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Get Thee to the Accelerator!

Posted in Startup Programs | The Canadian Ecosystem | Strategy | Starting Up | Incubators/Accelerators | Articles

By Mat Goldstein and Graham Topa

Startups and prospective entrepreneurs are always asking us about the best sources of capital for early stage companies. Until you have proven technology or early market validation (i.e customers, preferably ones who actual pay), it can be extremely difficult to get attention from investors. Angel investors and venture capitalists (VCs) tend to be more interested in companies and founders with a track record of success, or those that can point to concrete metrics showing an attractive growth trajectory. In the event that an investor is willing to write a cheque to an unproven early-stage company, they are likely going to demand a substantial ownership interest in exchange for the risk.

As an alternative to arranging Angel or VC investment, start-ups should be aware of the wide variety of incubators and accelerators that have exploded to service Canada's emerging tech innovation landscape. Incubators and accelerators aren't exactly the same, but in some important respects they do overlap. Both provide a range of resources and programs for founders and early-stage ventures. Both offer education, office space, mentorship, and networking opportunities. Some accelerators go further by investing cash in start-up companies in exchange for a small slice of equity (there are incubators that do this too - for example, idealab). Accelerators may also administer programs over prescribed periods of time, and provide cohorts with the opportunity to showcase their innovation to investors at a "Demo Day" (but not all; for example, OMERS Ventures' partnership with OCE - oneeleven - specifically avoids the program model).

The opportunities that accelerators provide in addition to those available through incubators means that admission to the best accelerators can be highly competitive - top accelerators reportedly admit about 1% of applicants - but entrepreneurs often find that the education and other benefits are well worth the price of admission.

Here's the deal offered by ten of Canada's best accelerators:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accelerator Program Location Program Length/Info Cohort information Cash for equity Additional Financing Example Company
Extreme Startups Accelerator Toronto 3 months, ending with investor showcase - Access to investors in Toronto and NYC 6 cohorts and 24 start-ups as of spring 2014 $60,000 for 10% equity Eligibility for $150,000 convertible note from BDC Venture Capital Hurrier
Founderfuel Montreal 12-week incubation course ending with demo day 20 teams chosen for two three-month cohorts $50,000 for 9% equity Eligibility for $150,000 convertible note from BDC Venture Capital Kiwi Wearable Tech
GrowLab Vancouver 3-month intensive, ending with demo day 4-5 teams chosen from over 400 applicants Up to $30,000 for 5% to 9% equity Eligibility for $150,000 convertible note from BDC Venture Capital SparkCRM
Hyperdrive Waterloo 6 months, multiple demo day opportunities in Waterloo region and Toronto 4 cohorts and over 30 start-ups accelerated as of spring 2014 $40,000 for 7.27% equity Optional $15,000 loan - start-ups eligible for $150,000 BDC convertible note Incentivibe
[IN]cubes Toronto Customized curriculum - no specified program length Portfolio contains 18 companies $15,000 for 7.5% equity N/A Hovr.it
Jolt Toronto 6-months - for product creation and beta testing $610,000 invested 17 start-ups that have raised $6.4 million in additional financing $50,000 for 9% equity N/A Turnstyle Solutions
Ryerson Futures Toronto and Mumbai 4+ months, customized program focus on market validation and scaling - provide access to networks, mentors, office space, operated by serial entrepreneurs 16+ weeks, no cohorts, rolling applications Up to $80,000 in seed-funding, including convertible note and founder's equity Access to follow on funding Figure 1
The Next 36 Toronto 2-phase, 9-month mentorship program, ending with 1-day showcase 36 entrepreneurs and ventures accepted Up to $65,000 in seed capital 7% N/A Kira Talent
UTest Toronto Year-long program for very early stage ventures - funding, mentorship, office space at MaRS Discovery District Facility Two cohorts of 11 startups as of mid 2013 $30,000 for 5% equity Access to follow-on investment of up to $500,000 from MaRS Innovation Eqol, Inc.
Decentral Toronto 3-month due diligence curriculum, emphasizing mentorship, ending with a demo day Rolling cohort model, each with 6-9 graduating companies $50,000 for 7% equity Eligibility for $150,000 convertible note upon graduation, and assistance in raising seed round New as of Spring 2014 - no companies yet graduated

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