Hey, Louisville entrepreneurs, inventors, neophyte businessmen and budding marketing geniuses: Start your engines! There’s a new accelerator in town.
Tony Schy has formed Velocity in Jeffersonville, Ind., to help people who think they have a good idea, or product, or design or business model. (The company used to be known as Velocity SI – as in Southern Indiana – but Schy says he was concerned people would shorten it to VSI, and that’s not what he wants to be known as.)
“Velocity” is the key to all this, says Schy, because it suggests not only speed, force and action, but also direction. “That’s what most business start-ups lack,” he says. “It’s an understanding of where they need to go and a plan for getting there.”
Schy launched the 501(c)(3) non-profit company in January because he’s been the brains behind a successful start-up and knows how difficult that can be. Also, new companies are the key to a community’s economic vitality, especially in these days of still-too-high unemployment.
“If you look at the history, most net new jobs are created by companies 5 years old or younger,” he says. “A thriving, growing community needs to have entrepreneurs willing to step up and take a risk. There are a lot of good ideas out there. What’s lacking is the knowledge of how to make those ideas a reality.”
This weekend, Velocity will be one of the sponsors of Startup Weekend Louisville, at the JCTC Small Business & Entrepreneurship Center at 620 S. Third Street (suite 200). It’s a networking and role-playing event in which people are invited to pitch their startup idea and receive feedback. Teams organically form around those ideas voted as the best, followed by a weekend exercise that includes creating a business model and doing market validation. At the end of the weekend, teams present their concepts for more feedback. Schy will serve as one of the mentors.
“I suppose someone could come out of this with a fully formed new business concept,” he says, “but it’s unlikely. You don’t take a business idea and perfect it over the weekend. It’s much more intense.”
How intense? Even 100 days presents a pretty steep development curve. But that’s what Velocity is offering with the first of its own semi-annual business development competitions.
“We will pick five teams and guide them through the process,” Schy said. “We give each team some seed money – $20,000 – for equipment or materials or just living expenses and guide them around the process of refining their ideas and making them marketable and practical.”
Among the questions these teams have to address: Is there any market for your product, idea or service? Is there a real need? Who’s your customer? And, perhaps most important, what’s your value proposition? How much would anybody pay for this?
“Most entrepreneurs are blind as to their value proposition,” Schy says. “They think it’s such a terrific idea, the sky’s the limit. But the sky is very rarely the limit.”
Applications for the competition are open now on the Velocity web site, www.velocitysi.org. Schy doesn’t know what to expect this first time around, but he’s guessing he’ll get between 50 and 100 applications. Deadline for applying is April 5. The five finalists will be announced in early May, and the inaugural class will begin June 3.
Schy says he’s looking for three specific things:
- It must be a team of players, ideally three or four. This is not for the solo entrepreneur. There’s simply too much work, and too much pressure, to start up a new idea from scratch.
- The idea may not be the greatest new idea ever, but it has to be reasonable. And the parties have to be flexible, practical, willing to let go. “We’ll almost certainly be tweaking their ideas and adding wrinkles, and they can’t be unwilling to change.”
- There has to be a market for the product or service big enough to offer growth, volume and potential.
The teams aren’t necessarily expected to tweak their product so much as their business model. “Most start-up companies fail because the original business plan was flawed, and nobody ever identified the flaws, so the flaws were never ironed out,” Schy says.
Teams are, however, encouraged to identify their markets and do some actual field research. “If it’s a consumer product, narrow down who your target consumer is and go out and talk to them,” says Schy. “If it’s an industrial product or service, go to the purchasing executives at Yum Brands or Humana or UPS and ask some questions.”
What are they thinking? What do they need? How would this affect their day? In the example Schy likes to use, “If your product is a new pen, don’t hand it to them and show what a shiny new pen it is. Ask them if they use pens, if they have problems with pens, what those problems are, what they’d like to see in a new pen.”
“It’s customer development, and it sounds obvious, but it’s too rarely done,” he says. “It’s an intense process, not for the faint of heart.”