(Author’s note: actual headcount today was 29 people with five new faces. Thanks, Kelby Price!)
This week we welcomed at least four new faces to #OpenCoffeeLou; enough new faces that we went around and did reintroduced ourselves.
I didn’t take count, but I’d estimate that there were around 24 people in attendance.
While we’ve had people participate in #OpenCoffeeLou long distance via videoconferencing before, this week’s #OpenCoffeeLou was available virtually to anyone who joined the Google hangout.
So the next time you’re too sleepy to make the meeting or you’re on vacation, you now have options. Thank you to Kelby Price for making this possible. #OpenCoffeeLou members will automatically receive a link to the Google Hangout before the meeting.
If you are not someone who has attended a previous #OpenCoffeeLou but would like an invite to future Google Hangouts, please sign up here: https://tinyletter.com/OpenCoffeeLou
This week’s #opencoffeelou was moderated by Elizabeth Rounsavall of Chrysalis Ventures. She put together a panel of experts on accelerators:
Alex Frommeyer of Beam Technologies who completed the Rock Health accelerator program (albeit virtually) in February.
Rock Health began four years ago as a Health IT company accelerator in San Francisco. It has recently narrowed its focus to become a strictly digital health accelerator. Because of their strong brand identity and ability to attract high-potential companies, Rock Health, according to Frommeyer, recently switched its terms (originally the accelerator provided $20K per team with 6 percent equity). With Frommeyer’s class they began providing $100K per team, still in exchange for only 6 percent.
But Frommeyer and his team chose not to take the money and not to give up any equity. Rock Health was the only accelerator they applied to, and they became the first team to participate in the Rock Health program virtually. The team stayed in Louisville, and Frommeyer traveled out to San Francisco periodically to meet with Rock Health mentors and engage with other teams.
Tony Schy, the Managing Director of Velocity SI, a discipline-agnostic, 501c3 non-profit business accelerator across the Second Street Bridge. Their first class of five companies – two from Louisville, and one each from Seattle, Los Angeles and San Diego – begins on June 5, and their Demo Day is August 29.
Schy said that Velocity is part of the Global Accelerator Network, which describes its membership as: “6 continents, 63 cities, 50 accelerators” (I’m not sure how that math works. In order to become a member of the GAN, you must, at your core, have “Entrepreneur-friendly terms.”)
In Velocity’s case that means the accelerator provides $20K in funding in exchange for 6 percent equity in the company.
Velocity is not tied to any government or university entity, Schy says. It slows things down and comes with strings. He said, “The money we received came with strings and that was ‘no other strings allowed.'”
The plan for Velocity is to field two classes a year. Schy says they have “three years of runway” or enough funding for at least five classes, even if there are no exits or no new revenue sponsorships.
Jackie Willmot, the COO of XLerate Health, an early-stage healthcare innovation accelerator. Applications are open until June 17.
XLerate Health, which will be located in The Nucleus Building, will offer three high-level programs to entrepreneurs.
The accelerator program will be an intensive 10-week residential program from August 12 until October 25. They’ll provide teams with Lean startup training via the Kauffman program. XLerate will pair teams with mentors and help them get their products or services to beta test sites so they can get real-time feedback and experience with potential customers.
Panel discussion (please note, direct quotes are quoted; everything else is paraphrase):
Elizabeth Rounsavall asked: Why are there so many accelerators all of a sudden? It seems like we’ve gone from zero to four or five in a year.
Frommeyer said it’s a great platform for economic development for cities. And it may seem like a sudden boom, but Louisville is just joining the accelerator wave. The movement is really only five years old. Y Combinator is only eight years old (Y Combinator started the movement and has accelerated huge name companies including: Reddit, Weebly, Disqus, Dropbox, Airbnb, Hipmunk, and Codecademy).
Accelerators are a great tool for recruiting highly technical people to an ecosystem.
Rounsavall: Given how many accelerators there are, how do you market yours? What differentiates one accelerator from another?
Willmot said the mentorship base is the key. Also, partnerships within the ecosystem, connectivity to venture capital and networking opportunities.
Frommeyer cited “brand equity” – how successful an accelerator has been in the past and how much weight their reputation carries.
Schy said he can sniff out companies who are applying to the accelerator just for the $20K investment. He’s not interested in them.
A question from Will Bogel: Where are companies when they enter the program?
Willmot said: they have a team, possibly a prototype. They’re early stage, maybe with “friends and family” investments, but likely no other investments.
Schy said of the five teams starting Velocity in June one company has $50K of “friends and family” investment. He also suggested newer accelerators take much earlier stage companies.
Velocity isn’t requiring its teams to commit to stay in Louisville, but they have to come here for the duration of the program, and efforts will be made to try to keep them. If an applicant team was adamant about returning to its home base after the program – had cut off any potential for relocation – they lost points on their application.
Schy said seven out of nine out-of-state teams decided to stay in Cincy after the most recent Brandery class.
Companies must be scalable. They must be a new business model with some significant uncertainty. The business can’t be strictly local. It doesn’t necessarily have to be a tech company, but in this day, said Schy, “all companies are technology-based.”
Velocity had 80 applications for this class.
(Note to entrepreneurs: Schy recommended this site for finding programs and events for startups worldwide: www.f6s.com)
The two local accelerators, Willmot explained, were spawned in the same movement. They’re “fraternal twins,” not in competition. Schy said that if he got an application from a health care company, he’d send them to XLerate Health.
Finally, Tony Schy answered a very popular question: What’s the difference between and accelerator and an incubator?
He said an incubator is a facility model, that takes place over a long time period – even years. It is typically not program-based and is traditionally university-affiliated.
An accelerator is intense, mentor-driven, and takes place over a short period of time.
We had very few announcements this week.
If you’d like to continue the discussion on accelerators, Bobby Ferreri, Tony Schy and other representatives from area accelerators will also lead a panel discussion at the next Venture Connectors luncheon on June 5. Lunch is $45 for non-members. Reserve your space ahead of time.
WordPress meet up is at the iHub at 6:30 p.m. tomorrow.
Daniel Johnsen will moderate the next #OpenCoffeeLou.
We will have no #OpenCoffeeLou meeting on May 27.
Have a great week. You can join us (in person or virtually) next week at the iHub at 230 S. Floyd Street at 8 a.m.
Thank you so much, as always, to Heine Brothers for providing the coffee.