Here is one view, taken from NESTA discussion on startup factories in June 2011.

In my mind there is no question that to help build a pipeline of grown ups, finish ups and speed ups, there needs to be a healthy pipeline of ambitious, healthy, well-connected startups.

Can ’startup factories’ help provide that pipeline of businesses that will be taking the stage at the BLN Growth Forum’s of the future?

First, the bad news. In the nineties there were incubators. On the whole, they were a very bad ting and lots of people have got confused about the difference between incubators and accelerators.

At one point in 1999-2000 there were over 50 incubators active in London alone. I worked for one, (bEurope, which managed to create and fund a single business, Investis, which still runs very successfully today. bEurope, like many others, ran out of money as the business model depended on getting funding for each of the business that it incubated and the investor appetite for early stage investments evaporated in the dot com crash). On the whole, incubators were a bit of a disaster and the ones that had raised the most money had the hardest to fall, even if their founders were somewhat cushioned from the crash as they had managed to raise funds with management fees that provided some succour from the drop – remember Brainspark or Ant Factory anyone? There were a few reasons that they created so little value: many of them didn’t have a clue what they were doing or actually know what incubators should do; investor appetite for any sort of early stage investment disappeared; the best companies didn’t go to an incubator that was taking often significant equity for a range of services and space of variable quality.

So why are ‘startup factories’ or accelerators going to be different?

Startup factory bosses: Reshma Sohoni, Seedcamp. Jon Bradford, Springboard. Running two of the leading European accelerator programmes in Europe

I think the principle reason that the next wave of accelerators have a much higher chance of success is that the market has changed – significantly – and incubators and accelerators use very different models.

It costs far less to start a web business (and most accelerators focus on web or at least digital businesses). The gospel of Saint Eric the Lean has been spread widely. A lot of the old bull shit about startups has gone (arguably replaced with the excrement from different bulls). Very few founders will be beguiled into thinking that the one thing that they need to be successful is to be bought under the wing of an investment banker who has raised a startup fund and set up an incubator. The web has opened up conversations among founders across the globe and young company founders are incredibly aware now of what they need and the type of support available to them. If they are not, they deserve to go to one of the *irony alert* special incubator/accelerator programmes somewhere set up and run, usually at public expense, by an agent of a regional development agency or similar because that will solve all of the problems of the region’s innovation and entrepreneurship.

Let’s consider what some of the best accelerator programmes can do and ignore the fact that when accelerator programmes are seen to be successful, a swathe of copy cat, me-too programmes will spring up. (Anyone want to bet £50 that there will be three times the number of accelerator programmes in Europe within three years?).

For the sake of argument, lets use the examples of top accelerator programmes provided by Tech Cocktail as part of research undertaken for the Kauffman Fellows programme. By their own admission, the methodology applied in the US does not really apply to European accelerators as they simply haven’t been around for long enough but this gives a reasonable view of some of the programmes with the highest potential.

Criteria:

• Has to be, ‘for profit’
• Has to be fixed term programme
• Has to take equity
• Should not charge start ups for office space or services they don’t want or need

This is the top 8, in order, according to Tech Cocktail.

1. Seedcamp

2. Startupbootcamp Spain / Tetuan Valley

3. Startupbootcamp Denmark

4. Springboard

5. Openfund

6. NDCR Launchpad

7. Propeller Venture Accelerator Fund

8. Startupbootcamp Ireland

This is a reasonable list of potentially high quality programmes across Europe even though the methodology is essentially indefensible. (Arbitrary weighting of highly qualitative variables applied to early stage programmes is inherently crazy even though the end result means most of the decent programmes appear).

Who benefits from these programmes?

NESTA’s report, ‘The Startup Factories’ identifies a number of beneficiaries:

• Angel Investors – reduce need for due diligence, reduce cost of discovering new companies, network with other founders and investors.
• Venture Capital Investors – Improve deal pipeline, get first sight on new technologies, network with investors and company founders.
• Large Technology Firms – talent scouting for new employees, new customers for platforms and services, brand association with innovation and entrepreneurship.
• Other startup founders – Talent scouting, supercharging their network, meet customers and later stage investors.
• Service Providers – New customers.

From what I hear from talking to people in all of these groups, the benefits are a little less well defined. I have italicised the ‘benefits’ that people value least and in bold the ones they value most:

• Angel Investors – reduce need for due diligence (angels always want to do due diligence even if a programme offers them the opportunity to see momentum in a business), reduce cost of discovering new companies, network with other founders and investors (the best programmes are filled with the kind of people that want to hang out together and do business together).
• Venture Capital Investors – Improve deal pipeline (the best investors virtually always see the deals they want to see, others, not so much), get first sight on new technologies, network with investors and company founders (See above for angels).
• Large Technology Firms – talent scouting for new employees (most startup founders are running away from big companies), new customers for platforms and services (most want customers, now or in the future. Microsoft Bizspark, Amazon Web Services and others all run programmes to support startups as the technology decisions made at an early stage of a businesses life tend to stay with them for a long time and this is a low cost way of supporting startups and locking customers in), brand association with innovation and entrepreneurship.
• Other startup founders – Talent scouting, supercharging their network, meet customers and later stage investors.
• Service Providers – New customers (this is a longer term goal for most advisors – servicing startups is a very expensive business for the best advisory firms).

Additional set of beneficiaries not mentioned in the report:

• Management and investors in the programme itself. Benefits here can come from a number of different fronts – investors want to make their money back of course but there are also lots of other things that they get out, from a sense of ‘putting something back’ to having their angel activity managed and supported. Creating and supporting the development of a successful accelerator programme is also one of the few ways that an angel investor can become recognised on a global scale. The Klein family, very well known in London and a few other places before Seedcamp for example, have now unquestionably earned a seat at the global angel high table.

In my view, the biggest beneficiaries of the best accelerator programmes are first time founders are served particularly well by the best accelerators:

• They bring people together to push each other on at an early stage.
• They offer a good grounding in the basic fundamental building blocks of business.
• They supercharge network with connections to outstanding and accomplished entrepreneurs, investors and advisors.
• They hold founders to account, both via the accelerator, and via their peers in the programme.
• They can provide access to people who can help specialist founders think about things they don’t know about – a coder needs to understand more about product management for example.
• They validate the business and the idea.
• They give founders confidence and profile.
• They offer founders access to talent that wants to work in startups.

So back to answering the original question:

‘Can ’startup factories’ help provide that pipeline of businesses that will be taking the stage at the BLN Growth Forum’s of the future?’

My view is that the best ones can do some extraordinarily powerful things, particularly for first time founders and I have no question that a significant proportion of the alumni of such programmes will be the business leaders of the future. The only danger I can see is that the notion becomes so popular that accelerators of variable quality spring up everywhere and confuse the market with crap-ccelerators. In a market where startup founders can share information across continents incredibly easily though, it is likely that the best ones will still be easily identifiable.

Now, any entrepreneur worth anything will appreciate the rule of ‘ABC’ (Always Be Closing).

This would therefore be an entirely appropriate time to point out that we are running our second BLN Growth Forum on 5th July in Cambridge. This is a meeting for the leaders of some of the fastest growing technology driven businesses in the UK. We are also very pleased to be bringing the leaders of the next generation of high growth businesses to the forum through our relationships with Springboard and Seedcamp. We think that the alumni of those programmes represent the best of the new generation.

http://growthforum2011.thebln.com/

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Nice one NESTA. A really worthwhile event that took the conversation well beyond expectations.

I want to write a blog about the reasons successful incubators and acceleration programmes are successful. This is where I am keeping notes so there is really not very much to see but feel free to add any comments you wish. Testing the wisdom of crowds.

Anagram Tube Map

Reid Hoffman Techno-dude and all round good guy.

Reid Hoffman at Silicon Valley comes to the UK

“It took a long, long time for me to start to think about myself as an entrepreneur”.

Reid’s initial plan was to become an academic for social change. Did a postgraduate degree in Philosophy at Oxford and realised that he had no interest in becoming an academic. He had the revelation that software has a huge potential to reach far more people so wanted to learn how to design products, ship products, make great stuff. Joined Fujitsu and Apple before joining Pay Pal in 2000. Pay Pal was a huge ride but incredibly rich learning experience.

Key takeaway from Pay Pal:

An interesting premise for a discussion, particularly when the speakers are from Autonomy, LinkedIn, Google and other companies that are setting out to change the way the world works.

Some notes from the discussion:

“We now have access to very large data sets from consumers and companies, and access to technology that makes it easier than ever to capture and store this data. This event will explore what you can do with this data, and the technical and social challenges involved. We will discuss examples of companies who are collecting, processing and interpreting data for business and social benefits.”

Part of the Silicon Valley comes to the UK programme, this panel and discussion is to explore the opportunities for entrepreneurs that the rise of Big Data offers.

Big Data Panel, NESTA, November 2010

These are my notes from the event, not particularly a commentary upon it.

The panel:

• Hans Peter Brondmo, Head of Social Software and Services at Nokia
• Max Jolly, Director of Media Solutions at dunnhumby, (behind Tesco’s Clubcard programme)
• Haakon Overli, Managing Partner of Dawn Capital, (one of the UK’s most active investor in data-base businesses).
• Megan Smith, VP Business Development and CEO, Google.org
• The event is chaired by NESTA’s Director of Policy & Research, Stian Westlake.

How do we ensure we tackle the opportunities without getting lost in the numbers?

Hans Peter Brondmo: Data and Nokia. HPB wrote book with Geoffrey Moore in 2000, The Engaged Customer: the New Rules of Internet Direct Marketing, considering how corporates should be communicating with data. The past decade has shown how hard some of the possibilities have proved to make happen. Mobile phones are producing huge amounts of actionable data but not all of it can be used.

Privacy is a different thing now to what it once was. If you are carrying a phone in your pocket, you are being seen. While some of this is outside of your control, you now have more control over your ‘electronic soul’ that exists in the cloud than you ever did. Governments are trying to control it, corporations are trying to engage with it, you don’t have full control over it and the ownership of your electronic soul is not defined.

The electronic soul is an asset and you as a consumer should get to own your own information. You should be able to have a say in who uses your soul and for what but there is no framework to govern this. The Ts&Cs of every social network and piece of your electronic soul are different, some give you rights, others don’t.

Haakon Overli: The investor perspective.

• It’s all about making money – buy low, sell high. Get paid early, pay late.
• Investors are concerned that the pioneers of big data, will leave the field soured for future generations of entrepreneurs – if Facebook or Google lose the trust of their customers, their customers lose trust with the big data industry.
• When anyone talks about big data, you have to consider privacy at some point.
• Big data is only investable if it can take big data sets and extract information from them – cites Cognitive Match as his favourite (and in his portfolio) example.

Max Jolly, dunhumby: dunhumbyt owned by tesco and behind Tesco’s Loyalty Card. Max is a data miner – much cleaner than a coal miner. Attribution allows you to understand a customer, context allows you to make decisions on the information.

“You are what you eat. We look at your shopping and infer all sorts of things about you from age, sex, weight, social status, what you are likely to buy next etc. We even know things when you repeatedly put £10 of petrol in your tank rather than random larger amounts”.

The smartest businesses are making their data available across their organisations, but this will also create huge privacy issues if not done in the right way.

Megan Smith, Google.org: Uberuser, ubercreator, ubercataloguer of data. Google.org leverages Google employees to do good things with data. Three examples of google.org’s use of big data to do good.

• Google.org is trying to use Landsat images over time to start tracking the deforrstation footprint anywhere across the world for past 30 years – Google Earth Engine.
• Flu trends – tracking 36 search terms for flu related symptoms across globe. Found it to be over 95% effective in anticipating flu outbreaks across the world.
• Google Crisis Response – integrating the response to crisis with easy use of big data.
• Google Books – Not a google.org initiative but shows what can be done by putting lots of information from disparate sources online.

Questions.

Who has the most to gain and who has the most to lose with big dasta?

Who owns my data?

MS – Privacy is a problem when you have an unfriendly state that might abuse the data. Gainers far outweigh the losers. Big winners will be consumers through better access to healthcare and lifestyle information. When you can see what dta can do for you, you will embrace it.

[Mmmm – This was a fairly evangelical answer to question- who has most to lose?]

HO: Legislators are simply not going to be up to setting and creating a framework for privacy. It is up to the ecosystem and the players within it to set the agenda. This could be hugely dangerous.

HPB: Privacy frameworks have to come initially from the private sector – from enlightened companies paving the way. Facebook is leading the field in creating an online identity that allows you to log into other sites with their/your identity and to share your data with others. Is this the right company to have such power? It will be down to the companies involved to be seen to be doing the right thing. Self-policing, or lack of it, is one of biggest potential pitfalls of rapidly evolving privacy legislation.

MJ: With great power comes great responsibility. The people with the most to lose are the people who have the most to gain – Tesco, Google and others have been extremely conscious about how you raise the awareness of responsible use of data. It is the responsibility of the big data owners to help educate the public in how their data is used.

Tesco can calculate calorie intake per family, calculate food miles, CO2 consumption. By sharing some of this data with consumers they may be able to help educate consumers about choices. Some people will react very badly to being told what to do.

Big Data, Little Borders: How has big data been affected by territorial boundaries?

MS: For google.org, borders have very little to do with issues. Google.org is typically using satellite images that are not subject to individual country laws and reporting. For activities on the ground, disaster relief for example, Megan thinks they are only likely to go where they are accepted by government in a particular situation.

Why need more excitement about data. People that make that happen are great!

Hans Rosling talks about the theatre of data.

The Grauniad are doing a great job of sharing data with the world.

What are you looking for entrepreneurs and how can they get in touch?

Hans Peter Brondmo, Head of Social Software and Services at Nokia.

• Nokia Growth Partners and Venture Partners helps to fund venture propositions.
• Otherwise, you have to find the right people in the right product group and make friends with them.

Max Jolly, Director of Media Solutions at dunnhumby, (behind Tesco’s Clubcard programme)

• Don’t have a great track record of engaging with startups. Have a big problem with sharing data. Want to change that and can make difference with expertise in other areas

Haakon Overli, Managing Partner of Dawn Capital, (one of the UK’s most active investor in data-base businesses).

• Happy to talk to people opportunistically.

Megan Smith, VP Business Development and CEO, Google.org

• Have lots of things we can do to help companies grow on business development side.
• Have over 50 APIs into Google available to third parties.
• Google ventures loves talking to startups, particularly ones with revenue that they can leverage into Google.
• Get in touch: megans * googlemail . com msadmin*  googlemail . com

Interesting topic but would have been interesting to discuss fewer subjects in more detail.

Very nice to see the redoubtable David Peto today at the launch of his new project – Aframe.

David founded and sold a Mac only production house in Soho before taking some time out to think about next move. Turns out he decided there was an opportunity to streamline the highly fragmented world of production and has spent the last 18 months not saying very much about his project whose backers include David Wheldon, (Vodafone), David Abbott, (AMV) and other luminaries from right across the advertising and video production industry.

Aframe - on a Mac

“Keep it all together”. Aframe is a cloud-based collaboration and production platform for the video production industry letting disparate teams collaborate across the production value chain. It wants to change the way the video production industry works by streamlining the production process and also taking content and pushing it to third party channels. It promises, ‘the best of the web and the best of video’, and was founded on the premise that the industry has got so fragmented and so out of synch with the enabling power of the web that there was a unique opportunity to make video production far more streamlined and efficient.

What does Aframe do?

There are three pieces to the puzzle.

1 Essentially it is an online video production project management system that allows organisations to:

• Manage and plan projects collaboratively across multiple teams and geographies.

2 Perhaps more importantly from the perspective of users:

• Aframe aims to make user’s video searchable by embedding video content with useful information thus making it more discoverable by third parties. In other words, it tags video content as it is uploaded, automatically. This offers users the potential to make their content discoverable by third parties immediately.

3 Storage and management of existing content is managed through Aframe’s two secure data centres so users:

• Don’t need to manage and store their own content, Aframe takes user’s content and stores and shares it online without owners needing to worry about looking after it.

At first glance, it seems to be extraordinary that an industry as obsessed with technology as TV production has not really embraced the internet as an enabling platform. This is not that unusual. TV production has been obsessed with the technology in its own hardware – video cameras, production equipment etc but only recently have the typically huge files that are produced and moved around in the video production process been moved via the web. So perhaps the time is ripe for a bit of innovation in the industry?

Success will require Aframe to (1) have hit the market at the right time in the technology adoption cycle – which it may well have done; (2) create a beautiful user experience for customers and; (3) to ensure the tagging technology really does help create new sources of revenue for customers as their work becomes more discoverable. It is very early days for Aframe but if the video production industry embraces the platform with as much enthusiasm as the early beta users I spoke to, they will have a busy future.

• Our next BLN media discussion dinner is held on 24th November in London. Details.

An opportunity to meet some of Europe’s most dynamic and exciting technology businesses though NB, this is taking place next Saturday morning (20th November) in Cambridge. This is the now annual visit of some of the brightest and networked entrepreneurs and investors in Silicon Valley to the UK. Speaker list including Reid Hoffman (LinkedIn), Joi Ito (Creative Commons) and Dave Hornik (August Capital).  More: http://www.svc2c.com/speakers

Silicon Valley comes to Cambridge

From Sherry Coutu, organiser of Silicon Valley comes to the UK, angel investor says,

“Many of you know that I’ve been working on bringing a number of iconic entrepreneurs to Cambridge.

“As part of this, we are running a company showcase of hot startups on Saturday the 20th of November. Yesterday, after we saw the quality of the submissions, we decided that it would be a good idea to invite some investors along to it as well.

“If you would like to come along, you’ll be able to see what the companies so, meet these startup CEOs and, over lunch, to meet some of the leading entrepreneurs and investors http://www.svc2c.com/speakers from Silicon Valley.

“This CEOs who are showcasing were nominated to participate based on referrals from investors and then only the top companies from this list were chosen to showcase their companies.

“We will be revealing the companies who are showcasing throughout the week – but I can assure you, they are a high quality!

“At the end of this showcase will be the ‘SVC2C Company of the Year award ceremony’ and a networking lunch where Reid and I announce the winner for 2010 who will receive mentoring and who will be sent, all expenses paid, to Silicon Valley to explore the opportunities for their company there.

“http://www.svc2c.com/programme/competition

“We will also hear how the winners from last year’s competition have gotten on. If you would like to come along, please act SUPER FAST as we expect that places for this will go very fast.”

http://www.svc2c.com/programme/competition