Tuesday, June 25, 2013
Welcome to the new breed of incubators: startup accelerators that give startups everything they need in one central location. It’s literally a startup ecosystem in a box.
I was at Launch Academy, a startup hub in Vancouver, Canada.
To my left, independent coworkers with heads buried in MacBooks and ears insulated by Bose noise-cancelling headphones. To my right, numerous small two- to three-person startups in accelerator programs, chatting about data models and monetization. Down the hall, small companies, like serial entrepreneur Danny Robinson’s Perch.
Across the way, a couple of Vancouver VCs’ offices, who provide mentoring office hours with successful startup founders. On the wall, a sign advertising evening and weekend events focused on growing your business and meeting cofounders or investors.
“This is a disruptive space … not the place to just come in and work,” Launch Academy general manager Ray Walia told me.
“If you have a great opportunity but need cash, we help you find investors. If you need more mentorship and guidance, then we help you get into an accelerator. If you’re doing well but need more traction … then you just keep working.”
In the broader startup world, nine out of ten startups fail. Improving those odds — and increasing the number of young, smart, and creative entrepreneurs who are willing to throw their energy, passion, and lives against them — is what startup ecosystems like incubators and accelerators do. Increasingly, they do it by throwing all the pieces of a tech ecosystem into one big melting pot and stirring. And by providing every opportunity to succeed.
“Our motto is Get sh*t done,” Walia says, noting that he interviews even coworkers who are looking to join the space. “What we’re really looking for is passion: can you convince us that you can get something done in the next four months – whatever that ‘something’ is — that will move your company forward?”
That’s starting to be the new normal, TechStars CEO David Cohen told me via email.
Cohen knows what he’s talking about. TechStars has graduated 168 startups from its program since inception in 2007, and 90 percent of them have been successful, remaining in business or getting acquired. Altogether, TechStars graduates have raised more $322 million in venture funding, and some are major success stories, such as SendGrid, Localytics, and Orbotix, which has raised $9 million since its TechStars incubation period.
That makes TechStars one of the most successful of the new on-location incubators. It’s been so successful that it has expanded beyond its roots in Boulder to Austin, Boston, Chicago, New York City, Seattle, London, and San Antonio, Texas.
But this approach is a little different than what the first accelerators envisioned.
The ur-accelerator, Y Combinator, to this day doesn’t care where you work or where you set up shop. Although Y Combinator is based in Silicon Valley, startups accepted to the program can be located anywhere, as long as they’re local enough to join the group for scheduled meals, talks, and office hours. Founders can find their own space, work in a garage, work in their home offices — it doesn’t matter.
Part of that might be due to the fact that Silicon Valley is so densely infiltrated by startups, mature technology companies, angels, VCs, and all the other components of a rich startup ecosystem that Y Combinator doesn’t need to demand onsite working hours. The Venn diagram of the surrounding community and the inhabiting technology ecosystem are so close, they’re almost totally overlapping.
That’s not always the case elsewhere. That’s where more geographically centralized incubators come into play.
Walia, who has founded a number of startups himself, was working out of BootUp Garage in 2011 in British Columbia, Canada. After going back to his basement in January 2012 and missing the experience of being around entrepreneurs, he wanted to start a coworking space. GrowLab, a Vancouver accelerator with roots in Silicon Valley, had a two-month gap in between cohorts — and therefore space.
“We walked in May 25, had an official opening on April 5, filled up our 15 desks in two weeks, and went to IKEA and bought more desks,” says Walia. “By the end of the month, we had 25 companies here.”
By the time GrowLab’s new cohort was ready, the space was full. So, with GrowLab’s executive director Mike Edwards and Vancouver-based super-angel Boris Wertz, they bit the bullet and found a new, bigger space for both. Microsoft came in as a sponsor, Garibaldi Capital came in as an anchor tenant of sorts, and LX Ventures joined as well.
“Essentially, we put together the entire startup ecosystem,” Walia told me.
Ian Jeffery of FounderFuel, probably the largest accelerator in Canada (800 people attended a recent Demo Day in Montreal) did something very similar in its existing 10,000 square feet of real estate. The plan is to go even bigger as it moves into a 30,000 square foot space in Montreal’s historic Notman House.
“The vision of Notman House is exactly that: We have investors, the accelerator FounderFuel, freelancers, coworking space; and we have the event space, which has 180 events a year including Google hackathons,” Jeffery told me.
Both efforts are by the startup community for the startup community, Jeffery says. And in some sense they follow the TechStars model, he added, which now has accelerators in seven locations including Chicago, London, and New York.
TechStars builds startup ecosystems in some regions that are not typically known as startup hotbeds, although they all have their own local technology scenes. Boulder, Chicago, Seattle: There are definitely technology companies growing and thriving in those cities, but the cities themselves are not exactly Silicon Valley. So TechStars provides the space, the angel money, the accelerator, and the VC access that young entrepreneurs need.
As Walia puts it:
“We pull founders out of mom and dads’s spaces and garages and bring them into a peer environment. You get your most valuable input from your peers … almost via osmosis. You have the same problems as your peers, and being in that environment just helps.”
There’s a network effect that occurs when you work with others, Walia says. And there’s a network effect when you’re immersed in the entire ecosystem, and watch your peers build products, find investors, and hire teams. That network effect is especially useful for international teams, more of which are coming to Canada now that the Startup Visa is providing immediate and simple residency.
Danny Robinson, CEO of video communications company Perch, calls its “keiretsu,” the Japanese word for a series of interlocking and interdependent businesses. He’s an example of an older-stage company that provides leadership and inspiration for those just starting out, and he agrees that non-traditional startup markets, such as Perch’s hometown of Vancouver, need the help.
“It’s like collecting pieces of the puzzle,” he says. “In Palo Alto you literally can walk into a coffee shop and hear someone talking about their startup. But here, if you’re not connected with anybody, if you’re brand new, it’s really, really hard to break in.”
Breaking in and helping entrepreneurs is the entire vision. That and building the local ecosystems.
“I have a lot of passion to bolster the ecosystem where I live,” Robinson says. “And I think the best thing I can do to help the ecosystem is to build a billion-dollar company.”
Every billion-dollar company started somewhere with one person or two in a garage or a dorm or a kitchen. And so did every startup that fizzled and burned weeks or months after the bright dreams of beginning.
The goal of today’s startup ecosystems-in-a-box is to make the billion-dollar companies more likely.
at 2:35 PM