1. SEED Accelerator: The 90-Day Incubator By Ray Smilor, PhD Schumacher Fellow in Innovation and Technology Professor of Professional Practice Neeley School of Business Texas Christian University

2. Agenda I.Critical elements II.Benefits to entrepreneurs/investors III.Selected models IV.Lessons learned

3. I. Critical Elements Purpose – speed up product/company development Results – better entrepreneurs, higher-value ventures

4. I. Critical Elements Unconventional application process – Targets selected groups of startups – Requires team (not 1 person) Focused program to facilitate product development – 3 months usually Equity investment in startups – Under $150k/often under $20k Mentor-driven

5. I. Critical Elements NO – Business plan Rent or fees for services Physical space Entrepreneurs work out of living quarters near accelerator.

6. I. Critical Elements 1. Founders/Mentors Experience Networks Expertise

7. I. Critical Elements 1. Focus Distinctive Targeted Compelling

8. I. Critical Elements Ownership path: 5-10% equity stake in 1 st round of financing Successful companies → more rounds of financing Stake reduced with each round Absolute value of stake increases

9. II. Benefits For entrepreneurs: – Mentors – Connections – Business support – Product support – Seed funding – Access to future capital

10. II. Benefits For investors: – Faster product development – Better quality deal flow – Lower risks – Quicker time to market – Higher returns

11. 2011 Rankings USA Startup Accelerators RankProgramLocation 1TechStars BolderBoulder, CO 2Y CombinatorMountain View, CA 3Excelerate LabsChicago, IL 4LaunchBox DigitalDurham, NC 5TechStars BostonBoston, MA 6KicklabsSan Francisco, CA 7TechStars SeattleSeattle, WA 8Tech WildcatterDallas, TX 9Dreamit VenturesPhiladelphia, PA 10The BranderyCincinnati, OH 11Capital FactoryAustin, TX 12NYC SeedStartNew York, NY 13BetaspringProvidence, RI 14BoomStartupSalt Lake City, UT 15AlphaLabPittsburgh, PA Source: Frank Gruber, “Top 15 U.S. Startup Accelerators and Incubators Ranked,” http://techcocktail.com

12. II. Benefits Criteria for Top 15: 25% - Qualified financing events Companies get financed after completing program 50% - Success of companies that graduated 25% - Accelerator program characteristics Money startups receive, equity, support

13. III. Models Y Combinator: – Founded 2005 – Silicon Valley 1 st SEED Accelerator – Worked with over 380 startups – 1 major venture capital fund – “Y Combinator” From computer science – “a program that runs programs” Metaphor: a company that starts companies

14. III. Models Y Combinator: – Invests on average $18k in large number of startups – Two 3-month funding cycles January/March and June/August – Program: fast and intensive Mentors Prototype Day Demo (Pitch) Day Social events/dinners

15. III. Models TechStars: – Founded 2006 – Boulder, Colorado 5 locations in U.S. – Works with 10 companies per location – Funding from 75 venture capital firms and angel investors

16. III. Models TechStars: – Invests $18k in startups – “Perks” $100k convertible debt note In-kind support from range of companies Valued at $250k – 3-month program Mentors Demo (Pitch) Day Social events

17. III. Models TechStars: Application form: – Describe business in 140 characters – Provide demo/prototype – Explain: How you will make money Who your competitors are What keeps you awake at night – Provide 3-minute video of team

18. III. Models Tech Wildcatters – Founded 2010 – Dallas, Texas – Works with 8-10 companies at a time – Mentorship-driven, micro-seed fund

19. III. Models Tech Wildcatters: – Invests up to $25,000 $10,000 per company $5,000 per founder (up to 3) – Two 3-month programs Spring/Fall – Program – “Bootcamp” Mentors Pitch Day

20. III. Models Tech Wildcatters: – Selection Criteria Technology: web/mobile/software/game Majority of revenue from businesses 2 or more founders Live in Dallas for 12-week program – Application Form – 3 key questions What problem do you have? How do you solve it? How will you make money?

21. IV. Lessons Proactive strategy: Idea Teams Invest ment Mentoring Develop ment Successful Exit

22. IV. Lessons Align needs of startups with investors’ expectations Provide platform for growth via ongoing mentoring Tie into entrepreneurs’ eco system Target training to accelerate product development Provide seed funding while entrepreneurs bootstrap