To-day’s needs for startups – from Fast Company

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Fast Company’s recent ‘quick read’ on ‘risk modifications’ (though US oriented) only goes to underline the need in the UK for regimes of support for mature people to take up entrepreneurship.‘The startup world sees its participants as either potential unicorns or drab losers, and rarely focuses on the ups and downs of building experience in enterprise. ‘

‘We can provide risk modifications’ says Fast Company ‘that will increase the propensity to take smart, calculated risks and build the small businesses and startups that are necessary across the country today!

  •  We should emphasize experience as a major asset to starting a business. Yes, Bill Gates and Mark Zuckerberg were college dropouts. But most successful entrepreneurs hit 30 before unleashing their big idea. Maturity matters.
  • Access to early-stage funding should be much more available and transparent. We need more awareness and better access to community venture funds, foundation grants, small business loans, and CDFIs, among others.
  • Entrepreneurs need portable benefits – health care, retirement savings, and other basics. This might be from one of the many portable benefit startups that existnow, or the programs that big insurers are launching, or might eventually be government funded at the state or federal level.
  • We need more accessible programs that offer non-cash capital–training around launching, regulatory burdens, payroll and HR, branding and marketing, recruiting, and all the other crucial determinants of success and failure.’

In the UK we are a long way from most of this. It emphasises how very much we need an organisation to represent the world of startups.

John Whatmore, October 2019

 

 

 

What makes for effective nurseries for young businesses

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A US-based charity is funded by the UK government to explore how well they are working in Africa – a project which touches all sorts of issues and contains advice for all Entrepreneur Programme managers.

Funded by the UK Department for International Development’s Impact Programme, Village Capital’s research aimed to convene leading African Entrepreneur Support Organisations (as accelerators, incubators et al ‘ESOs’) and share best practices. What does this project tell us and why do we not have the benefit of a similar study of the UK?

‘We learned’ says the ‘VilCap Communities’ report ‘that the entrepreneur support sector in Africa has an opportunity for better communication and collaboration. ESOs are growing businesses – much like the startups they serve. We need to focus on resourcing and strengthening existing hubs, rather than creating new ones.’ The same conclusion might well apply to the UK, so I abstract below the key findings from this report.

Building cohorts of entrepreneurs

1.Consider running programmes with a narrow focus. ESOs that run sector-specific programmes reported that they were able to attract higher-quality mentors and raise more funding later on.

2. Don’t treat a livelihood-sustaining business as though it was a high-growth startup.        It’s tempting to group micro, small and medium-sized enterprises        (MSMEs) together  under the category of “entrepreneur” or “small business”. But these businesses can have incredibly diverse business models.

3. Peer collaboration matters. According to a 2018 study, accelerators that place a heavy importance on peer collaboration between startups tend to outperform. Avoid bringing direct competitors into the same cohort; otherwise, try to bake in as many opportunities for interaction and collaboration as possible.

Designing a strong curriculum

1. Be smart about selecting programme partners who will roll up their sleeves. A study found that partners who are perceived as “adding brand value” because of their famous names do not play a major role in delivering positive programme outcomes. On the other hand, partners who contribute to the curriculum and play a meaningful role in programming tend to yield better outcomes – even if they are not as well-known. If your accelerator is going to partner with a corporation or a large institution, it is a good idea to educate these partners on how to add tangible value to the entrepreneurs.

2. Spend time on 1-1 interaction, not lectures. Avoid building your entire programme around guest speakers or formal classroom-style sessions. Research shows that one-on-one mentoring is more effective than lectures, and our highest-rated curriculum modules – stakeholder advisory sessions, mock board meetings, investor forums, and milestone planning – all involve identifying and matching startups with external stakeholders, customers, strategic partners, investors or advisors. If a mentor is well matched, they tend to enjoy the session and come back when invited again.

3. Build in time for reflection and repeat mentor interactions. Investors at the early stage are often taking a bet on the founder and their ability to execute. It can be very valuable to facilitate repeat interactions between entrepreneurs and the mentors or investors they meet at a programme, so that the entrepreneurs can demonstrate how they respond to feedback and report on their progress over time. Traditionally, Village Capital programmes have a one-month gap between each four-day workshop.

Building a sustainable business model

1. Diversify your revenue streams. Several of the most successful ESOs in Africa have sought funding beyond philanthropic capital and subsidies – for instance through consulting and research fees, co-working space rental fees, sponsored data and impact research, or in some cases commission on capital raised for their startups.

2. A fund is not a business model – at least not in the short term. Several ESOs we have spoken with are looking to set up their own micro-VC funds. This can be an effective strategy for supporting entrepreneurs, and may deliver returns in the long run. But the most common types of funds have minimal management fees (2-4% of fund value) and are unlikely to deliver payouts in the first eight years.

3. Develop (and track) relevant impact metrics. Many ESOs [commented] that they struggle to measure and evaluate data on their programme’s impact. The good news: this is not a problem exclusively felt by your organisation. The bad news: if ESOs as a sector do not get better at measuring impact, donors will stop funding the sector. Valuable metrics include venture growth, job growth, positive social and environmental impact etc.

4. Build templates for systems and repeat processes. The VilCap Communities Toolkit harnesses learnings from more than sixty programmes. It includes templates, guides, and programme management tools, including a template that guides ESOs through the process of performing due diligence on applicants to accelerators.

Developing your team

1. Petition partners for unrestricted funding to support team capacity. Grantmakers often provide constraints and restrictions on how funding can be dispersed. Restricted funding often leads to scope creep, distracting ESOs from their core work, which should be to support entrepreneurs.

2. Hire for the stage you want to reach, not the stage you are at. Early-stage CEOs tend to treat hiring as an administrative function rather than a strategic one. Hiring for the future involves thinking strategically about where your company is going, identifying areas where you need help, and making a plan for how you will fill those critical skill sets, even if it is down the road.

3.Entrepreneurial experience should be non-negotiable. ESO programming that is managed by people with no entrepreneurial experience can actually have a negative impact on entrepreneurs. Meanwhile, “Knowledge, mentorship, or investment coming from an entrepreneur who has led a company to scale was associated with approximately two times greater prevalence of top performance.”

Thinking regional

1. Consider coordinating on regional programming. We have found that ESOs that run regional programmes, or facilitate cross-ecosystem connections, have been more successful in raising operating and investment capital. We share insights on how to implement incubation programmes, provide seed investment, conduct research on growing sectors, and advocate for startup-friendly policies.

2. Consider collective advocacy. Organisations like i4Policy are leading the charge on lobbying governments for startup-friendly policy – both on a country-by-country basis and by creating collaborative links across ecosystems. Contributing to this kind of collective advocacy can feel off-mission, but will yield returns in the long run.

[‘Many accelerators end their programmes with an on-stage pitch competition, where investors in the audience will pick a winner. When we surveyed our companies and asked them where they met investors, it was rarely at an actual pitch event. The format privileges the ones who pitch well, rather than the ones who have the highest potential. At Village Capital we have replaced demo days with 1-1 investor meetings.’]

The report also has insights for Grant makers and Funders, about embracing additional forms of support and working longer term.

Vilcap, an Impact Invester par excellence, is a US-based charity that identifies significant regional needs, raises funds, and builds and runs teams to deliver solutions to those needs.

See Unlocking-Pipeline-Playbook-Village-Capital-1.pdf

John Whatmore, September 2019

A local authority aims to be a beacon of innovation and growth

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Innovation in a local authority: a London borough develops partnerships for growth Hammersmith and Fulham Council begins to see its strategy taking shape for becoming ‘a beacon of innovation and growth’.

The Council aims to turn the borough into ‘West Tech’, a leading place for technical and creative businesses, education and research.

At present the Borough is a mixed bag: it has many small businesses, a number of educational establishments, a thriving arts scene, several large hospitals, and the headquarters of several large national/international companies – for all of which it has conceived a vision: to transform the borough into ‘a global beacon of innovation and growth’.

It has set out a daunting list of objectives – under three heads:

  1.  Make White City and Imperial’s new campus a ‘destination’ and a world class innovation district
  2. Make the borough a top choice to attract businesses from the UK and internationally
  3. Ensure residents benefit from the changes they see.

Economic opportunities are anchored in the growth of Imperial’s new campus at White City, which will become a centre of discovery and innovation by virtue of its excellence in research and education in science, medicine and social enterprise. There is an accompanying arts strategy, though it is based not on funds but on facilitating innovation; and an accompanying strategy relating to the substantial presence of the education sector in the borough.

In Autumn 2018 Chemistry became the first of Imperial’s departments to move from South Kensington to White City, taking up residence at the Molecular Science Research Hub, which brings together nearly 800 scientists, clinicians, engineers and business partners and houses the latest equipment and infrastructure. A Deep Tech network is launched this May encouraging interaction with the aim of addressing common challenges such as in energy, healthcare and sustainability.

The campus’s iHub will house corporate partners, fast growth companies and startups. Hammersmith Hospital is to become a hub round which businesses can be co-located based on multi-disciplinary research in health and well-being.

The growth of clusters of technology, media and telecoms businesses will be supported with new land development policies, among them for affordable workspaces, and venture capital funding.

A number of parties including Imperial have enabled the creation of a low-cost ‘park’ for bio startups – in the Old Laundry Yard alongside Shepherds Bush Market, where a property company has been persuaded to locate 45 shipping containers, into each of which a smart little office has been constructed. Since completion about six months ago, four bio businesses have moved in, occupying about a quarter of these containers.

For the last 18 months, a joint venture between Hammersmith and Fulham and Imperial called Upstream – effectively a mini speed-dating agency –has run increasingly compelling events to bring sparkling people together, to picture the possibilities of the Innovation Hub, and identify the problems (recruitment, training, communications etc)

Among it successes has been working with a local organisation whose focus is venture building, and which is now partnering Imperial in constructing a building called ScaleSpace – for hi-growth young businesses.

These huge and all-embracing plans will be led by a new business growth team, whose head, recently appointed, brings experience of the Kings Cross development in Camden. ‘He will need to stimulate enthusiasm for enterprise… in a borough that has high birth and death rates for new businesses.’

While the overall objectives sound grandiose, encouragingly the Council and Imperial have both endorsed strategies that embrace each other.

John Whatmore, July 2019

 

 

 

Does Puerto Rico’s success with an Accelerator have a message for us?

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The worse the economic circumstances, the greater the opportunity for startups – maybe. Does this story about Puerto Rico point to a way for helping disadvantaged areas in the UK ?In Puerto Rico’s deepening recession, two small startup generators, funded by a local trust, have begun to make an impact on its dire economy.

 Puerto Rico has suffered from continuing problems for a number of years, losing 10% of it population over the last 10 years as workers left the island in search of better jobs elsewhere; and since the Hurricane in 2017, another 4% have followed. Garment factories closed in the 1980s and 90s, changes in the US tax code caused large corporations and their factories to leave the island, and it fell into a long recession from which it is yet to recover. Puerto Rico used to import 85% of everything it consumed; and after the Hurricane that figure rose to 95%.

Brainhi was conceived in the immediate aftermath of the Hurricane. Two individuals found connectivity in a small strip of the island and worked from the street to create a company that automated communication with doctor’s offices. If a human receptionist did not pick up the phone, Brainhi’s artificial chatbot would step in to answer questions, helping the offices that were severely understaffed after the hurricane.

It got its start as one of the companies in a startup accelerator programme in San Juan organised by Parallel18. For a little over three years, Parallel18 has worked with 168 startup, each of which receives $40,000 in equity-free funding, co-working space and coaching. It also started a pre-accelerator programme after Hurricane Maria, to foster local startups in earlier stages of development. The aim is to power a new wave of locally owned businesses that are resilient enough to weather future turmoil; and the numbers suggest that this may be working.

A resource hub for people trying to start new businesses in Puerto Rico called Colmen66 and Parallel18 have offices next door to one another; and both receive funding from the non-profit Puerto Rico Science, Technology and Research Trust.

Brainhi’s founder graduated in Puerto Rico but was one of the few in his class and among his friends who stayed in the island. Now he is attempting to reverse the tide. Helping people to come back to Puerto Rico and rejoin their families has been a heart-warming experience, he says.

Parellel18’s Outreach Manager hopes that by building a startup system across the Caribbean, they will be better prepared to deploy regional solutions in response to future hurricanes. Together with Facebook, Parallel18 is making plans to begin Startup Hub Caribbean, which will be the first accelerator that Facebook has set up in the Caribbean. [Facebook Accelerators generally relate to startups that support Facebook’s core business eg the development of apps.]

Maybe disasters are indeed an opportunity for startups. Shouldn’t the UK’s Department of Business be getting Nesta to commission say Startupbootcamp or Techstars to set up organisations like Parallel18 in areas of high unemployment in the UK?

(Excerpted from the New York Times)  

 John Whatmore, May 2019

 

 

 

 

Mentoring: fitting Empathy in

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Mentoring; fitting Empathy in Why is effective mentoring so difficult to deliver?

There are many well known examples, Einstein, Ghandi and Martha Graham among them. Oprah Winfrey cites author and poet Maya Angelou; Bill Gates names Warren Buffet; Bob Dylon’s was Woody Guthrie; Mark Zuckerberg’s was Steve Jobs. So what makes it work?

Until and unless you know someone well, it is more than difficult to figure out what kind of support would be most valuable – whether it is their ambitions, their objectives, their interests, their interactions or what. And it takes empathy to appreciate what kind of influence might be of value.

Mentors can help startups at specific stages – in concept development, production, marketing, finance and management; but mentoring needs are of all sorts and kinds, and that is the focus of the mentor manager (and where speed-dating is more like pot luck). I particularly recall being encouraged by my mentor when she said: “If you have come up against a problem, you are about to make a break-through.”

Enrico Fermi has been described as one of the most productive of scientists ever; a Nobel Laureate, but also, and intriguingly, as mentor to six other Nobel Laureates, he must have been able to be a different person to each of those different people. So what was he like?

‘As a person, Fermi seemed simplicity itself. He was extraordinarily vigorous; and in sport his ambitious nature became apparent. He was something of a benevolent dictator. This leadership and self-assurance gave Fermi the name of “The Pope” whose pronouncements were infallible in physics; and he preferred quick and dirty answers to time spent on consumingly accurate solutions – that came to be known as ‘the Fermi Method’. But all this did not offend at all, but rather charmed everybody into liking him.’

John Whatmore, April 2019

Imperial takes the lead in mentoring – from MIT

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Imperial takes its lead in mentoring from MIT Imperial has appointed an outstanding head to manage its mentoring service, with clear plans for how it shall work and for growing it to meet a fast growing need.

The President of Imperial, seeking to surf to-day’s wave of entrepreneurialism, recently appointed Paul Atherton, an outstandingly successful serial technology entrepreneur who focuses on startup companies from UK universities, to direct the Imperial Venture Mentoring Service, which he accepted only on the basis that it would have top level support.

Imperial has based its programme on MIT’s Venture Mentoring Service (see yesterday’s post for details of that service).

Imperial’s first initiative (after induction and training at MIT in Boston) was in late 2017 and it has now recruited around 40 mentors. It expects to reach 50 by this summer; and will need to recruit many more; the Director is currently interviewing around a couple of candidates a week, sourced from existing mentors, the development office and other contacts.

The aim is to provide to selected startups a pair of mentors, each with specific qualities. One of them will have been through the process and got all the scars of creating and developing at least one startup, experiencing its traumas and successes. And the other will be someone with extensive current knowledge of the specific field and market in which their startup is working. They are senior people with impressive records, and experienced in this kind of interaction.

The Director is responsible for making matches – which are based on the mutual accord of the proposed mentors and the team. They meet as a group about every six weeks; and may continue working together until the first/next funding round. Feed-back about each meeting is sent to the programme office (which also makes the arrangements for all the meetings.) The full cohort of mentors meets up once a year and talk together about their experiences.

Avoiding any possible conflicts of interest is a serious concern. If a mentor seeks to become more involved in the company of which they are a mentor, they may only do so on the basis of non-conflicted advice to the parties involved.

Imperial’s annual Venture Catalyst Challenge which this year attracted more than 350 applicants and in the final stage has provided intense support for 35 of them, provides a continuing stream of young businesses that can benefit from its mentoring services, as does the faculty and the Business School. Paul Atherton is looking to provide mentors for around 60 new young businesses per annum, and is pleased with progress so far.

Mentoring is sometimes regarded as a Golden Goose, whose magic is unfathomable, but we need to be able to understand how to get it to lay golden eggs. Managing the mentoring process should be as integral to incubators as management is to their businesses.

[I would be very interested to hear about where you are with mentoring, and especially your future plans. john.whatmore@btinternet.com]

John Whatmore, March 2019

 

 

The managing of mentoring

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What is wrong with our mentoring? Mentoring is not making the contribution of which it is capable. It is time for new initiatives. MIT’s Venture Mentoring Service is a managed process, which has been adopted widely, and now by Imperial.

Nearly 60% of startup failures are because they do not meet a real customer need, says recent research by CBInsights; and a third of all startup failures blame team problems. Yet research on mentoring (reported in ‘Accelerators’ 2018, by Wright and Drori) asserts that marketing opportunities and lack of managerial experience are two of the top fields in which mentors help startups. So what is going wrong with mentoring?

From 2011 a UK government scheme enabled hi-growth small businesses to work with a mentor; and mentoring was a key part of the government’s 2012 Growth Builder programme, but alas, despite its record of success, for some strange reason it was withdrawn in 2016.

Seedcamp, Y Combinator, Techstars, Wayra Lab and Startupbootcamp – leaders in the field of Accelerators, all hold tenaciously to the importance of mentors and mentoring. With their regular re-evaluation of progress, problems and plans (‘Office Hours’), and with their many connections, they aim to link startups to people with specialised expertise or experience, often using variants of speed-dating.

Where mentoring has been made available in Incubators in the UK, it often amounts to no more than an introduction to someone with vaguely related experience, and the process left to find its own way.

MIT Venture Mentoring Service (VMS) has taken a more systematic approach. It is not simply a service of introductions: it is a managed programme.

“ * First establish a local cohort of volunteer mentors (carefully interviewed and screened) who warrant that they will have no financial interest in this work, whose ethos is one of giving back and who confirm their commitment to giving one to two days equivalent in a month and will come to a monthly meeting of mentors (they will value its prestige, its networking and its sociability).

* Mentors always work and meet together in teams of 3-5, one of whom is the lead mentor.  They are from different business backgrounds and will share their different business experiences.

* The entrepreneur they are serving determines the agenda for each meeting and MIT makes all the meeting arrangements.”

MIT VMS has applications from 20-30 new ventures a month (from students, faculty, staff and importantly from Alumni).

For the last 13 years, MIT VMS has also run an intensive Outreach Training Program (for details, see 1 below) which has trained 91 sister programs from 23 countries (in universities, economic development organizations, accelerators, incubators and in hybrid organizations) to help them establish their own formal mentoring program based on the MIT VMS Model.

MIT VMS has been in discussions with a number of other parties in the UK, but the only adopter has been Imperial College. [To-morrow, yes, to-morrow I review Imperial’s approach and progress with mentoring.]

John Whatmore, March 2019

 

(1) In the Outreach Program, under an agreement with MIT, an organisation sends a team of up to 5 people to MIT for the Immersion Training Program of 2 1/2 days which includes:

-comprehensive curriculum with sessions on the concept of team mentoring,  who makes a good mentor, where to find such people and criteria for entrepreneurs for successful mentoring.

-observing an actual team mentoring session being conducted

-attending a MIT VMS Monthly Mentor Meeting

-meeting mentors, entrepreneurs and management informally.

MIT VMS staff will mentor the visiting organisation as though they were a start up and will hold a strategy mentoring session with them as mentees.  As an additional and optional program, MIT VMS will send an instructor/mentor to their location to train their first group of new mentors.

 

John Whatmore, March 2019