As you’ve probably read in our past blogs, we’ve got quite the wide ranging grouping of companies in the current FounderFuel Cohort. From aquaculture to 3D printing to transportation to education, we thought we’d start giving you some snapshots into the spaces that some of our companies are in.
Let’s begin with 3D printing. Check out some of the interesting tidbits they shared with us about the space.
1) The buzz around 3D printing has finally worn off and people are starting to really to understand and appreciate the space. 3D printers are becoming the norm, no longer just a fancy product that 1 in every 1000 people might own.
2) Following on point 1, we’re now seeing 3D printers being sold at stores such as Home Depot and Staples. Which means that it’s no longer just early adopters but there’s mass consumer adoption.
3) All of a sudden, not only is Canada being put on the map in terms of 3D printing but Quebec and Ontario are becoming major players on the scene with some huge Kickstarter and IndieGoG0 campaigns. Some examples are:
- The Tiko printer, which is what most are saying is the most affordable 3D printer to hit the market at just $179. With 20 days still left to go on their campaign they’ve raised $1,349,500 from a goal of $100,000.
- ProtoCylcer, who has created a way to recycle waste plastic into 3D printer filament. They managed to successfully fund their campaign by 146%!
- There’s a 3rd one who is expected to have a massively successful Kickstarter campaign but you’ll have to wait until Demo Day to find out who that is…
Make sure you come to Demo Day so you can see our 3D printing company pitch on stage!
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As program manager for FounderFuel during the last 2 years…I’ve been putting some thought into the state of Accelerators, what makes an Accelerator world-class and what the future might hold. Below are my attempts at summarizing these thoughts.
Definitions: Accelerators, Incubators
Let’s first review the difference between Accelerators and Incubators, to make sure we are on the same page.
There are various kinds of accelerators, some with a special market or industry focus. At a high level an Accelerator can be defined by 4 main traits:
The program is short, usually lasting anywhere from 3 to 6 months,
Companies coming in to the program have at a very minimum an MVP,
Companies will receive a minimal investment, usually pre-seed and the Accelerator will take equity in return,
The Accelerator will provide its companies with access to Mentorship.
Programs typically end with a demo day, or an event presenting the cohort.
Incubators generally provide the company with a physical space in which they can work to develop their idea over a longer period of time with less direct or managed interaction with those running the space. Incubators usually do not provide funding, so when it comes time to getting their product into market and raising Venture Capital, a company is more likely to go the Accelerator route.
The State of Accelerators Today
I recently attended the Canadian Association of Business Incubation Summit where Pat Riley, CEO of the Global Accelerator Network gave a talk on the state of acceleration and trends to look forward to. Below are some statistics that they’ve collected from their network of Accelerators from the past 7 years.
On average, it takes companies 4.8 months to raise money after completing the accelerator,
An average of 7 jobs are created per company after completing the accelerator,
52% of companies that have completed an accelerator raised capital and of those 62% raised over 500k,
79% are still in business today,
Accelerators help on average 6.4 companies at a time,
Accelerators receive on average 273 applicants per Cohort,
The Mentor network of an Accelerator has, on average, 84 members,
The average amount of equity taken by an Accelerator is 6.3%.
None of this comes as a surprise as it mostly fits within the parameters of an Accelerator that I defined above. However, what is really exciting to see is that 79% of the companies are still in business. This is exciting because one of the main mantras at FounderFuel is that we’ll either accelerate your success or your failure. So to see that 79% of companies that have gone through Accelerators are still in business leads me to believe that the model is working.
I was recently interviewed by a student and they asked me if the stat “9 in 10 startups fail” can be applied to companies that go through Accelerators. My answer to him was no, it didn’t apply. I justified this by telling him that companies that go through Accelerators are provided with every tool and resource that they need to be successful and if 9 out of every 10 of them failed, we just wouldn’t be doing our jobs. Accelerators would have no raison-d’être.
I was a little surprised by how low the number is for companies who have raised money after an Accelerator. The average stands at 52%. But then when compared to the amount of startups still in business, this stat isn’t as scary. It means that startups have found ways to monetize faster and grow without having to raise additional funding. Raising follow-on funding isn’t the only measure of success for a startup (but more on that later).
Where does FounderFuel fall within the stats of the average Accelerator?
It takes a FounderFuel company on average 7.1 months to raise money after completing the program,
FounderFuel companies have, on average, created 6 jobs per company after completing the program,
74% of our companies that have completed the program have raised capital and of those 40% have raised over 500K,
83% are still in business today and 11% of our companies have been acquired,
We help an average of 8.5 companies at a time,
We receive on average 389 applicants per Cohort,
Our Mentor network is made up of 151 members,
The amount of equity we take is 6% (or 9% for hardware startups, but they get 100K).
Something interesting that I’d like to point out is GAN has never analyzed the Accelerator space from the side of the entrepreneur, which is necessary to get a full and balanced view of the space. At FounderFuel, we make sure to do detailed and anonymous exit interviews with all our Founders in the weeks following their graduation. These help us regularly rethink and rework the program to ensure that we’re providing a top-level program that is always benefiting the entrepreneur. It helps us measure and evaluate ourselves based on more than just the numbers, which is a common mistake among Accelerators. Numbers can only tell you part of the story. I would highly suggest that every Accelerator out there makes this a standard practice.
The Future of Accelerators
Now, what does the future hold for Accelerators? It’s hard to tell, but one thing that is obvious is that the status quo won’t remain. We’re seeing Accelerators race to grow and rethink their standard practices (whether that means rethinking the classic program, focusing on specific verticals or expanding their reach) it will be interesting to see which ones will be successful in this evolution. During his talk at CABI, Pat (Global Accelerator Network), highlighted 3 points about where Accelerators should be heading.
Accelerators should start hosting multiple demo days, not just in the city you are located in but host Demo Day roadshows,
They should start focusing on one vertical,
Accelerators will be adding locations, it’s no longer just about the 1 city model.
I don’t completely agree with these points for various reasons. Investors are already suffering from Demo Day fatigue. I bet if you planned it properly, you could probably hit up a Demo Day almost every day of the year. Does it really make sense to encourage Accelerators to take their Demo Days on the road, will it really make a difference in the long run?
A better plan would be to continue building your brand, bring in great startups and work very hard to ensure they grow and scale and become successful. Doing so will attract Investors and they will want to travel from other cities to come to your Demo Day. It’s not easy but it creates much more value in the long run, not to mention the right kind of value. The same would apply for adding additional locations to your Accelerator. Is it really worth it? If you build a world-class Accelerator then companies will come to you.
It seems very “in” to start an Accelerator and they’re popping up all over the place, do we really need to move towards over-saturation at an even faster pace by encouraging Accelerators to open in multiple cities? I’m all for top-tier Accelerators expanding, but we’re close to (or some might say have already passed) the tipping point where there are too many Accelerators and not enough solid ideas worth accelerating.
Instead of opening up multiple locations and saturating the market let’s focus on collaboration between Accelerators.
Join us July 15th in Montréal during the International Startup Festival for another edition of the Accelerator Rally. See last year’s edition to get a sense of the topics covered and attendees. Stay tuned, as we will soon announce more details and open the call for speakers and panels.
That’s all for now, stay tuned, I’ve been putting a piece together on red flags to look for when considering an Accelerator.
Work in the Accelerator space and want to share your thoughts? Reach out! We’d love to chat.
It seems like every industry these days is becoming a “tech industry”, but the last one we thought would follow in this trend was the maple syrup industry. Armina Ligaya published an article in The Financial Post yesterday all about how the maple syrup industry is in the process of entering the 21st century.
We all might picture the maple syrup industry as one that is quite antiquated, a spout in a tree with a metal bucket attached but it is one that is in the process of undergoing a bit of a renaissance. Since the early days of maple syrup tapping there have always been issues with loss from holes in the tubes which transport the syrup. One of the only real ways to find and fix leaks was to have full-time staff walking around the sugar bush and searching for leaks. That’s about to change though!
A frustrated maple syrup farmer decided things needed updating and once he realized he wasn’t going to be able to find a technology solution he decided to create his own. He recruited a developer and began to build what is known as Tap Trek Technologies. In her article, Armina describes this as a “system [that] uses solar battery-powered radio units strapped to trees, each unit monitoring the vacuum pressure on about a half-dozen lines and transmitting that information, real time, to a computer or smartphone”.
This is a major breakthrough in an industry that has been lagging for decades. It wouldn’t be surprising if it became very crowded in the coming years, after-all it is almost a half billion dollar a year industry in Canada alone!
There are 67 days left until Demo Day. That means 1608 hours, 96,480 minutes or 57,788,800 seconds.
After doing that math, we were shocked that there were less than 2000 hours left for the teams to crank out code, push product and get traction before the big day. We got to thinking, if that number made us stress, how it would make the teams feel…To begin the conversation we asked the teams how many hours they each work on average a week, then followed that up with the real numbers to get their thoughts on their looming deadline.
How many hours a week do you work?
“Well let’s see, we work 8am to 10pm, 6 days a week so I’d say between 80 and 90 hours?”
“Easily 100. I work 14 hour days, 7 days a week.”
“Let’s just say I’ve closed Notman House every night this week. At 2am. I’ve also opened it every day this week. At 8am”
“How many hours are there in a week? That’s how many I work.”
So how does it make you feel that there are about 1600 hours left before Demo Day?
“Off the record? Can I swear in the blog?”
“Excuse me while I go cry in the corner.”
“I need to stop wasting hours on sleep!”
“I think I need to go change my pants…”
“Excited! I can’t wait to see how our company evolves”
And now there’s only 1607 hours left…
We’re only 3 weeks into the program and it feels like it’s been months! The teams are working hard all day and night to get their products ready and to build traction. Since it’s a rainy Friday, we decided to take some time to talk to the teams and have them reflect on how things have been going so far (considering the Molson Export and Redbull “decorations” seem to be popping up all around Notman House)
The Molson Export wall is expanding:
We’ve listed out below some of their thoughts:
“Everything is getting accelerated, even my sleeping ”
”We’ve talked to more people and formed more connections in 3 weeks than we ever have before.”
“We’ve been opened up to a whole other side of the MTL tech community. We’re still trying to process just how many people are truly committed to helping us grow and succeed.”
“Our heads are constantly spinning!”
“I’m getting really good at only sleeping a few hours a night.”
“It’s a shock to realize just how many people are interested in your company and willing to invest their time and knowledge”
And the Red Bull towers are growing…
We can only imagine what they’ll be thinking 3 months from now! The countdown to Demo Day is already on!
At one of the first FounderFuel Happy Hours with the cohort, we got to talking about ramen. How living off ramen is dirt cheap and that you can make some legitimately delicious meals with ramen and a few add-ons, even when you’re in a bind for time (which the teams are, since they’re working their butts off). Ramen is often a staple in university students’ lives, and when you think about it, university students and startup founders and employees (if you’re that lucky) have a lot in common: small budget, big appetite, little time.
Before we get into what startups and ramen have in common, check out this awesome infographic from HackCollege on Ramen (and why we–students and startups–love it):
Created by: HackCollege.com
Now onto ramen and startups combined. There’s this little thing being called “ramen profitable.” A term some believe to have been coined by Paul Graham of Y Combinator, being ramen profitable is the ”situation where you’re making just enough to pay your living expenses.” “Once you cross into ramen profitable, everything changes. You may still need investment to make it big, but you don’t need it this month.” In the world of startups, this is a big deal. Generating enough revenue to support yourself is huge. It can make you feel better about what you’re doing, focus your energy and talents, and buy you time to make the necessary changes to your company. It can also make you more appealing to investors, and means that they’re less likely to take advantage of you because you need money, as Graham points out. But amongst the hallelujah chorus that is heard when a startup reaches ramen profitability come voices that say it can be as much of a trap as it is a blessing. Yes, it helps startups keep costs low, and buys time–but time can mean comfort and less of a push to get bigger, greater, and further out there. Instead of raising a round and having a set number of days of runway, being ramen profitable means an endless runway (at a student lifestyle), which can mean that instead of going big or going home, moving on, or accepting defeat, startups risk getting stuck in a ramen limbo of sorts.
Now, don’t get us wrong. Being ramen profitable is definitely something to be celebrated. You can eat and live without worrying about your company or your apartment going out the window. But don’t let yourself get stuck in limbo where ramen is enough and you don’t have the pressure to go for a big push or to push the eject button. Besides, eating ramen daily isn’t the best thing for your body or mind–speaking of which, stay tuned for the “Staying Healthy in Your Startup” article on how to stay healthy on a tight budget.
That’s all for now, folks! Have a nice weekend!
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