By Jim Flowers
A few months ago, Marty invited me to comment on business incubation and what a startup company ought to expect from an incubator. Relationships, I said back then. And I stand by that assertion.
At VT KnowledgeWorks we screen prospective clients for their Market opportunity, for the Magic that they offer to their prospective customers, and for the Moxie displayed by the start-up team. We reasonably assure that they have oil for their engines, in the form of logistical, administrative, and professional support services that reduce their risk.
Then we do our very best to make sure that they build a broad set of relationships that will be continuing sources of interpreted information, that they have a full complement of Mentors to assist them as they make tough decisions
Well, here’s an important follow-on story.
There is a growing fellowship of special-case start-up programs operated by closely-knit, permanent groups of angel-mentors. Paul Graham (pictured above) built the mold at Y Combinator, which he founded back in 2005. They have processed well over a hundred client start-ups so far and have an impressive list of successes.
With modest variations on Paul’s pattern, this new class of mentors-plus-capital programs has grown to include TechStars operating in Boston, Boulder, and Seattle, Austin Capital Factory, deep in the heart of Texas, LaunchBox in the DC area, and a number of others. The latest entry is DayOne Ventures, just opened for business in Southwest Virginia, and seeking applicants.
What’s special about these operations? They bring powerful relationships to the table as a requirement of engagement. They are funded and staffed by groups of accomplished entrepreneurs. These veterans work closely for three intense months with lightly funded, new company teams to maximize the opportunity in each start-up and squeeze out unnecessary risk.
At the end of 90 grueling days, they, and other aggressive investors, listen to each start-up’s polished pitch for continuing investment. The strong get money and live to fight another day. The others go home, empty-handed, but typically energized, rather than defeated.
This process is not for the faint of heart. The entry screenings are tough. To get the mentors and the seed money, the start-up teams must clearly demonstrate what I call Moxie, the strength of character to play the game to its conclusion.
Of course, they also have to bring a cleverly identified marketplace opportunity, and some value proposition that will set them apart from the competition and generate serious profitability. So, in my favorite terms, if the team has a Market, some powerful Magic, a solid business Model, and an abundant supply of Moxie, they can qualify to get both the Mentors and the Money they need to pull off a strong launch. And it all happens in the span of 90 days.
That’s intense incubation.
Today's guest blog is by Jim Flowers, a forty-year veteran of technology-based start-ups, Director of the VT KnowledgeWorks Business Acceleration Center at Virginia Tech, President of the Virginia Business Incubation Association, and author of "MOXIE and other fundamental entrepreneurial concepts". He blogs at www.startwithmoxie.com.