Accelerators and Incubators and Offices, oh my! Where to take your startup idea?

Mar 19, 2012
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LeCamping announced recently that its applications are open for the third season of its accelerator program. The season three applications are available until April 13, and the program will run from June until November. With just a few weeks left in their season 2 session, emerging startups might be asking themselves whether an accelerator program is what they need. In a time where the number of accelerators seem to be growing, it may become more and more difficult for startupers to decided if/when/where to go to accelerate their business idea.

There are many factors to be taken into account when deciding this, and hopefully this article will help you decide what’s right for you:

First Step: A vocabulary lesson

In the midst of a growing trend, many different programs have emerged under various names and titles, and its important to read through the bullshit sales pitch and look at the simple facts – what are they offering:

  1. Incubator: an incubator provides all the essentials of an office environment: desk, internet, mailing address, kitchen, security – without the inherant privacy of having your own office; however, what it lacks in privacy, it makes up for in community and connections. You may look shnazy with your 3rd story whatever office in the silicon sentier, but you certainly will have a hard time finding colleagues and connecting with like-minded individuals who have encountered similar problems. A great example of an incubator is DojoCrea, which has three buildings totally over 1000m2 in Paris, providing domiciliation (a legal process for all companies requiring a mailing address in order to incorporate), along with a great community vibe which includes a weekly thursday apero. In addition, they have connections with bank, lawyers, accountants, OSEO, etc. which you may need/want down the road. Many French universities have incubators which provide access to the school’s alumni as well, notably HEC, ESCP, Sciences Politiques, and ParisTech. In addition, government-funded incubators like Paris Incubateurs and PRIMA have buildings all over Paris where startups come together.
  2. Accelerator: an accelerator program is an incubator which provides free accommodation and mentoring during a fixed duration of time in exchange for equity in the company, and occasionally provide seed capital. Mentoring in France has become a very loose term, as even I qualify as mentor (eek!). LeCamping is a big exception to the equity rule, as they take 0% in their companies and give them 3,500 euro during the six months. Admittedly not a large sum of money (just enough to feed the founders?), but the fact that they take 0% in their companies begs the question that they pose most of their startups: what’s your business model? Currently funded through grants & sponsors under the giant umbrella of Silicon Sentier, the accelerator may have to start answering questions as to what the sustainability of such a program is. Other programs, like DojoBoost, the accelerator located in DojoCrea, offer no seed capital, but still take 5% of the company.
  3. Virtual Accelerator: a virtual accelerator is an accelerator minus the incubation: they offer access to mentors, crash courses on creating a startup, but do not offer the office space and other services. Examples of this include the Founder’s InstituteStartup Academy, and HackFWD, which essentially provide a great network of mentors, potential clients & investors, and a certain level of notoriety/validation.

Second Step: Looking at your options

As founders set their vision and get ready for six months of startupery, it seems a perpetual question of where to go: incubator, accelerator, work from home, rent an office, co-working spaces: which is best for whom, what are the positives and negatives of each:

  1. Working from home: the easiest of them all, the clear upsides of working from home are cost and convenience. For those used to working from a distance, home may very well be an option, but more likely its chosen out of lethargy and the unwillingness to make any financial commitment  to their idea.
  2. Co-working space: while many startupers may be tempted to go to a co-working space, I would only recommend it if you choose the more incubator-style co-working spaces. That is, you have a place to leave your things, a desk assigned to you. The impersonality of a co-working space format does not bode well for startups who plan to grow, as it is difficult to develop a company culture in a place that is not your own. Co-working spaces are much more suited to independent/freelance workers; who can come and go as they please.
  3. Incubators: so you made the commitment to go to an incubator; now you’ve got that voice in the back of your head saying ” you’ve got an office – you’d be a fool not to use it.” The real key is going to an incubator with similar companies around you: when considering applying/joining an incubator, ask the managing  staff what kind of companies there are, and don’t be afraid to dive into sectors. Will you be housed around accounting firms, freelance architects, or mobile startups? It is a total loss to join incubator who’s culture doesn’t match yours. Incubators can be filled with first-time entrepreneurs, but also cost-conscious serial entrepreneurs. Meet the neighbors before you move into the neighborhood
  4. Accelerator: real accelerators, the incubators with mentoring, can worth their weight in equity. The key is looking into the programs track record: everyone should be held accountable by their track record. LeCamping, for example, has had 8 out of 24 companies go on to raise a total of 2 million euro. Looking at these numbers, I ask myself “do I think I have a 33% chance of raising seed capital on my own?” granted that, since lecamping takes no equity in my company, I have nothing to lose (but time), lets also look at their capital numbers more closely. 2 million over 8 companies is an average of €250k; while the average capital raised is closer to €300-350k in France, this isnt too far under. Then again, I happen to know that two of those companies raised 600-650 k each, so now we’re down to ~800k over 6 companies, more like 150k per company if you ignore the outliers.

While it is not an actual accelerator, Startup Academy has also had some pretty big successes. Though the site is vague as to the treatment that each of the 100s of company listed as having been apart of startup academy get, it is clear that the ones who get the highest level of treatment have a great track record of getting follow-up investment. I’ll let Sebastien Rousset speak more about his group’s track record if he’d like.

My new favorite accelerator, DojoBoost, is harder to track. Since its only in its first season, it seems that we’ll have tojudge the track record of its founder, John Lewis. John has had many successful exits – he’s raised six rounds of funding, I believe – working primarily in the financial software industry in the US. Having served as mentor at Lecamping during its first two seasons, he claims to have picked out 7 of the companies to focus on: all seven of them have now secured funding. He worked extensively with the 1st season companies even after they had left LeCamping, including DocTrackr, who are now Techstars Boston, Mesagraph, who got Robert Scoble’s seal of approval and closed a hefty round of seed funding, and Skerou, an upcoming Shopimum and arising competitor in the mobile shopping space. While only time will tell, I wouldn’t mind giving up 5% of my “company” to join his 5-month program, which includes follow-up time after the program for an indefinite period of time.

Third Step: Decide.

Accelerators can be great places for first-time entrepreneurs to grow their network beyond their university and beyond the startup events crowd. After all, would you rather own 100% of nothing, or 95% of something real?