07 May What we learned selecting FounderFuel’s 2019 cohort
FounderFuel season is upon us! We’re looking forward to introducing the companies to you shortly… but to get the juices flowing, we thought we would share a few stats and insights from this year’s recruitment process.
Key stats from our 2019 recruitment period:
- 6-week application period
- 205 applications
- 87 teams interviewed
- 24 finalists
- 8 companies accepted (5% acceptance rate)
These numbers are roughly in line with our 2018 results. Our catchment of startups also remains consistent. The vast majority (85%) of our applicants are from Canada. Within that group, about 55% of the companies are from Quebec, 30% from Ontario and 15% from the rest of Canada.
Looking back over this year’s recruitment period, a few trends stuck out for us:
🌱 Accelerators remain vital.
Even as the financing landscape for early stage startups continues to evolve, the “accelerator bundle” of funding, mentorship and network remains a vital component. If anything, as overall startup activity increases, the importance of accelerators as a stepping stone for founders and a filtering mechanism for investors is growing. In Canada alone, the last two years has seen the addition of three Techstars programs (two in Toronto and one in Montreal), the expansion of CDL and Next AI to Montreal, and increased recruitment by non-Canadian accelerators, especially YC, Techstars, and 500 Startups. Of course, increased accelerator activity means increased competition for the best companies. But at a macro level it also validates the importance of what we do, and because Real Ventures is an active pre-seed and seed investor, we are in the fortunate position to work with companies even if they’ve chosen a different path for acceleration.
⏱ Accelerators are about timing.
We often describe FounderFuel and other equity-taking accelerators as high-intensity entry points to the venture path. From this perspective, deciding when to join an accelerator is very much a question of timing. Join too early and a company risks trying to accelerate something that is not ready to take off. Join too late and the accelerator programming can be a distraction from the hard work of chasing product market fit. And because startups move quickly, timing itself is subject to change! For example, in this year’s recruitment cycle we met a few companies who seemed like a perfect fit for the program in January but by March, their company and fundraising progress had caused circumstances to change.
👫 Recruitment is about relationships.
FounderFuel’s application process provides us a unique opportunity to discover new startups. Of this year’s applicants, slightly more than half of the companies were new to us. But while recruitment is very much about meeting new people, the majority of startups that made it to the final pitch had already built a relationship with us prior to applying. This trend continued through the final selection: of the 8 companies selected, we had known 6 of them for at least 6 months, and in some cases had been tracking them for years. As with all phases of venture investing, building relationships over time pays dividends.
🍇 Diversity efforts are bearing fruit.
As active investors into early stage Canadian ecosystems, we believe our applicant pools are an accurate proxy for the current state of the market. One of the numbers we track most closely when looking at who is applying to our program is gender diversity. On that note, we were happy to see a gradual but marked improvement in this year’s recruitment cycle. In terms of the overall applicant pool, 21% of all applicants had women founders (up from 17% two years ago). Happily the percentage was much higher for the finalists (45%!) and the final cohort (37%). There are miles to go to get these numbers to where they should be, but we are happy to see some progress, which we attribute to the many diversity and inclusion efforts that have been launched across our ecosystems in the past few years.
We hope these findings are useful to others working on acceleration and incubation and to startups seeking to better understand how accelerators think and operate. We can’t wait to work with the 8 teams who have joined FounderFuel 2019 and as in past years we are blown away by the number of high-potential companies we met during the recruitment process. It’s truly an exciting time for Canadian startup ecosystems and we are honored to continue to play a part in building our community and partnering with ambitious founders to change the world! 🚀