Wether you are a start-up or a large corporation, finding your way in the realm of incubators and accelerators has become always more complicated as the ecosytem keeps growing. Hereafter I would like to review not a comprehensive benchmark, but a sample of a few players I had the chance to listen to, and draw some criteria to help you make the choice that fits you. That’s actually the first finding: there is no absolute ‘master of acceleration’. Indeed there are various value propositions, and different team personalities supporting them.
Incubators and accelerators
‘Common law’ separates incubators from accelerators: well-known incubators are Paris Region Lab, accomodating 150 start-ups over Paris, or La Ruche, a coworking space for ‘social business’. Incubators offer coworking spaces, where several start-ups work concurrently, transforming idea into elegant design and slick customer experience, defining their value proposition, and embodying it into preliminary prototype, MVP or demonstrator.
Accelerators assume that you have a product, and initial customers base: the direction is clear, you are ready to embark to the second step, searching for the multiplication effect: boosting sales, distribution, marketing, and branding, in parallel with sharpening a knocking busines model.
The fisrt question to ask yourself will then be: what is the status of my project, and do I need more of Design support or Business acceleration?
Juan Hernandez is cofounder of ‘L’accélérateur‘: it was created at the end of 2011, to found, and coach pre-seed start-ups. Juan explains that incubation allows a product to emerge, while acceleration goes deeper into business, market entry, commercialization and competitive advantages. ‘L’accélérateur’ provides 4 months of intense coaching, and support in the long tem, linked to a stake in the start-up. ‘L’accélérateur’ is fine for an entrepreneur who has gone half-way, having realized the complexity of his venture, and who’s willing an helpful hand to go the other way. ‘L’accélérateur’ brings funding, from 25 k to 200 k€. It coaches on business and operations, roadmap, as well as daily issues such as hiring a financial controller. It works on entrepreneurial momentum, prompting to ask oneself the right questions, assessing the situation, understanding problems roots, unfolding opportunities: a lot of small details that make a difference. Networking is vivid, especially on digital, opening doors to meet partners, customers, and investors. ‘L’accélérateur’ has helped completing 40 fundraisings in 2,5 years, for an amount of 20 m€. Services are paid through equity, cash provided helps to adjust a 10 to 20% stake.
Jérôme Masurel is CEO and founder of 50 Partners, a French incubator funded by 50 successful IT entrepreneurs, which concentrates on coaching a selected handful of start-ups. 50 partners offering starts with coworking spaces at reasonable price, with a partnership with Paris Region Lab. Then, the accelerator team provides 4 to 6 months coaching, with or without stake participation. Mentoring can last up to 2,5 years! They set up a mentoring structure made of several entrepreneurs from 50 Partners. 3 corporate partners, of which Publicis, bring additional support. The 50 partners share their experience as entrepreneurs with proven track record: one of them is Frédéric Mazzella, founder of Blablacar. The kind of entrepreneur they feel comfortable with is the humble type, looking for a launchpad, someone with a willingness and ability to learn. “Alone, I go faster; together, we go further” explains Jérôme. 100% of the projects have been founded. 50 Partners also belongs to a network of incubators: one start-up can spend 2 months at another incubator place: thus sush.io left for an acceleration at Plug and Play.
Gaetan Gachet is VP Business Development at Algolia, a French start-up for cloud search engine. Gaetan went through Y Combinator acceleration. He shares candidly his memories of this period: the team moved to the Silicon Valley to attend the 3,5 months session from January to March 2014. Primary focus was to define a metric: Algolia picked-up ‘sales’ and defined a 10% growth objective. Y Combinator invested k$ 80, and took a stake (7%).
Y Combinator does not provide office or coach: they let people organize themsleves. They provide access to a unrivaled network: one can meet Air B&B or Dropbox founders. There are around 800 Y Combinator Alumni: they know a wide range of problems that entrepreneurs frequently meet, and are willing to help. Every Tuesday a dinner bring together Alumni and start-ups. This 24/24 7/7 period builds the team, stimulates creativity and cooperation, with constant interactions, fosters solidarity, and leads them on how to work together seamlessly, and iterate. “We could feel the sense of urgency, as time to go back to France was approaching” remembers Gaetan.
At the end of the period, 60 start-ups present at Demo Day in front of 600 investors: all were successful in their fundraising. “We were technology oriented, we became a true service, facilitating access to content underexposed or misaddressed” observes Gaetan. Y Combinator is not so much about coaching large cohorts of around 80 start-ups, it’s about bringing you a label, which is not easy to catch (selection rate of 2%, 5 French start-ups among the cumulated 800 start-ups having attended Y Combinator), and fostering personal human development. Since 2005, Y Combinator has trained over 650 start-ups, 17 of which are valuated over m$ 100 each.
Techstars has also a very specific approach: it’s a unicorne just like Y Combinator. They have a network of 6 units over the US, one in London, and recently opened one in Berlin. Techstars provides $118,000 in seed funding, intensive mentorship over 4 months, and a network of mentors and alumni for 7-10% equity in your company. Techstars is opening incubation spaces for corporations on industrial vertical, like Sports with Nike or US mail.
Y combinator compared to 500 Startups
Milan Thakor has gone through both accelerators in 2014, and pictures a thorough comparison between both accelerators. “Go to 500 Startups for distribution and community, Y Combinator for focus and partners.” he says. “Y combinator addresses elite and growth, while 500 Startups is more scrappy and about building foundation’.
Stay tuned for our next episode: Start-up, find your accelerator coach 2/2