Accelerators help startups speed up their learning process while also providing support and coaching. But what are the most important lessons accelerator directors or mentors learn after dealing with hundreds of startups? What are the most common fail or success patterns?
Paul Smith, co-founder and director at Ignite, an early-stage digital accelerator program based in the UK, is one of the best suited to answer. In the past four years his crew have managed over 50 teams and delivered five mentor-intensive programs, working alongside VCs and angel investors, as well as providing consultation for other programs.
Paul is also an advisor of Hassle.com, a seed investor, a tech startup co-founder and a mobile design agency founder, with “varying degrees of success and failure”.
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Although there are no definitive standards in regards to the structure of an accelerator, Ignite 100 does things a little differently.
How to Web: You took out Demo Day from the program, but also made it longer. What’s the motivation behind these choices?
Every accelerator should look to improve the experience and value they offer to both startups and investors, but the fact is the accelerator model has iterated very little since it was devised. What’s suitable for Y Combinator and Techstars isn’t necessarily suitable for smaller operations.
For example, Ignite tends to work with teams and founders that might be attempting their first startup and have never raised investment before. It doesn’t follow that you should put them through a model that attracts serial entrepreneurs who already have a seed round in the bank – half of Techstar’s teams has raised money pre-programme.
We’ve just started our fifth programme, so we’ve a good feel of what’s worked and what hasn’t. We felt teams needed a little more time to get to the stage where they were investment ready, could prepare executive summaries and so on.
As for demo days, the truth is they’re inefficient, ineffective and little more than a beauty parade. There are dozens of them for investors to choose from, and when you talk to investors they hold very few in high regard.
So we chose to do things differently and I’m delighted to say that both teams and investors alike found more value in our new model – one team signed a term sheet within seven days of the programme ending. While presentation and pitching skills are of paramount importance, we won’t be holding another demo day because we’ve found a better way.
Do the teams from different cohorts end up interacting considerably during the program? What benefits have you seen them derive from this?
We’re the only seed accelerator in the UK to operate a full time co-working venue. We also put a lot of emphasis mixing different cohorts together so they learn from one another. We’re currently running three programmes back-to-back so new teams are learning directly from the previous cohort.
Everyone joining Ignite becomes part of a wider family that support one another, problem-solve, share their networks. It’s very humbling and gratifying to see how much they challenge and support one another.
You have a flat fee of 18k per team. Does this change the profile of the startups that apply for the program? If so, then how does the change manifest itself? Has Ignite 100 become more popular among startups with less founders because of this?
So far, we’ve haven’t seen any real change in the types of teams applying. I don’t think a few thousand pounds here or there makes any difference. What has changed significantly is where we find startups. As the programme has matured and our reputation’s grown, more and more teams come through referrals from mentors or investors, than through the application process. For example, of the 11 teams on the current programme, 8 were introduced to us through referrals. That means less than 1% of applications are shortlisted for the programme.
Why did you choose Newcastle to start Ignite 100? Was it the founders’ decision or did it also support the government’s strategy for the region?
Ignite is a private accelerator company; the founders were all based in the city at one point, so we knew what a great tech scene there is to support new startups. It’s one of four or five cities outside London that has a strong native tech scene, so starting a programme there made perfect sense.
You chose to partially fund the program through Kickstarter. Who were your backers and how did they get involved after the campaign was over?
We didn’t use Kickstarter to fund the programme; we used it to raise money to renovate Campus North, our 10,000 sq ft venue and premises for startups. I’m delighted that over 160 people backed the campaign and we hit our target in 29 hours! That goes to prove just how strong the Newcastle tech scene is.
In a recent article you mentioned that “while raising investment is by no means an accurate indicator of a startup’s success, it is a significant metric for Ignite”. What are the other significant metrics that you rely upon to evaluate success?
One of the key measurements for an accelerator is whether the teams are capable of raising investment after the programme. It’s what our investors expect us to do, so while it doesn’t prove that a startup will succeed, we have to aim for that goal. We also measure other metrics – total valuation of the portfolio, number of jobs created etc.
Where do most applicant startups come from?
We see more applications from London than anywhere else. Perhaps that’s not a surprise, but it suggests there’s a need for a programme like Ignite in the capital. Around a third of the applications are from Europe and overseas, and there’s usually a handful from Newcastle and North East England.
Among the 50+ startups who have gone through Ignite 100, have you identified any relation between patterns for success or failure and geographical origin?
I don’t think there’s been any real correlation. One of our biggest success stories right now is Jinn, a team from Madrid; another is Future Ad Labs, whose co-founders come from Dublin in Ireland and Wolverhampton in the UK. There are similarities in the attitudes of the strongest teams, but origin stories don’t seem to matter so much.
You wrote an article about “pitch porn” and its dangers for a startup’s evolution. How can startups avoid this pitfall?
Pitch porn happens because startups haven’t done enough to prove traction or revenue or other key metrics, so it creeps to make prospective investors more comfortable. The way to avoid it is to focus on what matters, on those key metrics that will help a team tell a story to investors. That’s hard to do, but that’s why consistent coaching is invaluable for some teams.
You’re a detractor to the “failing is a good learning experience” theory. When is failure acceptable for a startup, in your opinion?
Actually I’m not; I absolutely believe failing is a brilliant learning experience. What I don’t like is people who celebrate failure as if it’s as worthy as success. Failure for any business is absolutely the wrong outcome, but if you can identify why you went wrong and, more importantly, be brave enough to try again, then that’s the real value of failure – it’s not a badge to wear to show how cool you were, it’s a chance to try again and do better than you did before.