Since the term accelerator was first used back in 2005 by Y Combinator, we’ve seen the concept develop and become an increasingly important tool for startups to get off the ground.
The traditional acceleration program for startups usually consists of short but intense learning periods including some financial support and coaching for founders. This framework, tried and tested, works well for web or mobile applications. However, for deep technologies, innovation that generally requires a longer and more costly R&D phase, and is often developed without specific market or user needs in mind at the beginning, the program has to be adapted.
So, what does an acceleration program need to do in order to attract and efficiently support the best deep tech startups? We looked into the specifics, and gained insight into the ‘best practices’ that support structures (startup studios, incubators, accelerators) can adopt to support the best in deep tech.
Conducting a tailored survey in the deep tech community, we got feedback from over 100 startups worldwide that have previously participated in an acceleration program, as well as talking to 15 accelerators. Here’s what we found..
We asked: ‘What are deep tech startups looking for in an accelerator program?’
Priorities of startups [%] when applying to incubators or accelerators
What we found is that business development/market access and funding are consistently the two main priorities for startups when choosing an acceleration or incubation program.
Here are our 10 recommendations for deep tech acceleration programs:
Narrow the focus of your acceleration program to a specific sector or technology
Both the accelerator and the startups themselves will reap the benefits of having a focused program, restricted to a certain industry or technology.
Firstly, it’s easier to keep track of recent developments in the field when the scope is narrower, and it also makes it easier to find the right mentors, as a network of key actors can form almost naturally over time. Secondly, for the participants themselves it is more valuable to be surrounded by people in similar fields. Entrepreneurs can exchange knowledge and tips amongst themselves, and peer-to-peer learning becomes much more effective.
What’s more, startups’ needs are very different from one sector to another, so grouping startup cohorts by sector means their needs will be more similar, and can be met much more effectively.
For example, medical biotechnology is unlike any other sector in the fact that the companies require a high level of funding, but often need less help refining their business model (which is generally quite straight-forward in the healthcare sector). An acceleration program that is focused on this sector will be able to prepare for this accordingly. SOSV for example, backs several different accelerators, each with a different focus area: RebelBio, focused on Biotech, HAX, focused on Hardware, etc
Comparison of priority needs between biotech startups vs. non-biotech startups in [%]
Build Long-term relationships with a diverse network to provide startups with quality mentoring
By providing access to experienced mentors, accelerators enable their entrepreneurs to gain valuable knowledge and receive tailored feedback. In order to do this, it is key to build up long-term relationships with a diverse network of mentors. But, how? There are two main strategies. Firstly, it will again be beneficial to focus on one sector or technology, in order to appeal to potential mentors in that field.Secondly, while the main incentive of mentors should be to to support new entrepreneurs and young businesses, they should be given the chance to create business opportunities for themselves too! During the acceleration program, the mentorship or particular service they provide is often free of charge. However, at a later stage they may, with favourable conditions, be one of the first to invest. They may start to sell their services to startups, or even become a member of the advisory board. IPEPS, for example, ask their mentors to commit to a mentoring period of at least 6 months, which, whilst still ensuring the mentors a certain degree of flexibility, allows for a stable mentorship process. Also, Creative Destruction Labs maintain their network by inviting angel investors who are on the look out for investment opportunities, to work together to de-risk the startups during the program.
You should help foster a mentor-mentee relationship that’s built on mutual trust
Beyond offering expertise, a mentor is often part of a human support network, that an entrepreneur can rely on during difficult professional times. It may sound trivial, but according to the startups questioned in this study, in order to find success, it is important that the relationship between mentor and mentee is based on mutual trust. It is key to allocate time during the program for getting to know potential mentors, and then carefully matching them to entrepreneurs according to their preferences, rather than just the best “expertise match”. Mentor-mentee relationships are highly valued by Creative Destruction Labs, for example, who only keep startups in their programs if mentors are happy to keep working with them. EnergyLab also provides an online platform where startups can post their needs and queries and mentors are able to respond, while individual support is provided in-house by their professional coaches. Finally, Techstars’ program lets their cohort spend the entire first week meeting hundreds of potential mentors.
Providing client/user perspectives is key in developing the startup’s business
While deep tech usually originates from universities labs, the technology is by definition novel and often very sophisticated. It has not been necessarily designed with a worldly application or a specific market need in mind. One solution to a general problem can usually lead to dozens of potential applications in different industries. Prioritizing these potential applications/markets can only be done by talking to potential customers themselves, or even working with them on a proof-of-concept and business case. For this reason, it is essential to engage with potential customers and get access to valuable feedback from a client/user perspective. The Fishing Tech Accelerator, for example, presents itself as a matching platform between startups and corporations from the maritime sector. Then, once a match is identified, private partners are committed to providing entrepreneurs with opportunities to lead their projects in a real setting. EnergyLab also organises an exclusive event between their startups and all the key actors in Australia’s energy sector every 4 months. Finally, Deeptech Founders sets an objective of 50 clients or investor meetings during the program.
Startups’ responses in [%] to the question “What was the most useful for your business development?”
Deep tech startups often include access to international markets in their business plan from the start. Providing insights from global experts at the beginning of the project ensures the product development process covers the different needs and necessary specifications of both domestic and international markets. Giving the participating startups access to these perspectives has shown to be very effective, and can be done in various ways. HightechXL, for example, provides their startups with tickets for international fairs and exhibitions, and 50% of the startups that Berkley SkyDeck select for their cohort are international. Plug and Play have built programs in more than 10 countries, which enables them to connect their network at the global level, and , Climate-KIC pay an international network of experts.
Startups can learn from the experience of previous participants
Alumni have experience and knowledge of the entire acceleration process that is very valuable to the program. They can offer the current cohort a unique perspective, and advise them how to make the most of what the accelerator is offering them. They are also likely to have first-hand experience of the hurdles in the local ecosystem for new businesses, which is really helpful knowledge for the current cohort when it comes to finding their first customers.
Last but not least, after a few years and several successful alumni, the reputation of the accelerator within the industry will help to open previously locked doors. IndieBio makes alumni engagement a key part of their program, with mentoring sessions, events, partnership opportunities with corporates and continued fundraising support. Techstars Sustainability also organises meetings between current cohort and alumni.
Dedicate time for startups to exchange tips and pointers amongst themselves
A significant number of startups in our study said that they gained valuable insights by exchanging with peers. This kind of interaction is highly valuable to startups for two reasons. Firstly, entrepreneurs benefit from the insights and experiences of their peers, and secondly, it helps to create a human support network.
In order to give them maximum opportunity to benefit from this, the accelerator program should feature dedicated time slots to encourage discussion among the cohort. Rockstart, for example, facilitates interaction between the startups by reserving time slots throughout the program where peers can exchange their experiences and best practices. Thought For Food, an online program, has implemented various digital tools (e.g. Slack, Reddit, etc.) to foster the exchange over long distances. IPEPS organises breakfast discussions to give their cohort the regular opportunity to chat among themselves.
Answers of startups in [%] to the question: “What were the most efficient learning processes?”
Increase the involvement of investors in your program by making long-term contacts
It is key is to involve VCs in the program early on, by building a long term relationship with those that have a similar vision of the industry and its future as your program does. These VCs, who can be considered part of the accelerator’s network, will appreciate being brought into the program early, and to work with other mentors to de-risk the startups. It also allows them to evaluate the progress made by the startups and entrepreneurs between entry into the program and graduation day. A VC’s investment represents a sign of trust in the project, as well as in the founding team, so the longer the VC knows the founders, the easier it is to build a relationship of trust between them, which works in favour of potential investment. At Creative Destruction Lab, investors are invited to a few sessions to jointly de-risk the startups during the program, and Climate KIC includes investors in the cohort selection process. IPEPS allows investors to access a detailed form with key information about each startup in the cohort.
Allowing them to focus entirely on learning during the program
Within certain sectors and their ecosystems, there is ample funding available for starting a business. However, for deep tech startups it is still fairly difficult to secure private investments at an early stage, particularly in the first round when the perceived risks are still high and a customer hasn’t always been identified. Funding provided by the accelerator in exchange for equity was found to be very useful by entrepreneurs, as it allows the entrepreneur to entirely focus on the learning process during the program. It also inspires basic trust within potential investors, demonstrating that the accelerator and the organisations backing it up are committed to the project. The SOSV backed accelerators (e.g. RebelBio & IndieBio) provide cash in the form of convertible notes and common stock equity. Rockstart’s startups are given cash and in-kind services, eventually in return for equity based on a convertible loan agreement. Climate KIC, an EU sponsored program, provides participants with equity free cash.
Personalise the learning process to make it more effective
An accelerator will inevitably admit founders with very different levels of entrepreneurship experience, regardless of a project’s maturity, and the expectations of the program and business development needs of each participant will vary a lot. In order to maximize the impact of the program for each cohort member, it is essential to provide an adaptive, agile learning process and avoid a one-size-fits-all approach (something which is particularly important for deep tech, where the diversity of the technology and the businesses, is greater than for internet and mobile startups, that are based on standard digital platforms that already exist). General lectures and seminars should be reserved for general topics such as pitch training, which are of interest to the entire cohort.
RebelBio’s program is modular, and allows the entrepreneur to partially choose their focus area. EnergyLab has established a biweekly meeting routine between entrepreneur and coach, in order to ensure that individual needs are being met and that the learning process is personalised.
You can download the entire report via our website here.
Thank you to all of the startups that took part in our surveys, and to the incubators and accelerators that shared their insights with us.