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Yet Another Startup Accelerator?

Startup Sauna Accelerator
Startup Sauna Accelerator

Back in 2013 when I launched the StartUp42 accelerator in Paris, I received so many “oh, another accelerator” comments that I was really wondering if I wasn’t too late in that space.

Since then, TheFamily, 50Partners and Microsoft Ventures launched, the city of Paris opened new incubators and Xavier Niel, France’s telecom mogul, announced 1000startups, the soon to be largest startup incubator in the world.

Corporates like media company Canal Plus or telecom giant Orange also opened their own incubators. Even the French government announced a 200M€ investment plan for private accelerators throughout France.

Are we in an accelerator bubble?

Olivier Ezratty, a long-time and well respected commentator of the French startup ecosystem seems to think so, based on his recent article (in French) about our ecosystem being overheated. And, apparently, this is not just in France.  Silicon Valley entrepreneur and strategy consultant, Sramana Mitra, also recently wondered about being in an accelerator bubble. I’m not even talking about bloggers like Craftsmanfounder’s Lucas Carlson with his “incubators are bullshit” piece. And more are coming.

While the exact number of accelerators is unknown, f6s.com, a website that provides services to accelerators (including us at StartUp42), lists more than 2,000 worldwide. In a HBR article, Sramana Mitra even talked about 7,500 business incubators globally. In Paris, the city hall’s MyStartupInParis lists 44 incubators as of today and I’m coming across individuals and corporations who want to launch their own startup program literally every day. So no questions asked here: we are definitely in an accelerator bubble.

Is it a bad thing?

Question: can you tell me which of the two pictures below is a startup accelerator?

Startup Office 2Startup Office1            None but anyway you wouldn’t know just by looking at the pictures. The main problem with having too many startup programs is that entrepreneurs don’t know which one to choose, especially if they decide to give away equity to the program. It’s like choosing a university after high school.

Each accelerator has its own model (non-profit/for profit, equity based or not, investing or not investing), its value added and it’s rather difficult to judge for organisations that mostly did not exist 3 years ago. The problem when it’s difficult to judge the quality of an accelerator is that entrepreneurs might lose some precious time (and sometimes equity) in a program that does not bring enough long-time value.

Without disrespecting some programs, I clearly see the difference between programs that are entrepreneur-friendly, mentorship driven and focused on results, compared to others that offer glorified office space and mentorship that look like (and sometimes is) McKinsey style consulting session.

But this is hard to see from the outside. This is clearly one of the reasons that pushed us to be a member of the Global Accelerator Network, which ensures that all its accelerator members fall into their vision (which I share) of acceleration.

Do we need startup accelerators?

Happy Startup SchoolBusiness schools emerged in the second half of the 19th century to meet an educational need not provided for by other institutions. Accelerators are trying to fill a similar gap today. So, while b-schools train future corporate leaders, accelerators train current entrepreneurial leaders. Accelerators are today’s e-schools. By providing hands-on advices from experienced mentors and networking opportunities to founders, especially those not very familiar with business topics (like technical founders), accelerators really fulfil this “educational” mission.

Accelerators are also a great way to shake up an ecosystem and help emulate  entrepreneurial vocations. But, on top of that, what I’ve found most valuable for the founders we’ve helped so far, is endorsement. Entrepreneurship is hard. You make a lot of sacrifices, especially social ones. Being selected in a renowned program, even if you’re still not making money, is already a great sign sent to your family and friends that you’re not doing all this for nothing.

Will it stay the same?

I think we’re going to see more and more accelerators in the short run. Driven by startup hype (and probably bubble) and growing interest from corporations (see this good piece by @jd on the subject), startups will now have more and more options in terms of support. Their success in the long run will depend on their business model.

Equity-based accelerators will need to have several successful exits to sustain their growth and convince LPs to keep investing (there will always be investors) while, for other models (like non-profit), it will really depend on the accelerator’s capacity to show value to their sponsors (or customers) over time. As of corporate accelerators, I doubt most of them will still exist in the next 3 years as they’re usually considered a cost and their existence is almost always tied to one executive sponsor internally (that will eventually leave).

As of StartUp42, our sustainability is tied to our ability to select and help future successful startups that will in return help the organisation, while at the same keep convincing sponsors that our position in the ecosystem (especially developers’ groups) is still relevant over the years.

StartUp42 First year in review

This post was initially posted on StartUp42′s blog on December 23rd 2013.

End of December is usually the time to reflect back on what we did during the past year and try to have an objective look on what we achieved and failed. StartUp42 is no different and with so many things that happened this year, I thought of summing everything up in a blog post and sharing it with you.

 

First of all, our biggest achievement of 2013 is purely and simply the fact that we exist. Thanks to the support of our founding partner, EPITA, as well as our corporate partners(especially Econocom, the fist partner who believed in our vision), we managed to raise a bit more than 100K€ for our first year in operation. This budget allowed us to offer free of charge acceleration to 7 projects during our v0.1 batch (March-July 2013) and 7 other during our v0.2 batch (still ongoing).

 

We’re quite proud of our v0.1 batch:
  • Out of 7 projects, 6 of them are still alive;
  • All together, they realized a cumulated revenue of almost 150K€ in 2013;
  • Three of them have particularly performed this year:
    • Modizy raised 210k€ from respected business angels and foreign investors;
    • MotionLead is about to sign contracts with leading companies and is looking towards the United States with very much ambition;
    • Mobeye community performs around 120 missions per week in more than 100 cities in France for prestigious retailers
Stay tuned for news about our v0.2 batch which will end by our now traditional Prototype Fiesta the last week of January.

 

Other achievements we had in 2013:
  • With 70% of our founders having a technical background, we proved that engineers and programmers can lead startups;
  • We welcomed more than 60 extraordinary entrepreneurs, executives, investors and experts to come share, pro bono, their experience with our startups;
  • We managed to get visibility within the local entrepreneurial community thanks to our amazing media partners;

 

It wouldn’t  be fair though if we didn’t mention our failures. Like any startup we also tried things that didn’t work and we learned a great deal from them:
  • Like most engineers, we didn’t pay enough attention to branding and communication. As a result, our own achievements and those of our alumni were not necessarily broadcasted to the community. This is definitely our main focus for 2014 so expect to see more and more news from us, starting with this very blog post!
  • We failed to attract teams from other countries. I believe strongly that mixing up startups from different countries will give everyone a global outlook (and hopefully ambition) from the start. We did receive applications from foreign teams (even one from Japan) but not enough to select one of them;
  • Even though we aim for quality instead of quantity, we were a bit disappointed to receive the same number of applications for our v0.2 round than for our v0.1 (around 40). This could be explained by the fact that our recruitment period was during the summer and ended early September (apparently startup founders take vacations). Another explanation is that we didn’t put as much efforts during the application campaign as we did during the first one as we relied more on our digital communication channels. Obviously project sourcing is a hell of a job and requires a great deal of “real-life” interactions
  • Last but not least, we failed to attract designers. Apart from Fenris Lair Studio, our v0.2 startup developing a MMO game, none of our startups have a designer on board.

 

All in all, we’re absolutely thrilled about our results this year even though I must admit that digital startups were really the hot topic everywhere in 2013. Meanwhile, I wanted to individually thank some people that really made the StartUp42 project a reality and helped us along the way:
  • Joël Courtois, EPITA Managing Director, who trusted my crazy  ideas and backed the project from the very beginning;
  • Fabrice Bardèche, IONIS Group Vice-President, who realized the opportunity for the campus and gave us his initial support;
  • The EPITA and IONIS teams who constantly support us: Sandrine Maingourd, Christian Dujardin, Pedro Miranda, Corinne Bréchoire, Stéphane Garnier, Anne Dewilde, Guillaume Bardèche, Géraldine Seuleusian, Caroline Ales, Basile Petit, Benoit Lachamp and many others I forgot;
  • Everyone that was or still is part of the StartUp42 organization: Arthur Katz, Flora Lapage, Yannick Peraste, Kevin Straszburger, Aline Mayard, Thomas Meï, Shubham Sharma;
  • Our mentors that dedicated themselves to our startups more than they should have been, especially Adrien Aumont, Ori Pekelman and Michel Sasson;
  • People that inspired the StartUp42 program: Joël Saingré, Michel Sasson (again) and Stéphane Distinguin.

 

I wish all and everyone of you a wonderful end of year and see you in 2014!