We had the opportunity to share our Titanic framework and navigation tips with 10 sports-related startups @Techstars Indianapolis on Wednesday. First, this is a great place. Welcome to Indy, Techstars! We heard a lot of positive things about the Indy venture scene.
In case you don’t know it already, Techstars is an international accelerator with over 4,000 alumni, accelerator programs in various industries, and venture funding. The sports-focused accelerator is new to Indianapolis and hosting its first cohort. These startups vary across stages with some pre-revenue, some MVP, some with a replicable product and even a few that are starting to scale. They cover a broad range of sports applications from personal use technology to team software, sports facility rentals, sports video management, and even some sporting fashion. Check out these companies.
The session did raise a question some founders need to have answered. At some point in the evolution of your startup, you need to commit to and pursue the venture full-time. One way to “take the leap” is to join an incubator, accelerator, or perhaps a venture studio. But which one, and what should you expect?
There is a range of programs out there. But, there is no defined set of offerings or process for getting “certified.” What are you looking for? What questions should you ask? Here we try to break down some of the major considerations and questions to explore. Venture studios are a bit of a newer phenomenon, but some say they are the path to the future.
What You Get
First, understand what you should expect to get out of the program. There are some major categories that vary pretty significantly:
Programming/Content. Hopefully, the program has some kind of good content to help you systematically address the uncertainty startups have to navigate. Whether that is building a business model canvas, identifying your Titanic Hidden Debts, putting together a pitch, or other. Entrepreneurs, particularly first-time ones, need some structured programming to move forward with purpose.
Mentorship. Most programs bring in mentors. If these are just local heroes or older retired business folks from large companies, be wary because not all mentors are created equal. Hopefully, the mentor pool is diverse in experience and includes successful entrepreneurs and investors. If possible, identify and reach out to specific mentors in advance to see if they are accessible and helpful to you.
Resources. As you move from incubators (lean resources) to accelerators (some more resources) to venture studios (hopefully rich resources), the resource pool improves. But there can be significant differences in offerings between options in the same category. Ask former/current members about the legal, marketing, development, and other resources offered—both accessibility and quality.
Connections to Customers/Partners. Even more than dollars and sense, founders need introductions to potential users/customers and possibly partners who can give feedback on early prototypes or ideas, can try the MVP, or even be a pilot user. This is one of the most important elements.
Dollars. Some programs do come with some seed funding, but possibly with obligations (see below).
What You Give Up
For every “pro quo”, there is usually a “quid”. You need to understand the major things you give up.
Time. While the access you get can be helpful, you will be committing a lot of time including travel. The companies at Techstars Sports in Indy, for example, give up 13 straight weeks to be part of the program. Most also have traveled from outside the state.
Dollars. Some programs have direct costs, but many do provide space and minimal services for free as part of being accepted. Be aware of both direct (rent, program fees, etc.) as well as indirect/add-on costs (conference room rental, fees for resources, etc.)
Equity. Especially as you move from incubators to accelerators or studios, the likelihood that you are giving up equity increases. Understand the magnitude and terms of this equity when you are choosing between programs. It is not bad to give up some equity! This means that the program will have a vested interest in your success. But the magnitude of the equity should be commensurate with the value-added that the program provides.
So…Which is for You?
Based on the stage of your idea and startup, the time you have, and the resources you need, the best option for you will vary. Here is a brief description of the differences between the three options:
Incubators are typically focused on the earliest stage ventures. Entrepreneurs share space and some resources/services—and may not even be committed to a specific venture yet. Here, there is some overlap with co-working spaces, or shared space for the entrepreneurial-minded. Founders are not always full-time. Programming is often limited, but might consist of some brown bags lunchtime lectures or a speaker series, and occasional dedicated access to legal, marketing, development, or other services. Whether you are exploring starting a company, in the pre-revenue/ideation phase, or still sorting out if entrepreneurship is for you, this can be a great fit.
Accelerators are typically focused on the startup in the Minimally Viable Product (MVP) or early growth stage. This is when you are moving from establishing product/market fit to getting some early traction with customers is often a focus of the program. A good accelerator has strong programming and content, ample mentors, and solid connections to potential customers in your industry. If you are ready to take the leap to full-time focus on the startup, have some early traction, and are committed to seeing the concept to completion, explore accelerators that might be a fit.
Venture Studios are typically much more discriminating about who they work with. They will demand much more of an investment of time and equity. They may also focus on ideas that come from their own venture pool. But they provide much more robust resources, often including in-house development, marketing, and financial services. If you think you have a scalable startup that will need venture funding and resources to get off the ground, try to connect to a Venture Studio—and good luck!
Moving a startup forward and taking the leap is a huge decision. Take advantage of any programs, locally or otherwise, that can help you. Incubators, Accelerators, and Venture Studios all offer services and programming that can help startups navigate uncertainties that can sink your startup. So in addition to reading our book, The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups, check out these options!