ideas

Your Ideas are Worthless. You Should be Glad.

/in , , /by

Yesterday we received an email that I can only describe as an “hysterical screed” from a disappointed startup founder who felt that his ideas had been “stolen” by the likes of Y-Combinator some years ago. The email included links to an elaborate set of documentation including YouTube videos that compared two products that sort of, kind of do similar things.

Note, neither the message nor the documentation ever contended that any actual intellectual property, such as code or wireframes, had been stolen. Only the ideas behind them.

What was more arresting was the content of the email, which verged into conspiracy theorism and fantasy.

We get our fair share of weird mail. Investors seem to attract people who combine sad desperation with megalomania. Some just want money. Still when Cedric sent me this email saying: “Maybe a blog post?” I responded: “Hell yes.”

I am not posting this to defend the good name of startup accelerators worldwide, nor to defend StartupYard against such an accusation. I’m also not posting it to ridicule this person, because I am sure their problems are deeper than professional disappointment.

Rather I’m hoping to show startup founders how insidious and destructive the concept of “Idea Ownership,” really is, and why they ought to think very hard before making accusations of IP theft. Again, not because these accusations are particularly damaging to those who are accused, but because they are quite damaging to those who make the accusations, and to the many people out there who have great ideas to share.

You’ve Got an Idea? That’s Nice Dear.

The general gist of the supposed conspiracy was summed up in a few bullet points I will paraphrase (though I won’t give free publicity to the author):

Step 1: Accelerators Collect Startup Ideas (via F6s)

Step 2: We “Steal those Ideas” and Give Them to “Our” Startups

Step 3: We Exit Companies 5 Years Later for $300m

Please understand, I am not exaggerating. It was taken as a given that finding the best ideas out of thousands of applications would lead to multi-hundred million dollar exits.

If only that were the case! How easy life would be for accelerators like StartupYard. Not to mention those lucky startups we would give the stolen ideas to.

But sadly no, it just does not work that way. Your ideas are pretty much worthless. Let me explain why that is:

  1. Your Ideas Aren’t New, and We Don’t Care

The central plank of this theory is that investors and VCs are out digging through your garbage and listening to your phone calls trying to steal your ideas.

We’re not. You know why? Because we’ve heard them already. Yes, even that one. A typical VC is pitched a couple of hundred ideas a year. I see around 400-500 a year. Every year. It gets so that when I hear a pitch these days, I sometimes struggle to remember whether I have already met the founder who is pitching, because I know about the idea already.

What was funny to me about this particular email was that the idea the author purported to own was not only not a new idea, it was a problem already being solved by existing enterprise software. The pitch was for turning existing functionalities into an SME level product. That’s what we call “an execution play,” in investor lingo. It means the idea is the market, not the product.

You should know this if you’ve ever been to a pitching event with a Q/A. There’s always a smarty-pants judge who points out he’s heard every idea before. Most of them have, it’s just that lazy judges say that instead of something more useful. We’ve all heard the ideas before. There’s nothing new under the sun.

That’s ok because we don’t care much about ideas. We care about finding big problems to solve, because that is going to determine how successful your company is. The thing about big problems is that everyone knows about them. If they didn’t know about them, they wouldn’t be problems to begin with.

So our biggest problems with picking startups is finding the right team to solve that problem, and doing it at the right time.

Just think about this logically for a minute: you have an idea, and it’s a pretty good one. Genius in fact. What industry is it in? How big of a problem does it address? How many people work in that industry? How many people are customers or users of the products of that industry?

ideas, startupyard, accelerator

Even if we’ve never heard an idea before, it usually takes about 30 seconds of googling to figure out it isn’t a new idea. Even if we can’t figure that out, one of our alumni or mentors can, and frequently do. The question is not whether an idea is new, but whether the problem being solved is real.

The bigger the problem you’re solving is, the higher the likelihood that somebody, somewhere (and more likely many people, everywhere), have had the same exact thought. Their description of it might be different, and their way of fixing it might be different, but the idea is effectively the same.

2. Ideas are Easy to Copy. Vision cannot be copied.

We choose startups based on their vision, and how that vision makes sense for that team, that technology, and the problem they want to solve. It is mostly about people.

To someone not familiar with our thinking, it might look like we hear ideas, then “give them” to our startups. But, thats pretty misleading.  It would be like accusing a filmmaker of watching other films, or being inspired by literature. Ideas are wonderful and sometimes very clever. They are just never really entirely new. If they were, they wouldn’t make sense when you heard them.

Of course the iPhone would have been a truly new idea before the invention of electronics. But then, nobody ever had any reason to imagine such a thing before the discovery of electricity, let alone computing and the million other nested inventions in a smartphone. Inventions are always a blend of established knowledge with new approaches.

This popular phenomenon of “idea theft” is more pronounced today in the tech industry than in almost any other- and it’s particularly true in products that rely on a simple central value proposition that is easy to copy. Many products can “do the same thing,” but very few can do it in just the right way.

Look at Facebook, and the endless accusations of their “stealing,” the Stories idea from Snapchat. It’s true that Facebook recognized an opportunity when it presented itself, but the idea of using media to create a narrative was invented in the past few years is ludicrous. Do we accuse Uber of stealing the idea of a livery service?

One of my favorite ever blog posts about this topic is from the creator of the game 3s. When I first read this piece when it was published, I was a fan of their copycat competitor, 2048. Since then, I’ve adopted 3s and actually played it on a near-daily basis for the past 3+ years. Today I understand the piece very differently. What I saw then as mostly whining about competition, today I see as a powerful argument in favor of vision:

“We wanted players to be able to play Threes over many months, if not years (…)The branching of all these ideas can happen so fast nowadays that it seems tiny games like Threes are destined to be lost in the underbrush of copycats, me-toos and iterators. This fast, speed-up of technological and creative advances is the lay of the land here. That’s life! That’s how we get to where we’re going. Standing on each others shoulders.

We want to celebrate iteration on our ideas and ideas in general. It’s great. 2048 is a simpler, easier form of Threes that is worth investigation, but piling on top of us right when the majority of Threes players haven’t had time to understand all we’ve done with our game’s system and why we took 14 months to make it, well… that makes us sad.”

What this really is, is a startup founder talking about how simple his idea was, and how important his dedication to his craft was to the delivery of a special product. He was absolutely right to point out that comparisons between his product and the copycats were unjust, and would eventually be judged premature.

He may not have ended up with the most popular game, but he did end up with the best game, and customers paid for that game, not for the copycats (which were free). They “lost” in terms of being a market leader, but they succeeded in their vision for their users and product.

When you actually stop to think about it, it’s hard to name a lot of first movers in tech who managed to dominate their industries, or even survived. As CBinsights has pointed out using data supplied by failed startups themselves, “late to market” doesn’t even qualify in the top 20 reasons for failure.

  1. First to Market Isn’t a Predictor of Success

Shockingly, being first on the market is not a powerful predictor of success. In fact, study has shown that it may be associated with a higher risk of failure. MIT Sloan Management Review noted over 20 years ago that claims of first-mover advantage among successful businesses across a broad base of industries was caused by an effect known as “Survivorship Bias.”

Survivorship Bias, a form of selection bias, occurs when we attempt to judge the relevant qualities of a group, such as a group of startups, after they have become successful, while ignoring the qualities of those who don’t make it. This can lead us to misjudge the importance of some qualities in survival, because we are not looking at all the data.

The logical error is easy to spot when you know how. If I told you that a study of billionaires shows that 75% of them wear white shirts, but only 25% wear other colors, you could conclude that having a white shirt improves your own odds of success. But you would likely be in error. The population as a whole might be 90% white shirts, meaning that in fact another color is even more correlated with success when looking at all the data.

Think about that the next time you dress a certain way because Steve Jobs did. That would be aggressively missing the point.

Survivorship bias arises when we don’t have good data on failures, obviously because they have failed. However, there are ways of determining that survivorship bias is at work. For example, the inconvenient truth that the failure rate for Silicon Valley based startups is actually *higher* than in many other regions. As the Guardian suggests in the above article, this is precisely because so many successful companies are based there. The local standards for success are higher, so failure rates rise.

Does that mean you should or shouldn’t move to Silicon Valley? I don’t know. I know it does mean that moving to Silicon Valley is not guaranteed to help you.

Want even more proof of why first to market is overrated? Of the top 10 startups according to StartupRanking.com, not a single one of them was first to market. Some, like Slack, were not even the first multi-billion dollar companies in their own category. Booking.com offered private flat rentals in the 90s, a decade before Airbnb, and Couchsurfing was founded in 2003, a full 5 years before.

4. Most Ideas Don’t Come from Startups Anyway

A dark and terrible secret of the tech industry -just kidding, it’s obvious- is that most of the ideas that end up getting made don’t come from the founders themselves anyway. The core idea is there, but the final product with market fit is usually a distant cousin of the prototype- the work of many minds.

Where do most actionable ideas come from? Users, customers, advisors, investors, partners, friends, family, and hatemail. I’m only sort of kidding on that last one. The point is that startup founders generally start with wanting to solve a somewhat unclear problem in a somewhat unclear way. They attend accelerators and get early users, investors, and corporate partners on-board to help them make the problem and the solution more clear and actionable.

The really successful founders are not idea machines, they are execution machines. They know how to listen, recognize a good idea when they hear one, make it work, observe the results, and adapt further. There is great creativity and invention in this process, but it is not about ideas, it is about empathy, passion, and skill.

You Should be Glad Ideas Are Worthless

Now that I’ve ruined your beautiful vision of the perfect idea that will make you rich, I will give you a moment to thank me.

You should be happy after all: now you can get on to the stuff that really matters, like building a company you can be proud of, that provides something your customers really value.

Here’s another reason you should be celebrating: you can work on anything you want to. Somebody else already tried it? Not like you will. The problem is already solved by somebody else? I bet some of their customers aren’t happy.

Oh and nobody can credibly accuse you of “stealing their idea,” since ideas are not automatically intellectual property. Intellectual property is the work product of an idea, not the idea itself. Copyright applies to words and images and code. Patents require you to actually design an invention and describe how it works in detail; even then, it’s not automatic. A patent is for the bread slicer, not the sliced bread.

ideas,

Call the lawyers. We’ve got a live one.

If someone has already done what you want to do, thank God somebody has already proven you can make money in this field- that makes your job a lot easier. Or thank goodness somebody else tried this and failed. Now you know not to make those same mistakes. See? Now that ideas don’t matter, the world is truly your oyster. Go forth and start up.

Startups Fail

Our Top 3 Reasons Startups Fail: Featuring CB Insights Data

/in , , /by

This is going to be a post about what makes startups fail. But first of all, if you don’t regularly read CBinsights and receive their newsletters, then stop reading this post and go sign up. There’s a reason most newsletters don’t have 400,000 weekly readers.

If you do, then you may have seen a bit of content that CB insights has been updating consistently since 2014: The Top 20 Reasons Startups Fail. This is a list compiled from a sample of over 100 “Post-mortems,” written by founders and employees of high profile startups that failed.

The list is ranked by the number of times a specific reason for failure is cited – each post-mortem contains some combination of these reasons:

StartupYard’s Top 3 Startups Fail, and How to Avoid Them

We won’t detract from this piece by hashing out every reason startups might fail. Instead, we’re going to focus on 3 of these reasons, and how to avoid letting them kill your startup before it starts.

Some of these reasons also explain why we choose not to work with some startups that apply to our program. If you’re thinking about applying to an accelerator or talking to early-stage investors, then these are important questions to ask about yourself and your business.

  1. Ignoring Customers

Oh boy. This is a big one. For me, this is the big one. The mistake that kills a startup dead like a beautiful rose in a dry vase. Ignoring your customers, refusing to think about them and to be driven by their needs, is the kiss of death.

It all starts so innocently: a humble coder working nights and weekends on a passion project. That’s the way a startup should start, but the nature of a startup is to grow – not just in size but in mentality.

Every startup investor and mentor has had this conversation:

Mentor: who are your customers.
Founder: Well we are our own customers.
Mentor: Yeah… but who is going to be your customer? What do they need?
Founder: They need our product.
Mentor: Why?
Founder: Because it’s awesome. They’ll love it.
Mentor: Yeah but… why your product? What not a competitor?
Founder: Because we are newer/smarter/cheaper/better UX, etc.
Mentor: How do you know that’s what they’re looking for?
Founder: Because we are the customer.

Points to you if you can spot the tautology in this reasoning. I strongly agree that a problem you are passionate about solving has to be one that affects you. In that sense, you should be your first user, you just need to remember that the customer is somebody you can also learn from.

A good way of remembering that is this: you didn’t buy your product. You built it. Your customer will buy it. Even if you both have the same problem, you are not the same person.

Again, it’s essential to create something you would use yourself. It just isn’t enough. Great products involve a deep insight into the motivations of customers; even when that insight is a very simple one, or an instinctual one, it does not come about by chance, but by observation and curiosity about people.

Thinking About Your Customers:

How to avoid this one? It happens that we’ve shared a lot of content on this theme. Positioning for Startups, Bulding a Killer Customer Persona, and The “We” Problem, are good places to start.

In short, it comes down to having a process. Here is one you can try:

  1. Develop customer focused product/messaging frameworks (aka: Positioning)
  2. Make educated guesses about your customers in that framework (aka: Personas)
  3. Test these frameworks with real people and an early product or mockup.
  4. Redevelop your product and business strategy based on what you’ve learned

There’s not one way to do this, but there are plenty of ways to do it poorly. Not having a clear idea of what you know and don’t know about customers is a mistake that’s easy to avoid. Paul Graham put it this way in one seminal blog post:

“When designing for other people you have to be empirical. You can no longer guess what will work; you have to find users and measure their responses.” -Paul Graham

2. Lacking Passion

“You need passion,” we are so often told. Less often are we told what that means.

I think this is why some founders confuse “having passion,” with “being energetic,” or “assertive,” or “dominant.” These are not the same things.

Passion comes from within – it’s not a performance art; it guides what you say but also how you think, what you are willing to do, and what setbacks you are willing to accept. In short, it’s not about how you behave, but about who you really are.

Everyone has some passion. It’s the thing that keeps you up at night, and bothers you throughout the day. A little voice in your head telling you something needs to be done.

Understanding their own passion is pretty hard for some people. We’ve seen that a lot. We spend a lot of time with founders trying to find out what gets them really engaged and excited about their work. What gets you out of bed in the morning is what’s most important in your work.

One of the first thing we ask applicants to StartupYard is: “Why are you doing this?” The answer says a lot about your passion.

A lack of passion is easy to spot, if you know what to look for. Here’s an overview of the qualities that typically tell us a founder lacks the passion they need to move forward:

  • Risk Avoidance: Founders who are unwilling to take risks, such as leaving a job, moving to a new place, or bringing on a co-founder.
  • Waiting: The founder who bases their decisions on the actions of others; who waits rather than acts with intention. “I will leave my job if you give me funding.” “I will decide what to do based on what investors say.”
  • Focused on Money/Valuation: Some founders who are overly focused on “getting the best deal,” do so because they value control and personal gain more than achieving their stated goals.
  • Motivated by Opportunity: I sometimes say: “don’t pitch me an opportunity, pitch me a company.” A founder who talks about getting a piece of a huge market might not be doing what they do out of a love for the work.
  • “Win At All Costs” Attitude: In my opinion, this happens when founders confuse passion for ambition. Ambition isn’t a bad thing, but it isn’t passion for what you do- it’s a passion for winning. Your passion for helping customers has to ultimately outweigh your personal ambitions, or else you won’t make decisions based on what’s right for them (and thus your business), but rather what fulfills your ambition.

Seeking your Passion: How do you know you’re doing things for the right reasons?

In my view, this is a simpler question than people often make it. We are taught from an early age that we should emulate those who are successful, but education systems often don’t help us to really understand why successful people are special to begin with: because they have a passion for what they do.

For all the tactics, tricks, and habits of the rich and famous, passion underlies everything. People succeed when they do what they are good at, enjoy it, and are willing to work harder at it than anyone else.

Just consider the following questions if you want to get in touch with your true passion:

  • If I were rich, would I stop doing this?
  • Are there better uses of my talent?
  • Am I waiting to enjoy what I am doing?
  • Am I doing this in order to be able to do something else?

If your answer to any of these is “yes,” then you ought to think hard about what you’re doing. You haven’t yet found your passion.

3. Missing Product-Market Fit (PMF)

“When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.” – Andy Rachleff, CEO, Wealthfront

Even if you’re doing something you really care about and you’re doing it for customers you understand really well, you can still fail to make the right product for the right market.

Andreessen-Horowitzs  has a fascinating post on product market fit, in which they quote Andy Rachleff who developed the PMF framework, starting with what he calls a “Value Hypothesis:”

“A value hypothesis identifies the features you need to build, the audience that’s likely to care, and the business model required to entice a customer to buy your product. “

There are two sides to the PMF equation. Market, and Product. Missing PMF means failing to address a specific market with exactly the right product, at the right price.

Right Market

Andreessen-Horowitz heavily emphasizes finding the right market first, which is another way of saying that you must identify the right problem to solve. If you pick the wrong market, you can end up building a product that people love, but won’t pay for.

This happens more than you’d suspect: plenty of popular products have never gained good PMF. Even mega-popular products like Twitter can teeter on the edge of failure, and take over a decade to achieve PMF (which Twitter seemed to do only in 2017, with their advertising business and focus on media and news).

Other orphans of bad PMF are products like Tumblr, Vine, Soundcloud, and BetaMax tapes. Each of these has either failed, or is now on life-support. The latter example of BetaMax is included in this extensive list from Business Insider. In fact, virtually all the products in this list failed because of lack of PMF. Not because the products were bad, but because the business model didn’t work: the market didn’t sustain them.

The Right Product

“First to market seldom matters. Rather, first to product/market fit is almost always the long-term winner.” – Andy Rachleff

So picking a problem you can solve, for a market that wants a solution critical. Still, you can manage this and still fail. The product that solves that problem also has to appeal to the customer enough for them to use it.

A great example of this also comes from BI’s list: The Apple Newton line, which lived from 1993 to 1997, and which Wired later called a “Prophetic Failure.” What most people don’t know about the Apple Newton line was that they very accurately predicted three distinct product categories, which would emerge in the following 15 years: the smartphone, the tablet computer, and the modern consumer laptop.

In many ways, looking at a Newton from 1995 feels like looking at a cyberpunk version of a modern device, made to look like a 90’s product.

 

The Newton failed in three categories that would go on to be the fastest growing market categories in history for computing, but still failed because the technology wasn’t ready. As the project lead Steve Capps said later: ““We were just way ahead of the technology. We barely got it functioning by ’93 when we started shipping it.”

The series failed at least partly because the market was not ready for such devices, but also because of its infamously bad character recognition feature. Even though later editions of the devices improved on the original, it was too late for Apple, which would spend the next 20 years rebuilding itself and slowly reintroducing all of these concepts in the form of the iPhone, iPad, and Macbook.

Testing the Value Hypothesis:

Like listening to your customers, PMF is all about trial and error. Make certain assumptions, test them with a minimum viable product, make more assumptions, and test them. The clearest milestones for PMF come from customer feedback about the Value Hypothesis.

You can begin to test this hypothesis right away, even with just an idea- with no product to show. It’s pretty simple: if you get confusion, lack of enthusiasm, or even hostility, either it’s the wrong product or the wrong market. Find out what the person you are talking to does want, and also look for others who do want the product you’re pitching. Chances are the answer is somewhere in the middle.

This is a bit like fishing. Either change the location or change the bait. It just takes time and consistency. Fish long enough, and you can get lucky.

For example, I was attending a tech conference a few months ago, when I got the chance to meet the former Senior Vice-President of a major electronics company. He mentioned that he helps early stage hardware companies find PMF, and I mentioned we had just such a company seeking PMF: Steel Mountain.

He asked me what the company did, so I gave him the 90 second water-cooler pitch. Within a few moments he was nodding. When I got into some of the features, he was saying: “yes… yes.” When I finished, he exclaimed: “I can’t believe no one has done this! When can I buy one?”

This, I must repeat, was the former Senior VP of a major electronics company, whose products you probably own. Nobody had ever pitched him this particular idea in just the right way before. That is a powerful indication of PMF.  You don’t have to convince the customer they need the product, because they know they need it.  

Still I may lack some important information. Is this customer representative of a distinct market segment? Is the business model workable for the target market? Does the product work the way they want and expect?

You still have to explore all those details, but enthusiasm for the product’s core value proposition is a great milestone. It was then the Steel Mountain team’s job to continue testing the product with the same customer and others like him.

 

6 Ways StartupYard Helps its Alumni Post Acceleration

/in , /by

One impression some startup founders have about accelerator programs is that they are a “one-off” activity that lasts for just 3 months, at which point a company moves forward to either grow and scale or falter and die.

Thus the constant objection some founders have to attending an accelerator: “It’s going to take too much of my time.” And yet the purpose of a good accelerator is to be a platform for growth, and a means to save time and deliver faster than you could otherwise.

An accelerator’s value has to live largely outside the time-frame In fact, over 7 years of operation, StartupYard has continued to grow its role in the post-acceleration success of our invested companies.

While we’ve always tried our best to take care of companies that have been through our program, these years of experience have continually shown us that our involvement is often as critical after the program as during it. That has led us to greatly expand our post-acceleration activities with alumni.

Here are some of the things a good program should be able to help alumni with:

Fundraising and Prep

An important part of growing a sustainable business is laying the proper groundwork with co-founders, employees, and investors from the beginning. This is an area where young companies fail needlessly. Flexibility and a “move fast and break things” attitude are great until they become roadblocks to growth. When you’re at the stage that you need capital to execute sales and development faster, you’ll need what any serious company does: a plan.

Yet few early-stage companies have access to the experience and resources they need to set up their ownership structure properly, much less to continue to manage that structure in a way that serves existing shareholders, and prepares the company for future investment. Then there is the need to develop a full set of contingency plans based on different levels of investment, with optimistic and pessimistic assumptions considered and accounted for.

Unlike a typical Seed fund or VC, StartupYard works with founders from the pre-incorporation phase if necessary, and can guide the creation of a growth plan that makes sense, and can make the company investible in the future.

Many of the blockers to necessary investment for growing companies are avoidable. They’re things that can be overcome early, or they can become a drag on your success. Few companies make it from incorporation to venture funding without a few nasty surprises along the way. These can be greatly limited by an early-stage partner whose job it is to make sure you’re laying the right foundation.

The Alumni Network

Often forgotten, but very important in our experience, is the role of our alumni network in helping new StartupYard companies gain a foothold. Like the mentor network, our alumni group is composed of people who have experienced every challenge young companies face. Not only that, the alumni have been in the founders’ shoes in the very recent past.

Because our alumni maintain such a close relationship with our team, they can be continually called upon to share their working knowledge of their industries, and make connections for new startups that even our mentors can’t. After all, who knows better how to approach customers with a brand new idea than someone who has just done it themselves?

StartupYard, DemoDay Batch 8

StartupYard Alumni

To a surprising degree, our alumni have also come to constitute a base of early customers and partners for our newer startups. As our network grows to inhabit more industries, the chances that a fresh startup can begin cooperating with an alumni company grows every year. In our last two batches, multiple new startups have signed alumni companies as their first customers. The process also works in reverse: our newer companies have also become customers of our alumni.

The Negotiating Table

One of the biggest hidden advantages of being a StartupYard alum is the leverage it can bring to negotiations with new partners or investors. Of course, name recognition and the social proof a founder gets from attending our program are important, but they extend beyond just getting that first meeting with an investor.

Because the accelerator is a stakeholder, we are able to weigh in on the side of our startups to ensure that they are treated well and fairly by their later investors. Tech investors know, or quickly learn, that their access to deal flow depends on the reputation they’ve earned with us and other programs. Investors who are founder-friendly and straight-shooting are invited back, while those who don’t play fair will find that startups avoid them.

Here our mentor network also improves the position of our startups in negotiations. Being able to receive feedback from other alumni and mentors from the same industry helps founders to approach business deals better armed with the knowledge and context they need to make the best deals. Often too, our management team and mentors are involved in deals as advisors, bringing increased confidence and experience to the negotiating table.

Hiring

Of all challenges an early to mid-stage tech startup will face, hiring is perhaps the hardest. This is a problem that gets harder as companies grow, rather than easier. Finding and retaining talent is the number one barrier to growth for such companies.

Though StartupYard isn’t a talent agency by any stretch, again, planning is the best defense against this inevitable problem. That’s why we focus from the beginning on helping our startups to make the right early hiring decisions, so that their growth down the line won’t be disrupted unnecessarily by having to make drastic changes to the team in mid-stride.

This planning process includes not only understanding what kind of talent a young startup can afford, but also what types of people founders should hire first. Does a company need a COO or an outside CEO? Does it need a business development specialist, or should it hire a crack product development leader first? These questions are vital to the early success of young companies, and they’re very easy to get wrong.

Business Development

Business development with our startups is never confined to the brief 3-month window of acceleration. In fact, that’s more like an introductory period. Our startups continually tap our mentor network and corporate partnerships for business development for months and years after leaving the program.

We frequently connect alumni with new members of the network, as well as fielding requests from mentors and partners to connect them with our startups. As our network continues to grow, it becomes a richer resource for alumni and mentors both, often keeping connections going for years after the program. StartupYard’s in-person events and ongoing activities keep an open door between alumni and the broader network, so that early-stage companies that have grown in maturity and abilities can come back to mentors and partners when they’re ready, and mentors can keep up to date on what the companies are doing.

Press

Finally being part of StartupYard also means being part of our press operation. Though we aren’t the darling of the international media that Y-combinator is, our name recognition in Central Europe is high in the tech media, and we can leverage that name and our existing relationships with media outlets to highlight the activities and successes of our alumni.

In media, “relevance” is an important factor in getting any story told. Journalists look for familiar names and common connections to determine whether a startup or a particular story is noteworthy to its audience. Having the name of a well-known investor behind you helps to create that context for journalists and their readers, and makes it much more likely that you will receive coverage.

Michal Kratochvil, StartupYard, BudgetBakers, Startups, Accelerator

VIDEO: Mentor, Investor, Startup CEO: Michal Kratochvil Talks Acceleration

/in , , , , /by

Mentor, Investor, Startup CEO: Michal Kratochvil talks about life at StartupYard

StartupYard investor, mentor, and CEO of StartupYard alum BudgetBakers, Michal Kratochvil joined the world of startups after a career in corporations as Managing Director of Accenture Consulting in Prague. Michal gives us an idea of how working with startups has changed his view of business in the past few years, and how he became a believer in Acceleration.

Posted by StartupYard on Monday, 15 January 2018

 

Michal Kratochvil joined StartupYard in late 2015 as an investor, and our 3rd “Executive in Residence,” and has continued in that role ever since. In 2016, he took over as CEO of BudgetBakers, a StartupYard alumni company and personal finance platform that has grown rapidly to hundreds of thousands of active users under his leadership, and now employs about 30 people.

Michal joined us after a distinguished career at Accenture Consulting, where he served as Managing Director for Central Europe for over a decade. His switch to the startup lifestyle was gradual, as he slowly converted from his customary suit and tie, to t-shirts and jeans, also switching from an IBM notebook to a Macbook. Today Michal is deeply involved with StartupYard’s operations, particularly in selection of startups, and helping companies to grow their networks through his impressive personal rolodex.

Michal also studies martial arts, and is a fan of western style horseback riding, participating in rodeo events and exhibitions.

Great interview about #startup #acceleration with @BudgetBakers CEO Michal Kratochvil @startupyard in Prague! Share on X

 

StartupYard, growth strategy

10 StartupYard Companies Raised €2.2M in 2017

/in , , , /by

2017 was a good year at StartupYard. Not just financially , but also because we saw a number of our Alumni and recent graduates accomplish amazing things in the past year. Of course, 10 companies raising over €2 million total makes us very happy.

Still, the money is less important to us than what the money says, which is that these companies are doing good things that investors believe in, and that therefore we’ve done our job well.

10 Companies, €2.2 Million

More StartupYard alumni raised funding in 2017 than in any previous year. 10 Alumni and startups in the program raised funds in rounds worth between €35k and €750k. Many of these investments we’ve announced, but others have not been made public yet.

We’re also happy to report that there are additional deals in the pipeline, and we will hopefully be able to announce those very soon. We hope that 2018 will follow 2017 as another record year for fundraising.

How Does StartupYard Help Startups Fundraise?

The Network:  Aside from the obvious, which is that we begin by investing in Startups that go through our program, every deal that one of our alumni have closed in the past year has been with the help of the StartupYard network.

Through mentoring, and especially Demo Day and the following Investor Week, our startups meet and get a chance to pitch a huge number of likely investors, including business angels, VCs, and even banks and large corporate investors. In every case in the past year, our startups have been able to raise money because of contacts made during the program. In most cases, the startups raised directly from StartupYard mentors or existing investors.

The Reputation: As with any long-running accelerator program with a decent track record, we have a smart group of investors who will pay close attention to any startup we work with. Being around for many years, and having made many right calls in the past, we are trusted by investors to offer clear, honest and helpful feedback about our alumni.

That doesn’t mean investors do whatever we say. But they do listen.

Our investor network know that we do not shop investments that we don’t believe in ourselves. Credibility in the investment community matters very much. You don’t always have to be right, but you have to be informed, open, and honest. I can safely say that every company I’ve worked with in the past 4 years at StartupYard that deserved an investment, got it. We find a way to make it happen.

The Program: Just as important as having the right network to do your initial fundraising, you have to be an investable company to begin with. One of the things we look for in startups we select is that they are usually almost investible, or we see that with some hard work, they will be investable sooner rather than later.

That naturally incurs a big risk for us, but it also helps define our mission- not to find “the best” most shiney startups out there, but to find the ones with the most real potential. One of the metrics we use to determine our success at picking “go over show,” is how well our startups do after our program at raising smart money (that is, from investors who know what they’re doing).

The Backup: Another quiet but important part of StartupYard’s role with alumni companies is to provide “backup” in negotiations with future investors.

Having an existing investor on your side of the table is an important practical and psychological advantage in investment negotiations. For one thing, an existing, experienced investor helps ensure that new investors behave themselves, and make fair offers on fair terms. Knowing an experienced partner is behind the startup encourages fair play and discourages game playing.

For another, StartupYard has the network and platform to expose bad actors, and to make sure our startups don’t deal with them in the first place. We have the power, in extreme circumstances, to block investments in our most recent alumni. This should be seen not as a blocker for investment, but as a negotiating advantage for startups, who can always fall back on us to block or negotiate terms that are unfavorable to the founder, on their behalf.

As we say, we can be “the bad guy,” with future investors when we are needed to be.

Listening to What an Investment Actually Says

Many founders who apply to StartupYard, and many who join us and go on to raise further investment, begin with some wrong conceptions of what raising investment is all about.

Of course, it’s the money they’re usually thinking about. But this is only part of the picture. If you need money, there are lots of places to look for it. Not all of those places are good, and not all of them are ultimately worth your effort or the risk you take in going there.

I used to joke with our founders that if you got into this business just to make money, you should just sell drugs instead. It’s almost true.

If there is good money and not so good money (clean or dirty, smart or dumb) how do you decide whom to take money from, or whom to ask for it?

Try approaching the question from the opposite tack: not “how do I get this money,” but instead: “what will it say if someone gives me this money?”

It should say that the investor believes in the upside potential of what you’re doing. Any investor in an early stage company should be nowhere near defining the real market value of the investment, because that value hasn’t been fully explored or proven yet.

The investment has to say what the investor can reasonably believe. Here are some things an early stage investment should say about what the investor believes:

  • The company will be worth more in the future
  • The founders are honorable and trustworthy
  • The product is good and there is a market for it
  • The founders will work hard, and pivot if necessary
  • The founders will eventually sell or realize a profit
  • Failure is possible, and ultimately acceptable

Maybe one or two of those points surprise you, but I hope not. We should not expect early investors to be total true-believers in what a startup is doing, but we should be able to answer all these questions before accepting an early investment from someone.

We should also not expect investors to be unemotional, or completely calculating in their early-stage investments. A true opportunist is a dangerous friend to have.

Picking the right investor is not just about sleeping well at night, though that’s part of it. It’s also about making sure that you actually have the clarity of vision and the confidence you will need to do what the investor believes you can do. Convincing someone of something is a lot harder than telling it to yourself.

One of the best ways to get someone to believe all the things I’ve mentioned is to really believe them yourself. The best way to believe those things is to make them true.

Make Yourself Investable

As we’ve seen, becoming an investable company is about more than having a great idea, or the energy and determination to make it happen. It’s also about the network you have, and the choices you make early on.

If you think you have a tech idea with great potential, consider working with an accelerator like StartupYard to grow your immediate network, and turn the idea into a business investors and customers can really trust.

Finding investors, just like finding any business partner, is about knowing what exactly you need, and what to reasonably expect. StartupYard helps you figure those things out.

 

StartupYard is currently accepting applications for Batch 9.

We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Startups: Do You Make Me Money, or Save Me Money?

/in , , , /by

Something jumped out at me from a recent podcast by Y-Combinator with Des Traynor, Founder of Intercom. Asked about the problem he solves, he described how over time, their approach to sales has changed:

“. When you’re trying to pitch them something, they just say “Hey, here’s my two numbers, which one of these are you changing?” And I think when we show up and we’re like, well if you love your users you’re going to stick around, and they’re like sh-sh. Don’t care about any of that. Are you going to make me money or save me money? And we need to get better at answering that question. And we need to have better evidence to answer that question.”

In Startup culture, there is always a lot of talk about “solving problems.” Every product and service has to solve some problem. That’s true as far as it goes, but “solving a problem” for your users is not, in itself, enough to build a business on. You have to also answer some version of this question: how do you make me money, or save me money?

As we accept applications for StartupYard Batch 9, this question will be forefront on our minds when making initial selections.

Lots of problems exist, but not all of them are promising new businesses. How do you know when you’ve nailed down that problem that people are willing to pay money to solve?

You can check out the video podcast here:

A Problem That Isn’t a Problem

The reason we always begin our acceleration program with the classic Positioning Statement, is that expressing the problem you solve is one of the hardest things an early stage startup has to manage.

Often times the “problem” founders pick to talk about is just another way of saying that their customers want their product. Maybe they do, but why?

Over the course of in-depth positioning discussions with dozens of startups, I’ve developed a sort of framework for determining whether a problem is in fact a real problem, and not a “startup problem.” While not universal, this framework is extremely helpful in determining whether you’ve really nailed down the problem you’re solving.

I apply this mental checklist:

  • Does the problem have clear financial implications?
  • Is the customer aware that this is a problem?
  • Does the customer actively search for other solutions?
  • Is this problem something your customer would list among their most important concerns?

One of the most typical early positioning problems is that founders will identify things like “a better interface,” or “more efficiency,” or “saves time,” as the key benefits of their solution to a problem.

But by applying this checklist, we can see that benefits like “saving time,” are not always as urgent as they might appear. Does the time have a clear financial cost? Is the customer aware that they can do something faster? Would they actually seek a faster solution on their own? Is this time that they are wasting a concern for them?

You can sell me a way to shower in half the time every morning, but I wouldn’t buy it. It’s only a problem if the time I spend showering is a frustration to me.

Sometimes I ask founders: “Have you ever sat down and googled: “how to do x faster?” Most of the time, they haven’t, because that’s not typically how people behave. Only when something is taking so long, and is so arduous that it has become a clear problem, do people act to find solutions.

A Case Study: Steel Mountain

Steel Mountain

Getting your positioning, and particularly your problem statement to answer those questions can mean changing deeply how you talk about what you do, and how you see your customers, and who they are.

I’m going to use the case of one of our most recent startups Steel Mountain, the home-network security company that will soon be offering a single device to monitor and protect homes from digital intruders, viruses, and other threats.

Steel Mountain, it must be said, were already in a more than usually advanced stage of development when they joined our program, but I would say this exact roadblock was among their toughest questions early on. They had a compelling product, but they needed to really be able to express the problem that it solves.

The “You Need Us” Problem

After about a month in the program, their positioning looked something like this:

“The privacy and security of homes and small businesses are increasingly at risk from digital threats. Steel Mountain’s Secaura device plugs into your router, providing enterprise grade security across your entire home network. Unlike typical security software, Secaura covers all connected devices instantly, requires no active maintenance, and employs advanced artificial intelligence against known and unknown security threats.”

That is a very straightforward positioning statement, quite typical of a security company. Just one problem: it doesn’t quite pass the checklist I mentioned earlier. Let’s see:

  • Does the problem have clear financial implications?

Not really. We are told first of all that there is a threat lurking out there somewhere online. But that threat has no exact proportion, and the target customer (the head of a household or small business), is at pains to estimate how much exactly a digital threat means in terms of lost income, lost business, theft, or other mischief.

  • Is the customer aware that this is a problem?

Maybe… although given that this is such a simple solution to a complex problem, it’s rather doubtful that anyone who truly understands the problem doesn’t already have a solution in place. Perhaps there is market awareness of the problem, but we aren’t yet clear from this statement that the target market knows they’re in real danger.

  • Does the customer active search for other solutions?

Again, it’s not yet clear whether the target customer actively engages with this problem at all. Some probably do, but the alternatives mentioned, such as security software, serve only a minority of households. Most do not have a sophisticated solution in place. Is the product only for security minded people, or is it for people who can’t deal with complex solutions?

  • Is this problem something your customer would list among their most important concerns?

Again, we can speculate that the typical household or small business does not list security among its top concerns. Those that do are probably using more complex solutions. For those who are using no solution, it is seen more as a low-level, constant issue that many people would rather ignore than understand, and most people believe will never have an effect on them either way.

As we can see clearly from this checklist, we haven’t identified an urgent, well-understood need from a well-defined target customer. 

Making the Problem a Real Problem

How did Steel Mountain come down to a positioning statement that did involve a clear problem and urgent need for the solution?

First, they took the painful but necessary step of considering that while their expertise and the value of the product as they see it is in security technology, the typical customer in their target market has no way of evaluating such products.

Instead, they went back to these 4 checklist questions and identified a problem that satisfies all of them at once.

The problem they identified was this:

 

“Parents of families feel great pressure to provide a safe digital environment for their children, and are prone to wasting money and effort on partial security solutions that never completely protect their homes and families.”

Bingo.

For starters, we have narrowed the customer set in this positioning statement to parents. In doing so, we’ve been able to identify a more universal emotional and social problem that the target customer can easily identify with.

So the problem is no longer: “my home is not secure,” but instead: “I am afraid of feeling like a bad parent who can’t protect their family.”

How does it do with the checklist?

  • The problem has clear financial implications. Every parent has wasted money on safety equipment that wasn’t really needed. This solution promises to end that guess-and-check approach to digital security.
  • The customer is very aware of the problem. Any parent who gives their child a smartphone or a tablet knows the dangers, and tries to consider them.
  • Nearly every parent in the target market has or will in the future investigate digital security to protect their children. The solutions are in fact much broader than merely software, as in the earlier positioning statement. Education products, specialty devices, operating systems, and many other solutions are available to address the same concerns. This solution can now be compared to those as a cost effective and complete alternative
  • Child safety is a top concern for most families with children. Again, by shifting the problem to one of “parents with children” rather than “owners of homes,” we have also shifted the conversation towards top concerns that parents have, for their children. Now, rather than comparing Secaura to an anti-virus software, we can compare it to other home security essentials: baby monitors, door locks, or fuse-plugs.

This process also helped the founders identify more features of the product that were very attractive for customers. Parental content locks, and “bedtime” settings for individual devices, though the founders had included them as an afterthought, were of prime interest to this new target market.

The reactions the founders got began to change because of this new positioning.

When Steel Mountain’s CEO Will Butler began pitching the company with this strategy, the change in enthusiasm was remarkable. People in his target market started asking: “Can I have one?” And “I’ve always wanted that!” It went from a geek product to something the customer had to have, and should have already owned.

Steel Mountain CEO Will Butler pitches about the stress of living up to your role as a parent.

It’s often said that “people don’t buy security.” What’s really meant by that is that people have a hard time seeing the value of something that protects us against a problem we don’t understand. If the product solves a problem we do understand, and even better, one we already have right now, then the customer is much more likely to consider buying it.

Some security companies only manage to sell to customers who have already been victimized by attacks and theft. But others find a way to sell “peace of mind,” instead.

When solutions really find a clear and understood problem and customer, they begin to feel not just strong, but practically inevitable. Why hasn’t someone done this before?

Applying it Yourself

Of course, not every problem has to do with security, or money, or peace of mind. Your customer might not be concerned with saving or making money. The logic of the framework is about the relevance of the problem to a particular customer. Have you picked a customer and a problem that match?

If not, how can you change your thinking about who the customer really is, or what their problem really might be?

Squaring that circle is never easy. As a founder, you’re naturally absorbed in what you’re building, and driven by your own reasons for building it. Opening up and applying that work to problems you haven’t considered is part of a continuous creative process. It involves talking to your target customer and others about what their real feelings and concerns are.

You have to talk to a lot of people. Not just customers, but the people who sell to those customers, and understand them best.

Getting the problem right is a life or death challenge for an early stage company. That’s one of the reasons an accelerator can be such a great choice for a team like Steel Mountain, or many other companies we’ve worked with. The opportunity to shift your thinking and test it with so many mentors and potential customers in such a short time is a rare opportunity for a startup.

 

StartupYard is currently accepting applications for Batch 9. We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Video: StartupYard Alumni Founders Tell Their Stories

/in , , , , /by

At the end of StartupYard Batch 8, we asked our founders, along with some alumni to tell us about their experience with us for 3 months. Here is what they had to say.

StartupYard is currently accepting applications for Batch 9.

We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

 

Accelerator, StartupYard

Choosing an Accelerator: 11 Questions to Ask

/in , , /by

So you’ve got an idea for a tech startup. You’ve done your positioning statement, you’ve talked to people you trust about the idea. Maybe you’ve even talked to customers. Maybe you’ve already sold your product, or gotten users to sign up for your beta. Fantastic. Now maybe you need a Seed Accelerator. Not every tech startup needs one, and not every accelerator is the right choice. How do you know?

To Accelerate or Not?

At StartupYard, 59 startup investments in 6 years have shown us that the most important factor for founders looking at acceleration programs is fit. If the founders and their company are a good fit for the program, with the other startups, the mentor community and investors behind it, then the stage of the company, the domain, and the market focus are not nearly as important.

Accelerator, Startup, StartupYard,

This is why we’ve invested in companies doing hardcore cutting edge technology like AI and Cybersecurity, but also companies doing technologically simple things, like marketplaces, and sharing economy startups. If the fit is good, then the diverse backgrounds and ideas of the founders enhance each other, and mentors and investors get more engaged, because all of them are able to find something they’re passionate about in every batch.

We emphasize fit over most other considerations. How can we actually help companies succeed?

Nothing can guarantee fit, but there are at least 11 things you *can* ask any accelerator to determine whether it is the program you really need.

So here they are:

1. Why Is the Accelerator Interested in My Startup?

Few founders ask us this, but to me, it’s a potential game changer as a question.

What I see as an ideal answer is: “Because we see potential in your team, because we believe in the market you’re in, and because we think our program can help you.” It helps if the accelerator likes your technology, sees it as a big opportunity, and doesn’t want to miss out. But that’s unlikely to be enough on its own.

If the accelerator can’t clearly show you why your interests are aligned, you should think twice.

2. Are You Convinced by My Pitch?

Everyone likes validation. But you don’t necessarily want an accelerator that isn’t willing to say “no.”

We are not convinced by every pitch we hear, and that’s ok, if we *are* convinced by the team. Founders should go into a program knowing that they may need to consider big changes to their approach, and their assumptions. We want teams with a passion for their ideas, but not with a toxic sense of pride.

If an accelerator is not willing to voice doubts when you ask, then it might be a sign that they aren’t going to challenge you when needed.

3. What Do Your Investors Want, and/or Where is the Money Coming From?

Another key question almost no one asks. You really should, because the investors largely determine the direction of the accelerator. They ultimately control who runs the program, and thus the decisions being made.

If the money is from a corporate sponsor, what does the corporation want? If the money is private, then why are the investors backing this accelerator? Pay attention to how aligned the accelerator team are with the investors. If the investors and the team have a solid relationship, then you aren’t dealing with office politics or competing ideas about what success looks like.

4. Does the Accelerator Management Team Have A Stake?

This is related to the previous question. Ideally, the decision makers at the accelerator have a financial stake in the decisions they are making. This helps you to determine what their motivations in working with you really are.

Is it a deal breaker if they don’t have a stake? Maybe not, but you need to know who you’re talking to. The decisions a person makes when they have no financial stake in the outcome are bound to be different. Is the person making a decision because of the politics of their job, or because they really believe in it?

5. Why Are Your Terms What They Are?

Terms vary between accelerators. I don’t think there’s an ideal formula for how much an accelerator gives, or how much equity it takes. Zero equity programs are not always a bad thing, and programs that give more or less money for more or less equity have their own reasons for doing so.

Accelerator, StartupYard

The answer tells you how the accelerator views their role in your company. “Founder friendly” terms are very important. On the other hand, a mature investor is also up front about what they would be willing to do in case something went wrong with the relationship.

The terms are one thing, but the answers are another. Any contract is in place primarily to outline a relationship, not to define it in personal terms. Those personal terms often matter more than what’s on paper, so you need to know why the terms are the way they are.

6. Have You Ever Fired a Startup During the Program?

Not every accelerator has ended a relationship with a startup in less than ideal circumstances. It does happen though, and the story is usually instructive.

StartupYard, for example, has been very open about relationships that have gone wrong. In case such a thing happens, we try hard to identify the mistakes that *we* have made that led to the problem. In each case (and there has only really been one out of 59), we recognized our own errors in choosing, working with, and helping those companies. We have only “fired” one company during our program.

Accelerator, StartupYard

We were not vindictive and did not blame them for our own mistakes. If an accelerator puts blame only on the other party, that may indicate that they don’t acknowledge their failures or their part in the relationship. We all make mistakes, but you need investors who learn from theirs, and are not afraid to tell you about them.

7. What Do You Expect from Me?

What we expect from our founders informs how we choose companies to work with, and what we see as success when they go through our program. We have our own tough standards, but they are not universally what all accelerators expect.

We want every one of our companies to be a unicorn. We expect them to try. We expect ambition and drive, and hard work. We expect companies to improve markedly in all areas during our program. We expect them to challenge themselves and to meet challenges that we help them set.

But if you ask us, we will tell you that we also expect things like personal availability, honesty, willingness to talk about your motivations and to discuss your feelings. We expect our founders to take a broad range of input that other accelerators might not insist on. We expect them to adjust their ambitions according to new realities; to make changes swiftly if something doesn’t work, and react to obstacles rather than avoiding them.

Some accelerators will give hard and fast expectations in terms of growth, even on a weekly basis. There’s nothing wrong with that approach, but you need to understand the consequences of failing to meet those expectations.

You just need to know what you’re getting into, and what success looks like to accelerator you choose. Be honest with yourself, as to whether these are things you really want, and can handle.

8. What is Special About Your Ecosystem? Why Should I Go There?

Accelerators are deeply affected by their location in a particular ecosystem. What that ecosystem has and doesn’t have, and where it is, are important factors in your decision.

For example, StartupYard is located in a beautiful, accessible, and highly livable city: Prague. Our geography places us between East and West. We see that as a big advantage, and we want startups who also see it that way.

Our ecosystem has its strengths and weaknesses. Its size makes corporates more available, while it also limits which industries are most engaged here. The history of our region affects what we have to offer startups, and we work hard to express those peculiarities and special qualities to our companies.

Pick an ecosystem that works for you. Just because a place is big, doesn’t mean it’s best. Just because there’s money, doesn’t mean it’s the *right money*. The accelerator’s answers to this question will tell you a lot about how they see their value to you.

9. Does the Accelerator Pay The Mentors?

Accelerator, StartupYard

Hopefully the answer is “No.”

Of course, accelerators do pay for input from professionals in areas like design, marketing, speech coaching, in-person sales, and other soft skills. These workshop runners are professionals, and you get what you pay for. Mentors are different, however.

A mentor community should be all-volunteer because the connections that founders make with their mentors must be genuine. These are people who you will be relying on to follow-up, to open their contacts to you, make introductions, and be available for further advice and support down the line. That has to come from a place of passion, not greed.

Our mentors do it for various reasons. It improves their personal or company brand, it makes them look good, it gives them insight into emerging trends, etc. Primarily our mentors tell us that they do it because of the personal fulfillment and stimulation they get out of being mentors. These are high achieving individuals, who relish the chance to talk to people at the beginning of their own journey, and share their wisdom and knowledge.

That should be enough.

10. What Entrepreneurial Experience Does the Management Team Have?

An accelerator is for true entrepreneurs. No one is better suited to recognize your entrepreneurial strengths and weaknesses than a fellow traveler. That’s why most of StartupYard’s management team are founders of one kind or another themselves.

The management team don’t have to all be former tech startup founders. I was not a startup founder when I joined StartupYard. Neither was our Associate Helena, or our Portfolio Manager Jaromir. But we had all been entrepreneurs of one kind or another.

Cedric Maloux, our Managing Director, was a tech founder before it was cool, in the mid 90s. Helena owns a Yoga Studio, I run several side projects, and our Head of Partnerships, Gustavo, ran his own healthtech company for several years- we met because he applied to StartupYard with that project. It failed, but no one has better insight as to why it failed, than he does.

A military leader with no combat experience is a danger to the people he leads. It’s the same in Startupland. An advisor who hasn’t seen plans and dreams fall apart, is a liability to the founders he or she advises.

11. Do You Have Partnerships with Potential Customers?

Accelerators are not just about learning. They’re about doing. A key part of growing your company is going to be working with larger partners inside and outside the tech industry. A B2B startup needs real customers to talk to, and a B2C startup needs to talk to companies who serve the customers they are after. So ask about the accelerator’s real relationships with companies that may be important to your success.

In Startupland, there are “Partnerships,” and there are Partnerships. Promotional partners are cheap, and the relationships totally impersonal. Sponsorships and co-operational partnerships are better. An ongoing partnership is better than a short-term one.

You want an accelerator with a real working relationship with key players inside multiple industries and corporations. You may not always know which contacts you need, so the depth of the partnerships are important. Just because a company’s logo is on the accelerator website, doesn’t mean you’ll get past the secretaries if you need to.

So when you ask about these partnerships, pay attention to which contacts the accelerator actually has: they should be C-level, or other empowered representatives like board members, founders, and investors.

No accelerator will have powerful contacts in every corporation or government institution you may need, but an accelerator should have strong relationships in a range of key industries. This is why StartupYard has a dedicated team member for Partnerships, and it is why we have investors with deep ties to tech-related industries, who can leverage their networks for founders.

 

StartupYard is currently accepting applications for Batch 9. We’re looking for startup founders in Crypto, AI, IoT, and AR/VR!

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

Blockchain, StartupYard Accelerator

Why Blockchain Startups Should Apply to StartupYard Batch 9

/in , /by

StartupYard is currently accepting applications for Batch 9. One of the key verticals we are focusing on during this round is Crypto-tokens and Blockchain.

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now

 

2017 : The Year of Bitcoin?

From the original appearance of Bitcoin on the web forum The Foundation for Peer to Peer Alternatives in February 2009, to today’s craze around ICOs and explosive cryptocoin market capitalizations, the world of crypto has drastically changed.

Bitcoin’s unsavory early associations have meant that many have tried to separate the discussion of Bitcoin and Blockchain technology. But that is an incomplete approach. Blockchain in a technical sense is just one of a number of elements that make up crypto-tokens, like Bitcoin, and will continue to form the basis for future innovations.

StartupYard, Blockchain, Bitcoin

The central idea behind crypto-tokens is to create trust via collaboration, communication and computation through cryptography. This approach relies on a number of technologies: the blockchain (a distributed database), a decentralised consensus algorithm (proof of work) that allows security and open systems of access (no accounts are necessary). For more information on bitcoin, we encourage you to follow one of its most outspoken evangelists: Andreas Antonopoulos.

Today, a lot of startups are working with crypto-tokens and distributed ledgers to create new decentralised services to reinvent entire industries.

Why is StartupYard Investing in Crypto Startups?

This week we also wrote about why cybersecurity startups should apply to StartupYard. Much of the reasoning is the same, however unlike Cybersecurity, where the list of customers is long, and the need is very well understood, crypto-token technology is in its early years.

Bitcoin is making headlines, but the deepest benefits to society of secured distributed ledgers, transparent transactions, and the decentralization of data sharing and communication are still to come. Most of the true benefits have not yet been realized, but are appearing on the horizon. Startups need a deep network of business, tech, and investment mentors who can help them turn novel technologies into tangible, real world change.

Our interest is in finding those founders who have the ambition to solve societal, business, and governmental problems using this technology for the good of mankind. The ways in which crypto-tokens can benefit us all can’t be tallied, but just a few examples are:

Transactions: Crypto technology opens up the potential for a true peer-to-peer transactional ecosystem, in which both people and machines can trade anything from processing time, to energy, bandwidth, or currency, in a secure, trustless and cost-effective way.

Net Neutrality: As open access to the internet comes under attack in the US and elsewhere, crypto can provide a check against the censorship of information, and the suppression or preferential treatment of some sources of data and services over others. Distributed ledgers may also help fight state and non-state propaganda operations by providing tools to check facts and records.

E-Government: Transparent, open, decentralised networks without a single point of failure allow for decentralised trust to provide potential open-source solutions to election fraud, voter suppression, online voting, and voter identification- all problems that are linked with corruption and inefficiency in state and local governments.

Security: Crypto and blockchain technologies provide a potential defense against cyberterrorism, cyberwarfare, and malicious destruction of data, or the dissemination of false data and malicious code across networks. It also provides the potential for more secure collaborative networks that are not based on a central entity such as a corporation or government, eliminating the need for 3rd party support of data storage and sharing.

Why StartupYard?

StartupYard, DemoDay Batch 8, Blockchain, Crypto

Opportunities for crypto and blockchain startups appear to be numerous at the moment. Blockchain is having its first day in the sun, and ICOs (Initial Coin Offerings) are now proliferating. However, this unregulated and largely disorganized market is poorly understood by institutional investors, and especially corporations and governments.

This is a shame, because it will be these players who will give breakthrough technologies access to global markets and the customer base they will need to really have an impact. This is what StartupYard offers: not the quick cash of an ICO, but the stable foundation of a sustainable, global business.

For that you need:

Credibility and Access

StartupYard is a trusted partner for corporations, utilities, and investors who are seeking to engage with early-stage cutting edge technology startups. Translating and aligning your goals with those of large organizations with a global footprint is a long and painful process in the best circumstances.

Without a key partner providing access and credibility, this becomes even harder. StartupYard allows a crypto company to get their foot in the door of banks, telcos, and large investors with our deep network of mentors and advisors. Convincing those in power to trust and rely on you is a key step toward achieving your global ambitions. It should not be ignored or minimized in its importance.

Business Fundamentals

Blockchain and crypto technologies are exciting, but the fundamentals of business have not altered because of these technologies. Companies that operate outside traditional business structures and legal frameworks put themselves at risk, and just as importantly, risk the future of their technological breakthroughs.

Building a sustainable and rational business is as valuable today as it was when StartupYard was founded in 2011. You need experienced partners who have built fast growing tech companies before, to share their mistakes and their successes, and give you your best shot at success.

Experience

StartupYard’s hands on experience in blockchain technology is still recent, but we have already made two investments into companies leveraging the blockchain – one in Cryptelo, which has turned to providing secure key storage and transmission for blockchain products (and is raising an ICO), and Bloknify, a winning project in our most recent hackathon in partnership with KB Bank. Blocknify is developing a solution for secure contract verification using blockchain.

Beyond that, StartupYard has a deep well of experience in turning novel technologies with unclear or undeveloped applications into real businesses. We helped turn an NLP product for the Albanian language into Gjirafa.com, the fastest growing tech company in the Balkans. We helped turn a team of music and neural network geeks into Neuron Soundware, now making enterprise grade IoT devices with on-board AI that diagnose faults in heavy machinery (like Airbus jets).

We helped boost a once hobby project (BudgetBakers), into a global company serving hundreds of thousands of active users, and we have helped Rossum, an AI company doing document analysis, evolve into a venture invested company with a growing team.

Not all of our bets will pay off, and crypto-token technology will be no different. But as any one of our alumni will attest, startups at StartupYard do not fail due to lack of preparation.

Should my Blockchain Startup Apply to StartupYard?

Are you an early stage company, with a unique approach using crypto and blockchain to one of the problems we’ve talked about (or a new problem we haven’t), that would benefit from a deep network of mentors and advisors with the reach and scale the technology needs to succeed?

Are you two or more founders, who know the value of an accelerator, and are looking to build a global, sustainable business, serving clients potentially all over the world? Do you believe in what you do? Do you think you can convince others that you’re right?

Does your work have the potential to impact the lives of many people in a positive way?

If so then yes, you should apply.

Get started applying to StartupYard Batch 9. Applications close January 31st, 2018.

Apply to Batch 9 Now