SEED Accelerator:
The 90-Day Incubator
By
Ray Smilor, PhD
Schumacher Fellow in Innovation and Technology
Professor of Professional Practice
Neeley School of Business
Texas Christian University

Agenda
I. Critical elements
II. Benefits to entrepreneurs/investors
III. Selected models
IV. Lessons learned

I. Critical Elements
• Purpose – speed up product/company development
• Results – better entrepreneurs, higher-value ventures

I. Critical Elements
• Unconventional application process
– Targets selected groups of startups
– Requires team (not 1 person)
• Focused program to facilitate product development
– 3 months usually
• Equity investment in startups
– Under $150k/often under $20k
• Mentor-driven

I. Critical Elements
• Business plan
• Rent or fees for services
• Physical space
Entrepreneurs work out of living quarters near accelerator.

I. Critical Elements
1. Founders/Mentors
Experience
Networks
Expertise

I. Critical Elements
1. Focus
Distinctive
Targeted
Compelling

I. Critical Elements
Ownership path:
• 5-10% equity stake in 1 st round of financing
• Successful companies → more rounds of financing
• Stake reduced with each round
• Absolute value of stake increases

II. Benefits
For entrepreneurs:
– Mentors
– Connections
– Business support
– Product support
– Seed funding
– Access to future capital

II. Benefits
For investors:
– Faster product development
– Better quality deal flow
– Lower risks
– Quicker time to market
– Higher returns

6
7
8
4
5
Rank
1
2
3
13
14
15
9
10
11
12
Program
TechStars Bolder
Y Combinator
Excelerate Labs
LaunchBox Digital
TechStars Boston
Kicklabs
TechStars Seattle
Tech Wildcatter
Dreamit Ventures
The Brandery
Capital Factory
NYC SeedStart
Betaspring
BoomStartup
AlphaLab
Location
Boulder, CO
Mountain View, CA
Chicago, IL
Durham, NC
Boston, MA
San Francisco, CA
Seattle, WA
Dallas, TX
Philadelphia, PA
Cincinnati, OH
Austin, TX
New York, NY
Providence, RI
Salt Lake City, UT
Pittsburgh, PA
Source: Frank Gruber, “Top 15 U.S. Startup Accelerators and Incubators Ranked,” http://techcocktail.com

II. Benefits
Criteria for Top 15:
• 25% - Qualified financing events
• Companies get financed after completing program
• 50% - Success of companies that graduated
• 25% - Accelerator program characteristics
• Money startups receive, equity, support

III. Models
Y Combinator:
– Founded 2005 – Silicon Valley
• 1 st SEED Accelerator
– Worked with over 380 startups
– 1 major venture capital fund
– “Y Combinator”
• From computer science
– “a program that runs programs”
• Metaphor: a company that starts companies

III. Models
Y Combinator:
– Invests on average $18k in large number of startups
– Two 3-month funding cycles
• January/March and June/August
– Program: fast and intensive
• Mentors
• Prototype Day
• Demo (Pitch) Day
• Social events/dinners

III. Models
TechStars:
– Founded 2006 – Boulder, Colorado
• 5 locations in U.S.
– Works with 10 companies per location
– Funding from 75 venture capital firms and angel investors

III. Models
TechStars:
– Invests $18k in startups
– “Perks”
• $100k convertible debt note
• In-kind support from range of companies
• Valued at $250k
– 3-month program
• Mentors
• Demo (Pitch) Day
• Social events

III. Models
TechStars:
Application form:
– Describe business in 140 characters
– Provide demo/prototype
– Explain:
• How you will make money
• Who your competitors are
• What keeps you awake at night
– Provide 3-minute video of team

III. Models
Tech Wildcatters
– Founded 2010 – Dallas, Texas
– Works with 8-10 companies at a time
– Mentorship-driven, micro-seed fund

III. Models
Tech Wildcatters:
– Invests up to $25,000
• $10,000 per company
• $5,000 per founder (up to 3)
– Two 3-month programs
• Spring/Fall
– Program – “Bootcamp”
• Mentors
• Pitch Day

III. Models
Tech Wildcatters:
– Selection Criteria
• Technology: web/mobile/software/game
• Majority of revenue from businesses
• 2 or more founders
• Live in Dallas for 12-week program
– Application Form – 3 key questions
• What problem do you have?
• How do you solve it?
• How will you make money?

IV. Lessons
Proactive strategy:
Idea Teams
Invest ment
Mentoring
Develop ment
Successful
Exit

IV. Lessons
• Align needs of startups with investors’ expectations
• Provide platform for growth via ongoing mentoring
• Tie into entrepreneurs’ eco system
• Target training to accelerate product development
• Provide seed funding while entrepreneurs bootstrap