrew Vorster shares his insight and advice for tech startups considering accelerators and incubators.
This article is taken from a Q&A on tech innovation with Andrew Vorster, you can read the full article here – Gluon Consulting – “Bloody Noses and Tech Innovation – Q&A with Andrew Vorster” (http://bit.ly/QA-AV)
Hi Andrew, if I’m a fintech startup, I have an idea that I wish to execute, where should I go and how could someone like you help me?
AV (Andrew Vorster): London is currently the Fintech Capital of Europe. If you don’t have a business angel or VC backing you, I’d advise getting into an incubator or accelerator program if you can. The good programs will open doors to a relevant network and if your proposition is viable you will attract the investment you need. If it’s not viable, you’ll either find out fast or be advised on a viable pivot (or advised quite bluntly to pack it in).
I’ve sadly seen many startups (not just in Fintech) that have been bootstrapped by their founders or friends and family / their immediate network that have been cash rich and burned all the money on a project that would never have stood up to scrutiny had it gone through a formal process. The founders often have a great idea but for a variety of reasons are naïve about the complexity of the landscape and have no real concept on how to execute within it – that’s where a good incubator or accelerator comes into play.
I keep on stressing “good programs” as although according to various reports there are upwards of 60 incubators / accelerators / corporate incubators in London right now, they don’t all offer the same opportunities and open the same doors. Some of the “incubators” are little more than co-working spaces – they might charge you a low “membership” fee in return for a couple of desks in a funky space where they might get an “inspirational business leader” to present once a week / month.
The more structured incubator / accelerator programs are difficult to get into – they will typically get anywhere between 200 – 400 (I’ve heard of some as high as 1,000) applications for selection for one of 10 – 12 places in a cohort. I’m currently an active mentor at one of these – Startupbootcamp – although they aren’t the only game in town.
If you’re selected for one of these, congratulations – you’ve passed the first hurdle. Your application and concept has already been vetted by seasoned professionals – this doesn’t guarantee success but it gives you a fighting chance that you have a sound idea and someone is willing to place a bet on you – what now?
Typically, these program will be time-boxed – 4, 6, 12 months are common. You will be required to give up anywhere between 2 – 10% of your equity in exchange. You may be awarded an amount of cash (£20k – £50k) and / or an allocation of technology resources like cloud computing, storage, etc along with a limited number of desks in a co-working space. During the program, you will typically have access to an “Entrepreneur In Residence” to help you flesh out your concepts and provide some input on how to execute and a mentor network where you will be paired with one or more mentors – some “hands on” who will visit on a regular basis and some “remote” who are there to help you address specific challenges and open their personal network to you for introductions and opportunities. You will also be subjected to a program of knowledge sharing on everything from business model generation to pitch preparation. You will also be expected to regularly update the management team of the accelerator / incubator on your progress and report back to mentors on a periodic basis. Your concept and progress might also be socialised across an affiliated VC or angel network and you can expect to pitch directly to organisations interested in early stage investment as this is a rich hunting ground for them. The end of the phase normally culminates in a pitch session to a room full of potential investors.
According to research, over 90% of startups that follow this route are successfully funded.
Read the full article at – http://bit.ly/QA-AV