Solving the Incubator/Accelerator Problem: Essential Building Blocks

I want to personally thank Sramana for writing what needed to be communicated in her recent article on HBR Blogs: HBR – The Problems With Incubators, and How to Solve Them. She identifies endemic problems I’ve seen in the D.C. market of fraught “incubators” and “accelerators.” I’ve experienced direct hand at least five distinct situations and all of them could use a little improvement. Sramana Mitra points out that incubators need to “overcome two pitfalls “:

  1. They need to provide real value (more than office space.)
  2. They need to measure success in more than outside funding.

Perhaps this is why the saturated pools of “would be,” “wanna be,” and “should never be” “entrepreneurs” is teeming with people that seem bright but can’t “cut butter.” All they want to do is to get into a “group” and “get funded.” That is not what business is about. Business is about serving a customer, a client, a society, and a world.

One of our portfolio projects was fortunate to have gone through a well thought out “Civic Accelerator” during the Winter of 2012. This accelerator was a partnership between Village Capital and the Points of Light Foundation. The founding leaders of the group went through an established Georgia Tech‘s Flashpoint Accelerator to design the now named CivicX Accelerator in Atlanta.

Just like a business should:

  • They are focused.
  • They think and plan things out.
  • They bring in experts.
  • They experiment.
  • They gave real access to real mentors.
  • They iterate.
  • They lead the companies in their portfolio by leading by example.
  • They didn’t waste our time.

Here are what I feel are the essential building blocks of a the next sustainable accelerator, using the Alex Osterwalder’s terms from his book Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers:

  • Customer Segments : A focused set of start-ups at a specific stage of funding solving a specific type of problem
  • Customer Relationships : Stay in touch with the start-up members throughout the perpetuity of their firm. If you helped birth them, you should be around like a friend.
  • Channels : Use targeted channels to get to the right people. “Startup World” is saturated. Stop wasting time with stupid ideas that can be replicated in a day.
  • Revenue Stream : If you are going to charge people for office space, go into the real estate business. Think of a more interesting way to make money.
  • Key Partners : A robust group of partners, mentors, funders, lawyers, accountants, and bankers that are complementary, want to be involved and want you to succeed.
  • Key Activities : A combination of continuous recruiting, program execution, curriculum development and redevelopment, fund-raising, and emphasis on improving the process of a) getting the right people b) training them well c) empowering them with the tools, resources, and guidance to lead themselves.
  • Key Resources: Invest in proper talent to manage the accelerator. If putting on events, get event staff. If managing different initiatives, get a project manager. Other than office space, will mentors be around? What’s in it for them?
  • Cost Structure : Figure it out. You’re a start-up accelerator right?

I am not denying that incubators and accelerators are a real business opportunity for those that start it. It’s more work than you think. If you are thinking of starting an incubator, accelerator, or another fund, put yourself in the shoes of the business that you may help. What’s in it for them? What’s in it for society? If you’re in it just for the money, you’re wasting the time

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