Holy Sh!t, We Did It!
A year ago, in the aftermath of one of the top startup accelerator programs in the region closing down, I published an article about the need to reinvent the startup accelerator model in Southeast Asia.
It seemed to hit a nerve.
The article was republished across various media, and parts were later used in a Singapore Business Review piece about the ‘death’ of these programs in Singapore. *Disclaimer, I also had some unique insights having worked at one of these accelerators for two years*
The old model of corporate startup accelerator programs are flawed and what we witnessed was closure due to non-alignment with core business objectives of the parent company. Fundamentally, a misalignment between the goals of the corporate backer and the participating startups eventually led to defunding and closure.
But, the solution is in theory was very simple.
What if there was an independent startup accelerator program? Interests could be better aligned between the accelerator managers and the startup founders, with both seeking the advancement of the startup in return for future equity cash-out returns.
Together with my amazing co-founder Amra Naidoo, we decided to build it.
The main challenge is dealing with the mismatch between the short-to-medium operational capital needed by the accelerator (rent, salaries, marketing, etc.), with the fairly lengthy time needed to liquid equity stakes in startups (3 years, 5 years; 10 years+). Amra and I knew that we’d have to find a way to bridge this gap and finance the operations of the accelerator program independent of the equity we took in the startups.
Here’s how we did it:
We are lucky to have been accepted into the Enterprise Singapore Startup Accelerator program as a partner. This program offers us some support for operations of the accelerator.
We charge a fee to the startups. We invest S$100,000 into each and then charge them S$25,000 to help defray the cost of the program.
We run an innovation consultancy which partners with MNC’s, Government and Universities to design and run programs to more effectively engage with the startup ecosystem. Projects can be as small as a half-day workshop to as large as running a full startup accelerator program on behalf of our partner. This generates extra revenue to help support the accelerator.
Between these three sources of capital we can fully fund the accelerator operations and our equity positions in the startups are “icing on the cake”. Of course, we hope that in the long-term said cake is 99% icing, with many high-value exits (making us and our investors lots of money).
Speaking of investment in the startups... without a corporate backer we didn’t have a source for that capital either!
So in addition to building a startup accelerator from scratch and an innovation consultancy we also had to build a venture-capital business.
Luckily for us, the Monetary Authority of Singapore recently passed new guidelines making it easier to set up smaller funds in Singapore - good timing on that one!
Meet Accelerating Asia Ventures - an MAS-licensed Venture Capital Financial Manager.
Without giving away too much of our secret sauce, here are just some of the things uniquely offered to our Limited Partners (LPs):
An extremely high quality deal flow
Access to markets across the region
New business opportunities across all industries
A more diversified startup investment portfolio
And, our LPs also get perks such as:
Helping us select which startups get into the accelerator. Each cohort we invite mentors, investors and LPs to join us and meet the top 25 applicants and then choose the top 10 who will enter the program and get investment from the fund.
Getting first opportunity to co-invest in the selected startups in our program
Accessing closed events like our Mentor Night, Investor Night, and Demo Day
Visibility into the latest trends in various regional ecosystems
No management fees so we only win if you do
Low expenses as the accelerator handles many of the tasks normally funded by the fund(s)
Our LPs are a mix of Angel investors, family offices and institutional investors. Over the years our amazing network of advisors, mentors and investors have always been keen to work with us in growing the companies we believe in wherever they can - this fund makes it possible to participate financially too.
[If this fund sounds like something you’d like to be a part of (and you’re an accredited investor) then just shoot me an email and we can arrange a time to chat. #alwaysbepitching]
Getting back to the crux of this article, it really is a great time to reflect on what we’ve been able to achieve so far, while recognizing that the journey has only just begun. So if you thought that was a lot, here’s what’s in store for the rest of 2019:
The Accelerating Asia cohort 1 has just begun their program at our new office at Capital Square 3. Keep tabs on our events and activities by liking our Facebook page. Special thanks to our venue partner ClubCo! Check out the 10 startups selected to join cohort 1 here.
We are looking for qualified mentors for our program. Are you an Angel investor or current/ex startup employee or corporate with specific skill-sets to offer a startup? Apply to become a mentor here.
We will be running two cohorts per year so can already take interest from startups interested in cohort 2! If you know any startups that have a full team, product and some traction they can register interest here.
Lastly, I want to thank the many people who helped us get to this point. The list is way too long to list here, but you know who you are:
Founders from our founder community who helped us hone our business model and then referred in great startups for our first cohort
Mentors who guided us with constructive feedback and introductions
Investors who believe in our vision and model and have joined our fund
Startups who applied to a brand new program and will be IMHO the best cohort to ever come out of a startup accelerator in Southeast Asia
Technology partners who are giving services and support to our incoming founders
And many many more
I hope that in another year or so from now I can write another blog titled “Holy Sh!t, It’s Still Working!”, and that in the meantime we can make a dent in the universe by empowering startups who are positively changing the world.