At Eidson & Partners, we love the messiness of new product development; the messier, the better. We thrive at the beginning of new product strategies and introductions. It’s where we add the most value, because we’ve learned how to drive innovation amidst chaos. Since 1995, we’ve moved ideas through the early phases of product development for more than 200 products/ventures.
Until 2012, we had primarily focused on large companies (e.g., Microsoft) needing to develop and launch new products. But then our fearless leader, Al Eidson, got active in the Kansas City entrepreneurship community. As a result, we catapulted ourselves head first into early stage startups and their even messier innovation processes. Al is one of five co-founders of SparkLabKC (an accelerator program), which helps 10 startup companies each year advance their early stage businesses and accelerate their growth.
In addition to gaining exposure to a lot of ideas, entrepreneurs, and companies, the accelerator experience has given us new insights on creating and launching new products. We have gleaned a number of lessons that can be applied to product development and marketing for our clients. Whether a company is launching a new product or reinventing an old one, the accelerator process has teachings that can help.
Our Lessons from the Accelerator series is designed to capture the insights, ideas, and approaches gathered from SparkLabKC and translate them into best practices for any company wanting to launch a new product. We will start by defining the accelerator experience.
For those of you who don’t spend your days mentoring early stage startups, the accelerator concept might be a bit foreign to you. The following Q&A will help bring you up to speed.
What is an accelerator program?
An accelerator program is a 12-week intensive, in residence program that helps early stage startup companies quickly build, test, and market their product. Some programs can last six or nine months, but three months is more common. The time limitation is a key differentiator between an accelerator program and an incubator. Companies that grow in incubators usually stay from one to five years.
How much money is invested?
Typically, startups receive $18,000 to $20,000 in seed investment for six percent of their equity (stock held by the owners). Some programs offer more seed money or options on convertible notes that convert to equity when the company raises a Series A round.
What else do the companies get?
The startup founders hear a lot of counsel from accelerator leaders and mentors who have been recruited to offer specific guidance in their area of expertise (e.g., financial, legal, marketing, investment). It’s not uncommon for a startup to engage with 30 or more mentors during the 12-week program.
What happens at the end of the 90 days?
An accelerator program usually concludes with a Demo Day presentation by each of the companies in the program. Demo Day is a “coming out party” of sorts that tells investors and customers the startups are open for business, ready to show their wares and talk about the investment needed to continue their momentum.
What’s the history of the concept?
The accelerator concept came about in the mid-2000s and emerged from university incubators. Some of the best-known pioneers are Y Combinator (2005; Silicon Valley, CA) and Techstars (2006; Boulder, CO). They both started with venture capital/angel investors who thought too many startups were failing and wanted to keep closer tabs on their investments.
What evolved was the idea of a “sprint” that lasts 90 days and catapults a company forward, preparing them to scale with revenue and/or investor dollars. Many companies start a program with one idea and then pivot to another, more promising idea during the program. Others decide their idea is not worth pursuing further after the pounding it receives during the program.
How many accelerator programs are there?
According to Seed-DB, there are 212 programs worldwide, of which 116 are US-based. To say the accelerator concept has taken the entrepreneurship ecosystem by storm is an understatement. Most major cities offer at least one accelerator program. In the case of cities like Silicon Valley/San Francisco and New York, there are multiple programs – 17 and 12, respectively.
What is SparkLabKC?
SparkLabKC was founded in 2012 in Kansas City, MO. It is a 12-week business accelerator with a mission to support early-stage technology business startups using a proven seed-stage, mentorship-driven accelerator program adapted to the Kansas City region. SparkLabKC is building on public-private partnerships and the strengths of the Kansas City region’s vast entrepreneurial community to bridge the experience gap and capital gap for early-stage startup companies.
Twenty Kansas City companies have completed the program — two classes with 10 companies each (Summer 2013, Winter 2014). Some applicants had revenue when they started, others were ideas barely off the napkin. More than 80 mentors are available to the companies.
SparkLabKC’s next class will be held in Winter 2015. It will start accepting applications in the fall.
At Eidson & Partners, we appreciate the value of the accelerator experience and the lessons it teaches us about bringing new products to market. We look forward to sharing those insights with you in our Lessons from the Accelerator series. Up next we will discuss “killing bad ideas quickly,” which will be followed by posts that explore surviving the fuzzy front-end stage of product development, sprinting your way to innovation, repurposing technology for new uses, reviving under-performing brands with the principles of acceleration, and much more.
Please offer your comments and share your experiences. We’d love to hear from you.