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(Pre) Accelerate towards the future!

This year Startup Pirates, with the support of Tetuan Valley and Beta-I, held the first European Pre-Accelerator Summit. For an entire day, pre- accelerator leaders from 11 organizations working all over Europe gathered to discuss what is going on and what is the future of pre- acceleration.
We developed this white paper to collect not only the main conclusions of the Summit, but also to make information regarding Pre- Acceleration available to all the community.

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(Pre) Accelerate towards the future!

  2. 2. August 2015 Today we are happy to release our first white paper on pre-acceleration, with the outcomes of the Pre-Acceleration Summit, that happened in the beginning of June in Porto. This first Pre-Acceleration Summit is the direct result of an ongoing conversation that we are having since last October, when for the first time we started talking about the growing number of pre-accelerators in Europe and the lack of clarity on pre-acceleration, its goals and formats. On June 1 we brought together 11 of the most prominent pre-accelerators in Europe and, for an entire day, we discussed what is a pre-accelerator, the most important metrics, different business models and how does the future look like. For all involved, this white paper is a state of the art of the pre- acceleration scene, but we all acknowledge that pre-accelerators are still evolving and maturing and a lot is expected to happen in the next years, if not months. As a final note, we want you to look at this as a starting point for a bigger and wider discussion. Enjoy! Inês Silva & Carmen Bermejo Startup Pirates & Tetuan Valley
  3. 3. TABLE OF CONTENTS Executive Summary What is a Pre-Accelerator Metrics Business Model Future 4 6 12 16 20
  4. 4. EXECUTIVE SUMMARY This year Startup Pirates, with the support of Tetuan Valley and Beta-I, held the first European Pre-Accelerator Summit. For an entire day, pre- accelerator leaders from 11 organizations working all over Europe gathered to discuss what is going on and what is the future of pre- acceleration. The main goal of the Summit was to understand how is the pre- acceleration working in Europe and to identify challenges and opportunities for pre-accelerators through dynamic talks. Even though the startup acceleration definition is widely known, the term/expression pre-acceleration is pretty recent and undetermined. We developed this white paper to collect not only the main conclusions of the Summit, but also to make information regarding Pre- Acceleration available to all the community.
  6. 6. SPECIFICATIONS/ PROFILE Very early and pre-seed stage. Pre-Acceleration Programs work in different stages, that go from having people that don’t even have an idea or team to market validation.STAGE TARGET Generally first time entrepreneurs and recent graduates. A big part of pre-accelerators are also dedicated to unemployed people, researchers and students. PROGRAM LENGHT Shorter than the acceleration programs, usually go from 1 to 8 weeks. DEMO DAY In most cases they have a demo day at the end of the program, where the teams pitch in front of judges, mentors, investors or even the general public.   SUBJECTS It is common for the programs to include Customer Validation, Marketing, Pitch, Product Development, Prototype, Business Model Canvas. MENTORS All programs have a strong presence of experienced mentors. Some of them have supermentors/godfathers, that work exclusively with one team during the entire program.  
  8. 8. DIFFERENT GOALS TOP PRE-ACCELERATION GOALS: 1. Provide tools and knowledge 2. Find Problem/Solution Fit 3. Foster entrepreneurial mindset 4. Build the local ecosystem 5. Get into accelerators 1.TOOLS AND KNOWLEDGE Pre-Acceleration programs aim at empowering people with valuable tools, educating them about what it takes to create a business. These programs are also effective channels to raise the community’s awareness regarding entrepreneurship. DIFFERENT PRE-ACCELERATORS, DIFFERENT GOALS: Especially in the earlier-stage pre- accelerators, the program acts like a discovery journey for aspiring entrepreneurs: they take a glance at what being an entrepreneur means, experiencing also some of the obstacles they’ll have to face in the future. In more advanced-stage pre- accelerators people go further and deeper into entrepreneurship, working on their projects until they reach the quality level that might lead them to acceleration programs. 2.PROBLEM SOLUTION FIT The Pre-Acceleration programs focus on helping people identify exactly what is the problem, and develop a solution that fits it. This is one of the most important stages for any first time entrepreneur and where pre- accelerators can add the most value. 4.BUILD LOCAL ECOSYSTEM Pre-Accelerators maintain a strong network, and link experienced mentors and inspiring entrepreneurs with the participants, working on helping people create new startups that will be part of the ecosystem and boost the local economy. In countries without an entrepreneurial mindset their action is even more relevant. Everybody knows what difference does it make in a local ecosystem when the startup community is truly connected and cooperates. 3.ENTREPRENEURIAL MINDSET Pre-Accelerators goal is not only to technically skill-up entrepreneurs, but also to enhance and leverage people’s entrepreneurial mindset. 5.GET INTO ACCELERATORS Many startups applying for acceleration programs do not fulfill all the requirements, or the expected quality level. Some Pre-Accelerators already prepare teams and startups for the next phase, the acceleration, where they can grow and expand quickly.
  9. 9. PRE-ACCELERATION INSTITUTIONS STRUCTURED PROGRAMS Startup Pirates Tetuan Valley Beta-start Startup Next INNOVATION HUBS NUMA Betahaus Google Campus Impact Hub UNIVERSITY iMinds STRUCTURED PROGRAMS: Short programs dedicated to foster entrepreneurship, through an agenda that fits the participants’ needs and the goals of the program. UNIVERSITY: Lots of startups and entrepreneurs come from there, and we are now watching the evolution of education, through the implementation of entrepreneurship and innovation courses. However, Universities in Europe still have a long way to go. INNOVATION HUBS: Many started as coworking spaces where the community grew. They provide workshops, education, tailored services and a healthy environment for people creating their own business.
  10. 10. METRICS
  11. 11. DIFFERENT METRICS Pre-Accelerators select different metrics to measure their impact. Some choose to have external metrics for communication purposes and internal metrics to analyze the program. TOP METRICS: 1. Number of startups created 2. Investment raised by startups 3. Number of participants 4. Recommendation rate 5. % of startups getting into accelerators WHY MEASURE Pre-Accelerators, like all the other organizations, should evaluate the impact of their programs.   This information is not only valuable to communicate the programs outside (to media, sponsors, other organizations, future organizers and participants), but also for the Pre-Accelerator to understand what’s it position, and what should be changed.
  12. 12. LIMITATIONS DIFFERENT APPRECIATION Pre-Accelerators need to find a balance between KPI’s for internal and KPI’s for external use. On one hand it is important to manage expectations and understand the participant’s feedback (e.g. “Do participants recommend the program?”). On the other hand we have the sponsors and stakeholders, that prefer to see the impact in terms of dimension, reaching potential, and media presence (e.g. “number of editions”, “number of participants”, “number of startups created”). COMMUNITY IMPACT As part of a complex entrepreneurial ecosystem, entrepreneurs and startups work with not only Pre-Accelerators but also other organizations and people like Accelerators, Incubators, etc. And ideas, startups, the market, are always changing and evolving. So it is kind of presumptuous to consider the impact of a program as a solo-effort. INDIRECT RESULTS Most of all Pre-Accelerators educate people on entrepreneurship. Even if in the end of the program they don’t have a startup created, it doesn’t mean that the participants will not use the knowledge obtained in other areas or future businesses. An important question arise: How can we measure indirect/future impact? COMMUNICATION ISSUES As the number of editions and the community grow, it becomes more difficult for Pre-Accelerators to follow all the ex-participants and their projects. It is also hard to get answers from ex- participants, which leads Pre- Accelerators create different strategies to engage the community (e.g. invite alumni to join recent programs, reward the fastest answers).
  15. 15. SEARCHING FOR SUITABLE BUSINESS MODELS There is no universal business model for pre- accelerators. Each deals with its own sustainability concerns in a different way, that is conditioned by a lot of distinct factors such as: location, size, position, partnerships, law, and so on. All the models have pros and cons, and most pre-accelerators are now choosing hybrid models, that gather different components and split the risk and dependency. We present you some of the most popular ways of funding pointed out during the European Pre- Accelerator Summit: SPONSORSHIP EQUITY PUBLIC FUNDS PARTICIPATION FEE PRE-ACCELERATION AS A SERVICE
  16. 16. BUSINESS MODELS PRE-ACCELERATION AS A SERVICE Since they already have experience, understand how to create a community and are inside the entrepreneurial ecosystem, it doesn’t take them too much effort to advise, manage or create acceleration programs for other organizations. SPONSORSHIP One of the ways to finance a Pre- Accelerator is through finding one or more sponsors. It is perceived by many as easy money, however that’s a misconception: it is difficult to find sponsors, as the number of requests for sponsorship increase; and there is no stability in a business model that only relies on that amount, that has a chance of not being renewed. PUBLIC FUNDS In Europe it is quite ordinary for organizations to get public/government funding. There is a certain risk associated with it: it works better in the short run, the process can be very bureaucratic and involve a lot of inside knowledge, and the organization might need to adapt the program to the funding goals, getting away from the core objectives. PARTICIPATION FEE Despite the fact that some programs have participation fees, the amount usually is not high enough to make the organizations sustainable. Increasing the price would be a barrier for almost all the aspiring entrepreneurs, as before the program starts they don’t even understand or value what they are about to learn, or how worthy are the perks involved. EQUITY Although it is not very common, a few Pre-Accelerators take equity in the end of the program. However, since startups coming out of the program are so early stage, it doesn’t seem like a viable choice. The exit cycle is way too long most of the times, and when it happens the amount of money received is not very high due to the dilution.
  18. 18. FUTURE
  19. 19. FUTURE 1.UNIVERSITIES For some, the work that is done by pre- accelerators should be done by universities. These institutions are privileged positioned to provide tools a n d a n e t w o r k t o fi r s t t i m e entrepreneurs and accelerate their entrepreneurial endeavors. However, universities have been slow to adopt an entrepreneurial mindset and actively develop entrepreneurship programs. This is going to most likely change in the future which is a “threat” for private pre-accelerators. Pre-accelerators are a recent “invention” and their future is still very much unclear. While today, pre- accelerators are an unquestionable part of our startup ecosystem, in this fast paced environment, it’s possible that in a few years we won’t be talking any longer about them. Or maybe we will. There are a few risks and opportunities in the horizon for pre- accelerators: 2.FUNDING Above we discussed the several sources of funding available to pre- accelerators. This might be one of pre- accelerators biggest risks, since there isn’t a clear business model for them. While some are using sponsorship money, others are taking equity or using public funds, but it’s not clear if this models have a long-term shot. 4.VERTICALIZATION Most accelerators are going vertical, so there is an increasing pressure for pre- accelerators to follow. With the proliferation of pre-accelerators it’s natural that some will focus on areas where demand is high. 3.INTEGRATION We are seeing the first signs of integration. Y Combinator recently launched YC Fellowships and TechStars recently acquired UP Global (Startup Weekend, Startup Next, Startup week, etc) both of them showing that they want to increase and improve their pipeline of projects. 5.EXTREMES Are we going towards a time where entrepreneurship will be completely mainstream and the levels of knowledge and basic understanding will be so high that pre-accelerators won’t be needed? Or are we approaching a time where people are tired of the all startup buzz and don’t feel the need to explore more?
  20. 20. SOURCES Participants from the European Pre-Acceleration Summit: Aleksandar Tase - Superfounders Ana Almeida - Startup Pirates Carmen Bermejo - Tetuan Valley Daniela Monteiro - Startup Pirates Duarte Fonseca - Beta-i Edite Cruz - Beta-i Fiodor Tonti - NUMA Inês Silva - Startup Pirates João Cabral - Startup Sintra Mar Mitjavila - Tetuan Valley Mario López de Ávila - Startup Next Pablo Rodriguez - Tetuan Valley Rafael Pires - Startup Pirates Ricardo Marvão - Beta-i Rui Coutinho - Porto Design Factory Sven De Cleyn - iMinds Tiago Gomes Sequeira - Startup Braga Tihana Marelja - Zip White paper development led by Ana Almeida