From Speed Dating To Healthy Relationships: How Accelerators Can Be Made To Be Better Suited For Entrepreneurs
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“Don’t worry about failure; you only have to be right once.” - Drew Houston, Dropbox co-founder and CEO
Startup accelerators have soared in popularity in recent years, compressing years’ worth of knowledge and experience into a few digestible months. Getting access to a wide network of industry experts, expanding knowledge through dedicated programs, and, in some cases, getting access to funding partnerships have made joining an accelerator program an attractive starting point for a startup. It’s been so beneficial actually that the number of accelerators globally increased from just a few hundred in 2013, to more than 10,000 in 2016. If we analyze just the MENA region, it states that 50% of accelerators are non-profit, unlike the rest of the world that is around a 20% non-profit rate.
But what makes accelerators unique? After all, there are many alternative forms of support offered through programs or by its individual partners. The answer is simple: learning-by-doing, combined with an access to domain experts and the right tools, often yields positive results. According to Forbes, global surveys show that more than 90% of startups fail within the first three years of their life, while two out of ten fail within their first year. It shouldn’t therefore come as a coincidence that we see so many startups joining accelerator programs to increase their chances of success. Though, interestingly, most startups typically join not one accelerator program, but three, in their lifetime.
Stephen Forte, Managing Partner of Fresco Capital, describes this phenomenon as “accelerator hopping,” where startups duplicate their analysis and investments for minimum incremental value, while potentially diluting their financial value (though less relevant in the MENA with its large number of non-profit accelerators) by having multiple accelerators taking equity. Forte also points out that if the startup did not manage to get access to the investors through the first accelerator, it might not be an issue with the accelerator, but rather with the startup offering or market-fit. Indeed, there are quite a few potential reasons to explain the high chance for failure rates between an accelerator and a startup, which might encourage startups to go through multiple accelerators, rather than choosing the right one.
From a regional perspective, startups in emerging markets benefit from accelerators as much as those in more developed markets. While the concept and expectations of accelerator programs seem to be global, each region comes with unique, challenging, but enlightening settings that accelerators must account for, and the MENA region is no exception. First, business environments in the MENA region can be tricky and difficult to navigate. In addition, the diversity in cultures and languages in the region require localizing offerings for both the accelerators and startups. Then, while the region is considered a rich, untapped market with high potential, entrepreneurs struggle due to lack of access to the needed blend of local, regional, and global networks to support their work. Access to a comprehensive network of experts, whether in the business side, funding, expertise, or training is essential for startups to launch and grow. While there have been large developments that allowed greater access in recent years, there is still a long way to go.
At my company, BOLT, our experience through years of extensive collaborations with hundreds of entrepreneurs, thousands of mentors and experts, and countless projects with experienced and accomplished accelerators or incubators in the region, gives us a unique perspective on the needs and challenges of startups and accelerators. We believe that success results from providing the right support to the right audience at the right time. As identifying a startup is a key step for any accelerator, BOLT defines a successful startup as having two main characteristics:
- A project with an innovative unique selling proposition (USP).
- A project with the ability to scale within a specific market, and potentially into other markets.
“Intelak was instrumental in helping DUBZ transition from a startup to a scale-up,” said Omar Abou Faraj, the CEO of Dubz, an innovative baggage handling solution that takes your bags from pick up to check-in using their seamless LMD system. “Through Intelak's mentorship network, access to aviation and travel stakeholders (Emirates, dnata, and Dubai Tourism) we were able to upgrade our product and successfully pursue commercial and investment opportunities that took DUBZ to the next level”.
At BOLT, we are keen on understanding and providing the support that allows the right support to the right startups for maximum impact. Our expertise is especially relevant to startups and accelerators in the MENA region, leveraging a tested and holistic framework based on the four key pillars of the BOLT identity:
- Business model: the scope of work/intervention of the accelerator.
- Operating model: the way the accelerator interacts with the startups.
- Learn and grow: the depth of products and/or services offered by the accelerator.
- Target audience: the type of startup that the accelerator supports.
The “Business Model” characterizes the accelerator and the way it operates and delivers its services. We here observe four main common areas where a disconnection can happen between the accelerator and the startup:
1. A prerequisite for any fruitful collaboration is to have a common understanding of the startup set-up, objective, and challenges. This shall be enabled through multiple and comprehensive discovery dialogues. The most common obstacle arises when the startup founder is not a domain expert, does not acknowledge it, nor do they receive the help they are looking for because the accelerator did not prepare well enough.
2. An essential component for any startup will be the possibility to connect with the right mentors and experts, based on the startup’s set-up, objectives, and maturity stage. The prerequisite when it comes to the selection of mentors should consider three aspects:
- Knowledge about the industry in which the startup is positioned and will compete
- Skills brought by the mentor that will enable the startup to reach its intended objectives
- Legal and regulatory expertise as well as know-how of the market
3. Furthermore, any startup will need to source the right talent to achieve a successful and sustainable launch and growth. Often, the network or reach of the accelerator does not grant the resources required to make the startup succeed.
4. Finally, most startups will need to connect with potential investors early on in order to secure funding and support for their business. Creating a natural chemistry between founders and investors is critical for success as well as to increase the chances for investment. Not doing enough speed dating between founders and investors is a common mistake that can result in a lack of trust which can damage the sustainability of a relationship.
Source: BOLT website
The importance of these factors comes from the fact that effective programs require investors and startups to trust each other to offer the best possible value for all stakeholders involved.
BOLT’s business model acknowledges the above, and while having a global reach, BOLT has its operational base in MENA. This enables us to offer a contextualized approach, while having access to a wide pool of experts and mentors. Through comprehensive products and services offerings, across hackathons, programs, or workshops, we ensure to provide startups with the right tools and resources to be successful.
The accelerator “Operating Model” is BOLT’s second pillar, which defines the set-up of the accelerator and its ongoing interactions with the startups. We here observe two main areas where accelerators need to focus on:
1. In a digital world, accelerators require a flexible operating model that delivers value across multi-channels, whether digital or physical, and through a wide and agile network. The COVID-19 pandemic has shown that some accelerators were not equipped with the right technology to offer this flexibility, nor can they offer an international presence leveraging a flexible and agile team. Being agile and able to pivot in an unstable climate is critical to ensure the current and future success of their programs as well as their relationships with their alumni and current cohort.
“Covid-19 gave us the push to realize the exponential potential of virtual programming that actually brings the world closer together,” said Mia Jafari, Programme Manager of Intelak. “I see that in the post-Covid-19 era there will be a huge leap into hybrid learning models incorporating both virtual and physical learning experiences.”
2. Furthermore, diversity and inclusion have become essential, and being culturally aware is no longer a question of “why,” or “when,” but a question of “how.” By offering courses, programs, or workshops in multiple languages, and with deep industry knowledge along with cultural sensitivities, will strengthen the chance for more partnership opportunities for the startup.
This approach to working alongside founders has proven to be effective in our work, and we made sure that BOLT is able to offer its support physically or virtually across the world, by leveraging the most innovative tools, by leveraging the presence of our team in multiple locations and through the availability of our offerings in multiple languages, including Arabic.
LEARN AND GROW
The third pillar, “Learn And Grow,” constitutes every accelerator’s backbone through which they offer dedicated programs to support the design, launch and growth of startups based on their stage of development and needs.
1. Accelerators need to offer bespoke programs to best support the startups. Those can be developed using tools such as knowledge sharing or collaborative partnerships with other accelerator programs; locally or internationally. To tackle the issue of relevant resources for startups, NYUAD created a unique programme to support hardware startups. The winners of their competition are granted the opportunity to travel to Shenzhen, China to get a firsthand look at the hardware ecosystem, and be considered for investment and mentoring by startAD.
Source: BOLT website
2. Institutionalizing knowledge-sharing with other accelerator programs can give the accelerator an edge in terms of understanding the latest trends and technologies available in specific markets, not restricted within a certain geography. Furthermore, it enables potential cross-country exchange of startups.
3. To ensure a smooth and successful launch, planning the go-to-market and commercialization strategies for the startups, from the start, is essential. One of the key focus areas of each startup when joining an accelerator is to learn how to eventually become self-sustaining in the long-term, and to be comfortable with a frequent pivot of their business model.
4. Finally, getting startups in front of customers is essential. Access to the right stakeholders for proof of concept as well as access to investors is critical for their success and long-term viability.
“According to Blockbase Technologies, having access to aviation partners like Emirates Airline allowed for them to test their solution in an entirely new industry. This interaction gave them the ability to design a process flow for a general industry and gain valuable insight.
These concepts proved valuable to us in the past, and we made sure to integrate them within BOLT’s Learn & Grow pillar by offering programs, hackathons, and workshops that can be customized to match each team’s needs, and help them develop their proof of concept with key industry stakeholders.
Ultimately, an accelerator must ensure that there is close alignment between its offerings and the startups it will support. The accelerator’s “target audience” is the fourth but nonetheless extremely important pillar of the BOLT approach.
Each accelerator shall make sure to have a well-defined identity in order to enable a healthy selection of the startups it will support. An accelerator is self-defined through three dimensions:
- Their target in terms of which startups to attract: technology vs. product vs. service, demographics, industry of focus, and geography.
- The stage of development of the startup, its maturity, and size.
- The legal structure of the startup, from private to public or government entities.
Christina Andreassen, one of the judges for Startup Weekend Dubai ‘s Women edition in 2018, mentioned the challenges in terms of finding female-specific founders. For a woman-focused competition in the UAE it’s a challenge to find the level of talent we want to have when women in the STEM fields only account for less than 21%. [UNESCO report (2017, p.7)]
In the end, one thing is certain; accelerator programs can be immensely valuable when they offer the right help to the right audience in the right context. These pillars ensure that accelerators and startups move away from “speed dating,” i.e. giving standardized benefits without diving deep into the startup’s structure and local context and helps both parties form a healthy relationship based on mutual understanding of business, funding, and market-fit.
This is at the heart of our work at BOLT, where we work with startups and established companies from private to public or government sectors to ensure that we offer the best possible support in innovation and differentiation. Supporting founders helps their startups, accelerators, and society, so it is worth keeping this relationship healthy and inclusive.