Accelerators are popping up everywhere. In fact, there is a great democratization of capital underway that is providing a multitude of sources for small amounts of start-up capital – accelerators, angel groups, platforms like Gust, and now crowd-sourcing platforms as well. What used to be a linear scale of capital sources, small to large, has now become an exponential scale.
There are 10’s of large venture capital funds, 100’s of micro venture capital funds, 1000’s of accelerators and angel groups, and potentially millions of crowd-funding sources.
Correspondingly, the launch of a software company can now be accomplished with less than a tenth of the capital requirement of just 10 years ago. This is largely thanks to the myriad of web-delivered applications that can be sourced on a “pay by the drink” basis. The barrier to entry for raising a small amount of start-up capital – say $100,000 – is very low thanks to the multitude of capital sources mentioned above.
However, the barrier to raising large amounts of start-up capital – say $1,000,000 or more – is as high as ever. In fact, the barrier to entry for Series A capital raises appears to be getting ever higher. This is the disconnect between the many small capital sources and the few large capital sources.
Accelerator programs provide that critical point of connection. The reason that micro VC funds like mine like to spend time and capital with Accelerators is for much-needed efficiency. Micro VC funds have similar workloads to funds many times larger so they must find operating efficiencies anywhere they can get them. After all, managing a portfolio of ten $2 million early-stage investments requires a similar amount of time as managing ten $20 million early-stage investments but the fee stream is one-tenth that of the larger portfolio.
Accelerators provide critical efficiencies to the micro VC world including vetting of deal flow, matching of experienced mentors with program participants, focusing upon near-term milestone achievement, and perfecting the pitches for revenue and investment. The result for my fund – Trailblazer Capital, a $25 million micro VC fund – has been a ten-fold improvement in our investment sourcing. That is, we’ve been nearly ten times more likely to source a new investment through an Accelerator than through all other means of deal sourcing.
“That is, we’ve been nearly ten times more likely to source a new investment through an Accelerator than through all other means of deal sourcing.”
While we actively participate in Accelerator programs throughout Texas and surrounding states, we have a special interest in the VentureSpur Accelerator because it’s focused upon sectors in which we have active investment interest:
• Online Education, Learning, Training, Certification, and “Gamification of Education”
• Online Services for Finance, Banking, Investing, Insurance and Related Industries
• Telecom and Mobility Software and Related Online Services
Also, it’s a place we’ve been able to engage dozens of successful tech entrepreneurs with whom we have long-time relationships. These entrepreneurial mentors have pledged their time and support to help VentureSpur participants accelerate their success.
VentureSpur’s mentor roster is simply outstanding. Each mentor has managed a pre-revenue tech start-up at least once, some of them several times. They have grown and sold successful tech companies to the likes of Cisco, Murata, Dell, AT&T, and Gannett. A few have grown and taken their companies to an initial public offering (IPO). Many of them have created more than one successful tech start-up. Some have developed their once cash-strapped start-ups into high growth, cash generating enterprises. All of them have realized significant success and are willing to share their experience with VentureSpur’s program participants.
Take the story of VentureSpur mentor, TJ Person. TJ grew his first company, Mango Mobile, over several years and successfully sold it for $ millions to Omnicom, a large advertising agency. For his next start-up, Koupon Media, he decided to launch it in the TechWildcatters accelerator in Dallas. Why, after realizing such financial success, would he sell shares in his new venture at such a low valuation for such a small investment ($25,000) when he had so many options for funding his new venture? The reason is simple: he wanted to accelerate the launch of his new venture and the TechWildcatter program did just that. At the culmination of the 12-week program, TJ rapidly raised over $4 million of venture capital from Trailblazer and others, which has enabled him to grow the company exponentially faster than was otherwise possible.
If you feel you’re one of the country’s most promising start-ups and your building a business model in the field of telecom & mobility, online learning, or online financial services, you should apply to VentureSpur by the May 17 deadline and put yourself on a fast track to success.