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

European StartUp Scene

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?

23 Responses

  1. P. Moehring

    No love for Seedcamp? 
    We invested in Teleportd, Archivme, Psykopaint, Kwaga, and Stupeflix, all based in France/Paris. Plus, we’ve got a pretty good success rate in building follow on rounds and sustainable businesses. J’aime les startups francais, despite my terrible french. 

    • Liam Boogar

      My bad on leaving Seedcamp off – they’ve got a great reputation among startups in Paris, and my leaving them off was not meant to be a slight against them. Afterall, they’ve invested in as many French companies as French VC firm ISAI 😛
      I’ll make a point to redeem myself next time Seedcamp has some French news, although their investment in Archivme seems to have already filled their quota of ‘one french startup per year’ 

    • P. Moehring

      I’ll take your word for it 🙂 I am sure we see a bunch of great Entrepreneurs this year from France, it’s really kicking up. And I gotta hand it to Alice, she’s putting together a crowd of some real gems in leCamping. 

  2. Gangadhar

    I disagree with your comment that those who work from home are not willing to make a financial commitment towards their idea. I choose to work from home so that I can keep the cash outflow minimum while I am bootstrapping. I also know that the current set of incubators do not offer me much and that makes the option of working from home that much more attractive.

    • Liam Boogar

      are you profitable? How much time do you spend per week on the project? Do you think you work as fast as you would if you had invested in an office, incubator, or co-working space?
      I think plenty of people have side-projects at home, and that’s fun. But it’s not a startup unless time is an issue. And time isn’t an issue if money isn’t an issue. ‘Cause time is money.

    • Gangadhar

      I see your point. I would definitely move into a incubator once I have either investors or full time co-founders. Since I am working full time for my startup and chosen to work from home, I was only addressing your point that if you are working from home then you are not willing to make a financial commitment.

    • Liam Boogar

      Do you think investors like to hear “look, I’ll make the effort as soon as someone pays me to do it” ?

    • Gangadhar

      Wow! That was quite a comment, Liam. Don’t know your experience running a boot strapped startup but from my experience, it involves a LOT of expenses. As a founder, it is my concern to make sure that I am using my cash wisely. When I have everything I need at home, I do not see the value of spending upwards of €400 in a incubator just to show that I am financial committed to my startup. If I am an investor, I would look for ways in which a company is wisely using the cash invested in the company.
      In case you are wondering, I have worked from incubators in Paris and found them lacking for the reasons listed above.
      Having said the above, I sense I might be missing something. Are you saying that French investors look for companies at incubators and working from home carries a stigma?

    • Sylvain Gendrot

      Honestly, what you say about start at home is stupid !!!
      An office space, an incubator, coworking-space, or an accelerator is great, but if i live in a city with out, where i can work ??? AT HOME !!!
      Where Steve Jobs started ??? At home !!
      Start at home isn’t for fun, i agree it’s not a good solution, but sometimes you haven’t the choice !!
      I have a question, if i haven’t a place in an accelerator, what i can do ?? Give up or work at home ?
      The real jump isn’t to work outside his home, it’s to leave his job, when you haven’t a salary isn’t for fun, it’s real.
      (your post is great, except the part about work at home)

    • Gangadhar

      Thanks for backing me up, Sylvain! You make the point very well!

    • Liam Boogar

      Working at a home is a great way for people to lie to themselves and tell themseves that they are ‘doing a startup.’ Doing a startup is hard, doing a side-project is easy.

    • Stanislas Marion

      like Sylvain said, it is not the location of the work that determines the startup or side-project. It’s the full-time commitment. Location has nothing to do with it.

    • Sylvain Gendrot

      I’m waiting your blog post, but i’m leaving my job and you say “work at home it’s just for fun !!”
      ok, why not … but who will pay my bills ??? Because i’m leaving my job and it’s not fun, or a side-project, when you tell to yourself: “december, you’re out of cash. december, you must earn money.”
      Go in a good accelerator is difficult because they have limited places (leCamping help 12 startups, no more). It’s not easy like “i give 5% and they help me”.
      The false incubators (Gangadhar speak about), ask money for a poor service, but i haven’t money for a poor service.
      I started my project before leave my job, all the time i had a garanty salary, it was a side-project (at home or outside), i wasn’t not stressed, i slept well, it was just for fun. But when you must earn money from your side-project, when you write your Business Plan, when you count how many customer you must have, it’s no longer a side-project, it’s your job (but that’s fun !!).

    • Stanislas Marion

      sorry but I don’t think this is true at all. Working from home saves you so much time in commuting, lets you be as flexible as you want (everybody knows developers dont wake up at 8am), saves you money, has you working in a completely familiar and comfortable environment, which is super important, and forces you to develop an efficient way of communicating and knowledge-sharing with your teammates.

    • David Bruant

      “I disagree with your comment that those who work from home are not willing to make a financial commitment towards their idea.”
      => I’m not sure the correlation is that strong either. There are also people who are registered in an incubator AND work from home. Here the incubator is not an office, but a place to find contacts, legal/administrative assistance, etc.
      “I also know that the current set of incubators do not offer me much and
      that makes the option of working from home that much more attractive.”
      => This is a very hard statement. I do not know in which city you live in, but incubators usually are the occasion for people in the same stage or state of mind to meet. Events are organized by people who face the same problems, who can share experience, etc.
      Maybe the incubator in itself won’t bring you much, but the ecosystem/community around it could be beneficial.

    • Gangadhar

      Regarding your second point – I have been exploring incubators in the hope to find the networking that you refer to. There are various reasons why the current crop of Paris based incubators have not worked for me – I am a single founder, working on a Healthcare startup, lack of French language proficiency etc. Now that my product is out, I have been swamped with work and so I can do without the loss of time involved in commute (I live about 30-45 mins from Paris which is yet another reason).

  3. Alexandre Dana
    • Liam Boogar

      Hey Alexandre! Yeah, I’ve heard of it, although the web site and communication about the program is pretty vague (and I’m way too lazy to read that LONG page of french text on the front). Feel free to tell me more about it in english 🙂

  4. EverydayShit

    The author’s judgment of people who work from home does nothing to
    advance entrepreneurship. Are you building something or not? If Yes, you
    are an entrepreneur, and if your venture has a brand and a company
    structure, you have a start-up.
    Now a valid distinction can be drawn between those who create their jobs
    (freelancers, consultants) and those who create companies
    (entrepreneurs), and I agree that many (but not all) start-ups do
    require — for practical reasons — a place to work.
    But to imply that any entrepreneur who works from home is not really
    working is simply ridiculous and begs the question: Is the Rude
    Baguette’s mission to encourage entrepreneurs and foster start-up
    culture or to dissuade aspiring entrepreneurs by constructing artificial
    barriers to entry?
    What the world does not need is another voice claiming to cover start-up
    culture but in reality perpetuating the rock star culture and kowtoing
    to those who are funded… or who have offices.

  5. Jonathan Marks (@jonathanmarks)

    Got involved with startupbootcamp around the time this blogpost was written. I do think that accelerators are entitled to take a small share of equity providing they bring on a sizeable amount of serious talent in the form of mentors. That means structured sharing of knowledge – not just a weekly chat or (worse) a lecture on how it should be. They have to find a happy balance – which is probably the lean model. Currently working with #hightechXL where we see that a different approach is needed to assist those with a high-tech startup (i.e. a hardware component).

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