This morning I had the pleasure of checking out a panel discussion at the Computer History Museum on how to choose the best incubator for your startup. Thanks to Orrick for sponsoring the free event.
On the panel:
Speaking of Dave McClure, I have a lazyweb request: Can someone edit together a McClure ‘fuck’ supercut (like the Big Lebowski The Fucking Short Version ) of all Dave McClure’s obscenities across his most significant talks/videos? I can’t believe this doesn’t exist yet – Although, this morning I only counted 5 ‘fucks’, 3 ‘shits’, and 5 ‘assholes’ out of him.
- Adeo Ressi: Founder Institute
- Kindra Tatarsky: Astia
- Cameron Teitelman: StartX
- Chris Yeh (moderator): VP of Marketing PBworks
Here’s my condensed version of the highlights of the discussion and a few of my own take aways.
Which incubator is right for you?
First of all there is no clear consensus terminology wise as to what constitutes a startup incubator vs accelerator,etc. For the sake of my sanity, I’m going to arbitrarily refer to all these programs that help fledgling startups/entrepreneurs as incubators.
Each incubator has it’s own approach, niche, and core beliefs about what entrepreneurs need to succeed and what selection criteria makes for the highest rate of successful incubates (is that actually a word?!). Some of these niche targets will obviously make you or your startup unfit for submission. For example you’d need at least one founder that’s a registered student at Stanford to be accepted into StartX, likewise you need at least one female co-founder or C-level executive in order to apply for Astia.
Assuming you’ve got your gender, scholastic, and other issues sorted out you’ll want to decide what the critical needs for your business are.
An incubator may offer one or more of the following:
- Seed funding
- Mentorship
- Office Space
- Shared services/resources (e.g. legal, PR, design, accounting,etc)
- Community / Camaraderie / Support
- Networking/Connections (future financing rounds, demo day, program alumni, etc)
Each incubator has it’s own philosophy and rational for which suite of services it offers startups. They all offer mentorship, community, and networking. Founders Den (although it doesn’t position itself as an incubator per say) focuses more on co-working (office space), mentorship, and community. Founders Institute focuses more on an intense curriculum and recommends & refers entrepreneurs to best of breed local services / co-working opportunities. 500 Startups strives to offer all the above (if you consider design the shared service in this case). Y Combinator (not on the panel) offers seed funding, mentorship, etc, but doesn’t provide office space.
A show of hands poll of the audience seemed to indicate that people were more interested in funding (or help with funding) than office space or mentorship.
Speaking of funding, Adeo Ressi had stated that it’s “easy” to raise money. When the moderator (Chris Yeh) asked the audience if they agreed – no one raised their hand to indicate that they thought raising funds was easy.
Adeo Ressi qualified his comment saying that it’s “easier” and it’s a process oriented outcome. He likened it to borrowing money to buy/build a house. It’s a lot of work, but if you’re diligent and push through the paper work/process and have some traction/viable product you’ll get your funding.
Once you’ve figured out the best fit for the nuts and bolts, consider also the less tangible elements of each incubator – their style, their personality. Founders Institute definitely has a much more regimented, disciplined feel which definitely shows its colors in the approach and curriculum. Some entrepreneurs need, and thrive in that more structured environment. Other entrepreneurs would be better suited to a more chaotic free wheeling ‘just do it’ dynamic culture.
Let the right one in!
Those are the things I think you should consider when choosing an incubator, but what traits are the incubators looking for in a candidate entrepreneur?
StartX was looking for extreme focus & open to feedback (from customers)
Founders Institute: Average age 31 – 34, desire more female applicants, people who are frustrated with the status quot and have a tech related idea burning inside them. Like the older applicants that have had success in a profession with the perspective of a problem. Vocational skills are highly desirable. Social Science criteria scored from their predictive admissions test, personality traits such as openness, ability to process feedback from the world, fluid intelligence – the ability to measure and understand a rule set very quickly and apply it. Ability to deal with competing priorities, and finally a moderate amount of agreeableness… not too friendly, and not a total dick… someone with a certain amount of stick-to-it-ness.
500 Startup’s criteria is to look for evidence of product success and customer development. They are looking for entrepeneurs who are customer focused and the customer mission should be extremely clear… They prefer simple business models like subsciption or lead gen.
An alpha version of the product with evidence of traction and usage validation from unbiased customers. Paid conversions can’t hurt your case as well.
Preference entrepreneurs with 5 to 10 years experience or more… at 10 to 15 years experience and can’t raise initial capital on your own, there might be something weird going on there. Like to invest in unusual entrepreneurs that other investors shy away from, like couples – consider it an arbitrage opportunity to get under valued and under priced.
Quotable Quotes:
Dave McClure, ‘We don’t mind assholes who build good products and “get” customers (needs)’
Dave McClure modified Paul Grahams slogan, ‘Make something people want’ to be ‘Make something people want… to pay for’
Bonus links:
- Video from the incubator summit – how to choose the right incubator for your startup (June 21 2011)
- Where can I find a comprehensive list of startup incubators in the US?
- What are all the startup incubators/seed programs/accelerators in the San Francisco Bay Area?
- Seed companies and their startups list – google spreadsheet
- Geoff Clapp’s blog coverage of the event – The Great Incubator Debate
