Below is a guest post from Max Roebuck, the founder at our partners Crowder who explores how founders can benefit from accelerators.
My name is Max Roebuck and I’m the founder of a new London based IOT start-up called Crowder. We basically provide bars and restaurants with a marketing and analytics dashboard to help them better manage their venue performance whilst simultaneously offering consumers better real-time insight into those venues (such as how busy they are, current atmosphere, whether they can get a seat there right now etc) via a mobile app. The two are synced .. and the magic is born!
I am however not here to talk about the business as such. In fact, hedgehog lab (a company fundamental to Crowders development and a pleasure to work with) has requested I provide a guest blog documenting my current experiences.
Why I hear you ask? Well, I am currently enrolled in a Forbes ranked top 10 Silicon Valley Accelerator, namely, Wearable IOT World, based out of San Francisco. Matt O’Connor felt that it would be useful to have a no nonsense appraisal into what an Accelerator actually brings to the table for a founder / company and the realities of taking your very early stage tech start-up through that process (with a particular onus on the US scene).
I was only too happy to oblige as when I was considering whether to apply for an accelerator myself, I had no idea of whether it was a good idea, whether I was too early for one, too late, whether I should still be in stealth mode and how this would affect that, whether the 3 month program would delay things too much etc etc .. As such, I intend to write this post and the following posts as If I am writing to myself, 3 months ago, I hope some Tech Entrepreneur (or unemployed Mac owner as is a more appropriate description in most cases) can find some clarity in the following diatribe and that I can help to demystify the world of the US Accelerator.
I should firstly address why I decided to apply to US accelerators rather than any others. It was really all about the investor / funding scene in the UK. In the UK, my options looked more like £150-250k for circa 15/25% of the business and that would have come from Angel investors who’s experience was in banking or Energy - so no applicable tech / hospitality experience to leverage. Whereas in the US, particularly in the Bay Area, you have more tech entrepreneurs turned angel investors than you can shake a selfie stick at and a very different seed investor mind set than in the UK / Europe.
In the UK, Its more about backing 10 companies to do ok whereas in the US, its about backing 1 company to make a billion dollars and expect the other 9 you backed to fail. What this means however, in comparison to your £250k for 20% in the UK, you could look at something more like $750k or a $1m for a 10% convertible note In the US.. if you don’t know what a ‘Convertible Note’ is, look it up, its basically a loan and is what you want to raise with if you can’t raise with a ‘Safe Note’ (look that up to).
I was fortunate enough to have my eyes opened by a friend of mine who had just gone through this process the year before and I remember him telling me how much he raised (post accelerator) and how little of the business he gave away .. I nearly fell off my seat! By the way, my friend (and I) both essentially went out to the US with, in his own words, “a business plan and a deck, and not much else”.
Its important to be clear here, whilst that is what we basically had to show for ourselves, there had been months of research, market validation, customer acquisition (obtaining letters on intent / signing up some early adopters – people who said they will buy your product if/when its made etc), team building (for me this involved showing I had people waiting in the wings to build it once I got money) blood, sweat, tears and of course, a good idea.
I also had some software prototypes that I learned how to build with Proto.io (after hedgehog lab mistakenly told me that’s what they use). Ultimately, I’m not saying anyone can just apply to a US accelerator with an untested Idea and come out the end with a fist full of cash (although that has been known but its certainly not the norm!) - you still need to earn it.
Ok, so you’re off the US. First things first. Its expensive! Particularly the bay area. If you’re not broke by the time you’re applying to accelerators, I applaud you (please tell me how you do it) but am also suspicious of you.. why? In my case, I had to raise a mini seed round of 10k (for 1% of the biz) to help with expenses whilst I was / am on the 15 week program (which I did in 24 hours from 10 different investors – the ‘Triple F rule’ – Family, Friends & Fools…).
Now that’s not a lot to many but if you’re a 26 year old start-up founder who’s sunk all of his savings (and then some of the banks savings) into the business, it can seem like a tall order (Matt don’t worry, we’re still on track and everything’s going to be fine ;) ). I can only advise that you hustle the sh*t out of the situation or failing that, swim, because you need to get over here and experience this (both for yourself and for your business).
Ok, so you’ve hustled your way over to the new world and you’re sitting in your over priced motel room thinking, “have I made the right decision here, is this going to be everything I hoped for?”. In my case, I am enrolled in the ‘Wearable IOT World’ Accelerator (unsurprisingly focused on Wearable’s and IOT) based out of San Francisco. I can only speak of my own experience but it took about 60 seconds of walking into the Accelerator office on day 1 to realise, Yes, this is what I’ve been looking for!
Ok so what happens - exactly. Week one is basically personal introductions, getting up to scratch on the in house communication systems (Slack - so all the start-ups can communicate and collaborate), going through your 60 second pitch and then your slide deck (if you have one) so that all the other start-ups know what your about. Then you have a One on One (1:1) with the MD/directors or in my instance, Co-Founder.
This is where they drill down into where the business is at currently, what are your pain points, what are your objectives / KPI’s, what are your expectations and ultimately what can they do to help you realise your goal of raising seed capital (if that is your ultimate goal - for some it isn’t). This is all done from a position of trust. The accelerator is on YOUR side, you need to tell them everything if you want to get real value out of it, even the stuff you didn’t tell them to get through the door in the first place, now’s your chance, don’t worry, there’s no sense in chucking you off the program at this point.
Start-ups range from those with a good, well rounded idea and business model but no traction, team or investment to speak of (ultimately aiming to build out those points and raise capital) to those with 10+ people teams, seed investment already secured and an ultimate goal of tightening the bolts on the ship, meeting great new connections/future investors and learning from the best.
I am probably somewhere in the middle in that I have a team waiting in the wings, some preliminary proof of concept traction, some basic prototypes, no real investment to speak of yet but with an ultimate goal of raising our initial seed round in the next 3 to 4 months (fingers & toes crossed!).
From Week 1, there is a structured 15 week program that all centres around learning, networking, building, learning, pitching, networking, learning, building, eating, networking, learning, pitching, sleeping, networking, building, learning …. You get the point.
An accelerator is essentially a support ecosystem that aims to provide start-ups with the means, connections (crucially warm, not cold), knowledge, clout and ultimately self belief, to succeed. Think of a year’s worth of business value squashed into 3 months.
The 15 week program at Wearable World is as follows;
Marketing: Customer Development // Product Market fit
Marketing: Branding and identity
Crowdfunding / Investment
Product Design // Design for Manufacturing (DFM) // UX/UI Design
Business Design: Culture // HR
Shipping / Packaging/Logistics
Demo Day Prep Week
Demo Day Week
These are core weekly themes which means you get lecturers (for want of a better word) who come in and go through their experiences. Often these are ex entrepreneurs, large corporates or ultimately someone with experience in the topic and the talks tend to be informal pitches with a Q&A afterwards. To give you an idea of the types of people you can get access to, in week 3 we had the Supply and Logistics guy at Apple between 1998 and 2013 (no.3 to Steve Jobs) come in and talk about supply chain management, manufacturer management and the logistics/realty of the whole process. He basically oversaw the entire manufacturing process for the iPod, iPad & Mac (not the iPhone as this was different for some reason) – fascinating! We also have ‘Office Hours’ which is when the core theme linked mentors turn up and you can have 1:1’s with them and drill down into your own business with a specific focus on whatever they have experience in (Logistics, Online Marketing, Legal .. whatever).
In addition to the core themes of each week, we have Wednesday Dinners with very high value individuals (Entrepreneurs, Investors, Angels etc). In my case, I have met the CEO of Eventbrite (a $1b+ online event management site), Steve Demeter (one of the very first rags to riches story’s to come out of the apple app store), Osama Hussanein (one of the first investors in Oracle back in the day and owner of a fund that has invested over $3b in its tenure), and a few other Silicon Valley VC’s / Angels.
The dinners are informal, completely off record and confidential (hence why I can’t go into more detail) and ultimately focus on sharing each others experiences and learning from each others mistakes / successes. It’s a fantastic opportunity to get in the mind of some incredibly focused, intelligent, determined and ultimately very successful people from both sides of the fence and crucially, to learn! We also have pitch practise where you tweak your pitch, your core value prop and subsequent message, often your deck as well – all just making sure you are doing the best job of representing your company as possible.
There are regular field trips to places like the Autodesk prototyping centre where they teach you about prototyping software, what machines to use, what materials to 3D print with etc (many of us already know a bit about this but there is always more to learn).
For me personally, the real value from the accelerator so far boils down to 3 key elements;
Connections/Networking. I came out to the US with ZERO contacts or network (in the US). By taking part in the accelerator, I have met great investors, great entrepreneurs, great client contacts, great manufacturing partners and generally great people that you simply don’t have access to in the UK by nature of location (I’m not saying they aren’t there, they are, there are just fewer of them - its basic maths).
Learning. As a business owner you should aspire to always be learning, adapting and improving at every opportunity. Taking part in an accelerator is like drinking, thick, gloopy, sugary knowledge all day every day! I feel like some sort of superhero who becomes more and more powerful as he drains the knowledge of everyone around him.. Mwuahaha!
Structure. As a founder, its so easy to find yourself surrounded by the ‘fog of war’. You’ve been embedded so deeply in your business for so long that it starts to become difficult to identify your core value proposition because there are so many great possibilities that you want to tell everyone about. Often it takes an outsider to help pull you up onto the hill so you can survey the battle going on beneath and direct your resources accordingly. An Accelerator helps do just that by deep diving into every aspect of the business, identifying your true value (which is often not quite what you thought it was) and core message which in turn helps you define your strategy further and ultimately begin creating a leaner, more defensible start-up from which to grow. And many of you reading that are thinking “well yeah but I already know that”.. and maybe some of you do.. but I’ll wager the majority of you (like me), can learn a lot and enhance your business further by keeping an open mind, going through this process and ultimately listening to the feedback of others.
I’ve already droned on far too long but the only other thing I would mention about the US Accelerator scene, is prepare to BS your socks off! Now, I’m not saying Lie – that would be a mistake, what I’m saying is be prepared to put your British conservatism (even if you don’t think you have any like I didn’t) to one side. America is built on the dreams of pilgrims and that ethos remains at the heart of the entire nation. If you’re looking to raise in the US, you need to tell a story, plug at the emotional heart strings of your target customers and ultimately sell the vision, sell the dream!!
To give you an idea of what I mean here with the emotional heart strings bit, one of the start-ups on the course has a sensor that you clip onto your car license plate and it provides you with that radar parking assist thing (you know, the one that beeps when you get closer to objects) but instead of expensive installation, its $150 and links to an app that beeps on your phone. A great “how did I not think of that!” idea. Well it was advised that their ‘emotional tug / story’ should be “don’t reverse over your children – buy a …”. I think this was a bit much to commit to, even for the Americans and ultimately not used but you get the point.
I’ll finish on a phrase I heard one of the ‘Super Angels’ out here say and that has stuck with me since I heard it a few weeks ago. It is also a phrase that I feel sums up the entire scene out here - “Bet the jockey, not the horse”.
Thanks for reading! If people like this, then there will be a few follow ups documenting my experiences / insight as I go through the program so stay tuned! Also, feel free to like our twitter page @Crowder_App or check out our site www.crowder-app.com .. a shameless plug I know ;)
Crowder-app.com is true to its name, bringing people together with their favourite bars and restaurants. Crowder is an innovative new app that offers consumers an unparalleled level of real-time insight into their local bars and restaurants, whilst giving venues a cutting-edge data analytics and marketing dashboard that enables them to streamline performance and increase revenue.
Max Roebuck is the founder of Crowder, the next big IoT startup. With a Management and Marketing BSc Hons from University of Manchester's Manchester Business School, he is currently part of the Silicon Valley-based Wearable IoT World Accelerator. Prior to this, he was a Co-Founder & Director - Search & Solutions of Rassburg, a technology executive search and marketing information consultancy, based in London.