The first accelerator as we know it was Graham’s YC in 2005, followed by the franchise Techstars (2006), Seedcamp (2007), 500 Startups (2010), up to 1.600 currently in Crunchbase , along with incubators, seed funds, investment clubs, pitch forums, bootcamps, weekend hackathons, public and corporate incubators, … they are all different models that systematically look for winner teams and exchange a relatively low upfront investment, a set of services, a grid of mentors and other creative perks in exchange for equity stakes in their companies.

The profit of this model usually comes from returns on capital. One characteristic of equity based business models is that they yield results in the long term (generally 4–7 years). Thus, in practice, we’ve had virtually no time to see any of this models succeed just yet, even the few biggest ones have kept growing their expectations and none has yet consolidated and shown a real business success case (as accelerators, not as portfolio startups).

Conversely, we’ve seen many accelerators rise and fall, and they’ve shown less rigor and validation in their plans and results than the startups they try to accelerate. Plus, most accelerators have required a lot of cash to sustain their team structures and the startup investments, no matter how low they are. And their ordinary income is usually limited or zero.

Systematizing opportunities

How can we industrialize the hunt for opportunities that have the statistical probability of finding a needle in a haystack?

I learned that opportunities show up while looking for something else. Most business success stories have a big part of that, they are based on a series of random events in time combined of course with commitment, vision and great effort. And yet, none of these stories are repeatable. Most stories require different learning paths, resources, timeframes, influences, etc. to reach success. To give real support to that, we would need to create a tailored suit for each company.

As we’re building a more sustainable world day by day, the model of startup acceleration by raising VC money, and betting on a high number of projects, is not very sustainable.

But accelerators keep promising their investors that they are better-off in finding opportunities systematically, and defining one-fits-all programs for N number of companies, with N number of office hours, N mentors, N resources per startup, and so on. But the question remains, are they really creating value or systematically praying to find a winner team in each batch?

We could argue that, if you are the best of the best, that is: you have rockstar partners full-time involved in the screenings, top-notch mentors such as Zuckerberg, Houston or Hoffman influencing the program, you are guaranteed future investment no matter what you do, you have a real network of first corporate clients, potential partners and suppliers.

You would be creating a closed economy capable of triggering self-fulfilling prophecies. But you should still cope with the intensity and the rhythm, digest applications from the best entrepreneurs in the world in very very big numbers, and keep doing that forever, if you are to maintain your program running. Very few accelerators fit in that description, maybe only Y-combinator. Even other popular ones like 500 Startups are moving up to more advanced stages of the investment lifecycle, and others are focusing on doing “innovation consultancy” to corporations (which is an entirely different business model).

For equity to be revalued and returned, the most usual case is selling or IPO. Other possibilities for selling stock are very hard, and usually out of control. So in the business plan of any accelerator, it is hard to add lines of income (from returns on equity) at any point in time. The only predictable cash-in is that paid by investors.

We should add up all the chaos from a startup lifetime: founder fights, many financial rounds, creative VC contracts, expensive executives, and other painful but unavoidable woes in each startup life. At some point the once shiny presence in the cap table has evolved to pure insignificance.

So there’s no step in this chain which I wouldn’t tag as HARD or highly unlikely:

  • Hard to attract great deal flow
  • Hard to choose good from mediocre from big crowds
  • Hard or expensive to invest in high number of startups
  • Hard to survive and scale
  • Hard to liquidate and sell…

The conclusion is that accelerators have even less chances of success than the startups they accelerate.

Screenings and mentors

Pitch screenings usually are the only way to digest all the deal flow of startups in a finite amount of time. But, if you pay attention to the process, you realize that it has more to do with theater playing and story telling than scientific business facts.

It is difficult to make good choices based on such short interactions, but at the same time it is the only way to fit 10, 20 or up to 80 candidates in a program (out of 100, 200 or 1000).

Another at least questionable thing are the mentor grids. Every accelerator has their own mentor grid, many of them are shared between different accelerators. In some cases, mentors are self-assigned, and usually they are paid in equity.

In the real world, a good entrepreneur will have to fight to search and gain his/her own allies. The best mentor is the one that has valuable knowledge for the particular sector or activity of the startup and creates a long term love relationship with the entrepreneur and the project. The best mentor is convinced to risk his/her own money to invest in the company. The best mentor has something to loose when he/she gives advise.

In some cases, mentors, or even accelerator managers don’t have direct experience scaling real world businesses, and seek to learn themselves from startups and not otherwise. This makes it even more difficult to create the right abstraction for the acceleration program to work, not to mention to plan for its industrialization.

Conclusions

We keep hearing the songs about “unicorn” startups that combined are worth more than most European countries GDP. Who can blame contenders who want to replicate that in their backyard? But often, the real risk involved is closer to pure gambling.

Don’t get me wrong, accelerators are great for society and economy. Most entrepreneurs don’t know where to start from, and any structured help can put them up on their feet. And they are not stupid, if they decide to be accelerated it’s because they are getting value from it… their business will be the sequence of their decisions after all. One different thing though is wether accelerators are capable of capturing value for themselves. At least most of them proved the opposite.

They combine so many highly unlikely and unpredictable success factors that in practice they are almost impossible to plan and execute.

Top ones aside, the future of accelerators will be more tied to the government (either directly or through public subsidies), as they do have a social benefit and it is fair to be so, or they will be tied to corporations as purely subsidized think tanks (hopefully entrepreneurs will understand the real implications of that), or they will become highly specialized by sectors.

Many existing ones will evolve to either venture funds (post-traction investment funds) or venture builders (responsible for the entire execution of the business).

Why itnig is a venture builder

At itnig we start one or two companies each year from scratch with teams who have previously worked with us in some way, so we know how they think and execute. We don’t do screenings, instead we analyze markets.

We don’t have a fixed program, instead we accept direct responsibility to scale each business as any other founder. We don’t have a short-term exit plan, but we keep involved and working in the business for as long as it requires.

One of our startups at itnig

Our goal is to grow the business as much as possible and execute its vision, it is not to solely to raise new financial rounds. Our services are not based on equity, they are paid by startups at their cost, according to the needs of each startup. We strive to keep always a very lean and flexible common structure (outsourced if necessarily), making sure it never becomes a yoke to anyone, and we are 100% transparent about our ordinary P&L with the rest of the founders, so there is no room for conflicts of interest.

Of course a venture builder has many cons too, as it is less diversified and it involves much bigger risk per investment, but that would be the subject of another post.

At itnig we put all our focus in finding the right talent to work in our startups, part of this talent will be our cofounders in our future ventures.

Feel free to check out our website, participate in any of our events, or learn about our open positions.

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E.

Essential Podcasts for Entrepreneurs & Tech Lovers

Podcasts are a great way to discover new subjects and new people. Whether you are a tech lover or an entrepreneur, bellow you will discover podcasts for entrepreneurs you should – without a doubt – listen to. 

Itnig Podcast with César Migueláñez, Bernat Farrero and Carlos Pierre
Itnig Podcast with César Migueláñez, Bernat Farrero and Carlos Pierre

« Masters of Scale » 

with Reid Hoffman

The host: Reid Hoffman decides to turn to the corporate world instead of pursuing a university carrier. He worked for Apple, Fujitsu for then starting his own business: SocialNet and left it in 2000 to join Confinity. Confinity gives life to Paypal after fusionning. Finally, in 2003, Hoffman co-founds LinkedIn. He is Master of Scale’s host. 

About: The podcast welcomes some of the greatest entrepreneurs. You will discover throughout the talk how they managed to take their companies from 0 to a lot of zeros. You can listen to Masters of Scale’s special guests like Mark Zuckerberg (Facebook), Selina Tobaccowalla (Evite), Brian Chesky (Airbnb) or Nancy Lublin (Crisis Text Line). Must-hear: one of the top tech podcasts for entrepreneurs.

Listen to the podcast: On their website, Apple Podcasts, Spotify and Youtube

The Team: Reid Hoffman, June Cohen, Deron Triff and Jai Punjabi

« Rocket » 

with Christina Warren, Simone de Rochefort and Brianna Wu

The hosts: Christina Warren started as a Freelance Writer. Then, she worked at Mashable as a Senior Tech Analyst and Tech Correspondent and ended the journey at Microsoft as a Senior Cloud Developer Advocate. About Simone de Rochefort, she is  Senior Video Producer and co-host of The Polygon Show. Brianna Wu founded her first startup at the age of 19, Giant Spacekat. She was Head of Development at the time. She is now running for US Congress. 

About: In this podcast, you will discover three passionate women and their “geek conversation” as they like to call it.  No guest speakers, but you will be able to listen to a panel of tech subjects from Apple to Comics, you will not be disappointed. 

Listen to the podcast: On their website, Apple Podcasts, Overcast, Pocket Casts, Spotify and Castro

« This week in Startups »

with Jason Calacanis

The host: Jason Calacanis starts as an internet industry journalist in New-York. In 2003, he co-founded Weblogs, Inc and then a few years later he joined Sequoia Capital, launched the web directory Mahalo. He also founded ThisWeekIn.com. Furthermore, he created This Week in Startups podcast and a startup named Inside.com. Finally, he was part of the creation of the Sydney Launch Festival. 

About: Either you are looking to start your own company, or you are a successful entrepreneur, or you just love technology, this podcast will give you a peek to the entrepreneurship world. You will hear stories of all kinds! On his website, you will also find his events and some research on transportation, healthcare and more. This is one is part of the tech podcasts for entrepreneurs not to be missed.

Listen to the podcast: Apple Podcasts, Youtube, SoundCloud and RSS Feed

You can also subscribe to their newsletter in order to receive episodes directly. 

The Team: Jason Calacanis, Jacqui Deegan, and Tony Agapiou

« Recode / Decode » 

with Kara Swisher

The host: Kara Swisher is an American journalist specialized in the technology industry. She first started to work for an alternative newspaper in Washington for then working for the Washington Post. She wrote articles for the Wall Street Journal and New York Times and wrote her own books. Finally, in 2014, she created Recode, a website dedicated to the latest technology news. In 2015, she initiates Recode Decode. 

About: The weekly podcast welcomes tech experts and great entrepreneurs. They review how they got there, what’s on their mind about the current industry and what they would improve or create. Her recent guests were Elon Musk (Tesla CEO), former Secretary of State Hillary Clinton and Mark Zuckerberg. 

Listen to the podcast: Apple Podcasts, Google Podcasts, Spotify, Stitcher, and TuneIn

« K Fund PodKast »

with Jaime Novoa

The host: Jaime Novoa’s background is quite diverse. He is a writer and an investor, but he also worked in data analysis and social media analysis. In 2014, he founded Novobrief, a newsletter for startups. Then, in 2016, he becomes an investor at K Fund and he founds, in 2019, Dealflow, a weekly tech newsletter. 

About: The podcast discusses startups, entrepreneurs and Venture Capital. You will discover enterprises and their story. From data science, unicorns or digital platforms, you sure will find more than one interesting podcast. 

Listen to the podcast: On their website and Soundcloud

« Clockwise »

with Dan Moren and Mikah Sargent

The hosts: Dan Moren is an active author and writer as well as podcaster. He was a Senior Editor at Macworld. Today, he hosts two podcast shows: Clockwise and The Rebound. As for Mikah Sargent, he started as a Website Designer and Developer for then switching as a Senior Editor at Newsy. He now hosts few podcasts such as Clockwise on Replay FM or on TWiT.tv. 

About: The weekly podcast discusses technology and welcomes each time 2 special guests. For 30 minutes, they address 4 topics where all four speakers get to elaborate on the matter, highlight the issues and expose their thoughts. 

Listen to the podcast: On their website, Apple Podcasts, Overcast, Pocket Casts, Spotify and Castro

« Itnig Podcast»

with Bernat Farrero

The host: Bernat Farrero starts his career as a Developer. In 2009, he founded Itnig, a startup ecosystem that organizes entrepreneurship events. They also have a coworking for startups, a podcast and a fund for early-stage projects. Furthermore, he is a Founder of Factorial, Quipu and Camaloon. He is also a Board Member of Playfullbet, GymForLess and Parkimeter. Finally, he hosts Itnig’s weekly Podcast. 

About: The podcast welcomes every week a new guest. If you wish to learn from successful entrepreneurs, you are on the right platform. The discussions turn around Technology and its industry. You will come across guests like Carlos Pierre (Badi), Vincent Rosso (BlaBlaCar) or Oscar Pierre (Glovo).

Listen to the podcast: Youtube, Spotify, Apple Podcasts, Ivoox, and Google Podcasts

You can subscribe to their newsletter if you want to receive the podcast’s link every Monday. 

Whether you are at an early stage of your project, an investor or you are just curious, these podcasts for entrepreneurs give you the opportunity to be updated on tech and business news. Also, you get to learn from successful international entrepreneurs, which can definitely be very useful for your business.