Note: “Accelerating Hawaii” is a continuing series on the impact, importance, and structure of Hawaii’s startup accelerators and incubators. While some are backed with private investment, at least two will be built using public funds. With startup accelerators being a relatively new concept, and totally new to Hawaii, I’ve started talking with local stakeholders and successful accelerators throughout the country to share ideas, set expectations, and elevate awareness for Hawaii’s entire startup ecosystem.
As Hawaii continues its push to launch and fund local startup accelerators, it’s important for the entire ecosystem to get involved, provide ideas, and help ensure that our local accelerators have the tools needed to, well, “accelerate” both themselves and the startups. With over 200 accelerator programs across the globe, it’s easy for us to educate ourselves by listening to those who have done it before. And, we can learn just as much from the successes as the failures. As with a startup, if you close your door, build a product, then launch it, it’s probably not going to work. But if you talk with potential customers, meet with entrepreneurs who have built (or failed at) similar projects, and get as much input and ideas as possible, your odds of success greatly increase (but are still tiny).
To educate the local teams vying for their chunk of the state’s $2M accelerator fund, we can leave it up to the accelerator teams to seek out their own information and, through competition, those with the best information and ideas will (should) win. Or, we can all join together to educate every stakeholder—startup entrepreneurs, accelerator teams, local investors, government entities, local support organizations, local corporations, universities and high schools—so that there is a good foundation of knowledge, expectations, and shared responsibility, and a focus on the future.
For example, should Hawaiian Airlines have an interest in the success of a tech startup accelerator in Honolulu? Well, not if they don’t know what it is, how it could potentially create demand for business travel, how it might spawn a service or technology that can help them compete, or how it could help train their next generation of executives.
With the education of the entire ecosystem as the goal, I’ve started to talk with and learn from accelerator managers in locations that share Hawaii’s challenges, some of which are:
- Lack of a prominent technology sector, but presence of prominent non-tech sectors and the expertise, resources, and talent that go along with them.
- Far from tech hubs, prominent tech universities and many tech corporations to generate and retain talent.
- Lack of deal flow in any sector.
- Lack of investors.
Above all, I looked for initiatives that have a willingness to understand these limitations and really leverage the talent and resources available in their region. While most accelerator buzz here and elsewhere revolves around tech, Hawaii doesn’t have a large tech industry from which to pull investors, mentors, ideas, entrepreneurs, and everything else required for a successful accelerator. I view that as a significant challenge.
Recently I spoke with Amanda Chocko, the program director of Start Garden (formerly Momentum Michigan, and more on the name change in a moment…). I also spoke with Amanda a few months ago, to get some ideas just as Hawaii’s accelerator movement was starting to take off.
Sure, Let’s Build an Accelerator
Start Garden, a new and creative concept in startup incubation + acceleration, is located in Grand Rapids, Michigan, which has a population of 188,000, an economy built around healthcare/health sciences and manufacturing (Amway, Steelcase, Herman Miller, GE, and others), and is situated 3 hours from Chicago and 2.5 hours from Detroit.
Start Garden is fairly new, having been live in its current form for just a few weeks. The team, however, has been at this for nearly four years, and Hawaii can learn a lot from their experience.
Start Garden began as Momentum, an accelerator which was funded by a single, private entity and followed a more traditional accelerator model: 12-week term, $20k investment for 8% equity, mentors and workshops throughout the term, and a “demo day” at the end of the term attended by outside investors. But, after a few years, it was obvious that this model wasn’t going to work in Grand Rapids.
“We originally modeled Momentum after Techstars,” Chocko told me. “But, we quickly realized that we had a very low density of established tech companies or startups, a low volume of viable startup ideas, and no investors. On top of that, the timing of the 12-week sessions didn’t always work with the entrepreneurs, we had applications coming in outside of the enrollment period, and there were entrepreneurs who couldn’t commit to the full 12 weeks.”
Without a large local tech industry, it was also tough for Momentum to find qualified tech mentors and expertise, limiting the impact on the startup teams. To help expand the pool of talent, they started to accept teams from outside of Grand Rapids. But, those teams were then unable to take part in many of the workshops and events held at Momentum.
Chocko and team also noticed that the “goal” of the program became the demo day pitch itself, rather than creating a sustainable business. The startups would put a lot of work into perfecting their pitch, but then found that potential investors asked questions about the product, market, ideal customer, usability, testing, competition, etc., which the startups couldn’t effectively answer. With those fundamental questions unanswered, it was difficult to secure investment.
Revising and Relaunching
After year one, Momentum recognized areas for improvement and made changes to their programming to incorporate lean startup methodologies and customer development. That helped, but more changes were needed. After a few more sessions, Momentum regrouped, re-imagined, and relaunched as Start Garden, taking an entirely new approach that aimed to both leverage Grand Rapids’ strengths and help fill the gaps that hampered Momentum.
“We took a long-term view and wanted to understand what we needed to do now to make an accelerator successful in the future,” Chocko recalled. “Our region needed a resource to help turn ideas into a minimally viable product, test an assumption, or create an initial proof-of-concept. To do that doesn’t take a lot of money. It’s all about being lean, and that’s what we promote.”
Here’s how it works: Start Garden takes idea submissions continuously, then selects two per week to receive $5,000 each—that’s 100 ideas per year! One idea is selected by Chocko’s team, and, to foster community involvement, the other idea is selected by popular vote. Then, the selected teams have 60 or 90 days to work on their idea, after which they present (to the public) their progress and how they spent the money. If there’s a particularly promising idea, that team is invited to present privately to Start Garden’s investment team, and potentially other angel investors.
“If an idea goes flat, then we’ve only invested $5,000 and nothing further happens,” explained Chocko. “But if the idea is viable, we have the right to invest at the startup’s seed round valuation. And, if they don’t need any additional funding, our $5,000 buys us 3% equity.”
During the program, there are no requirements for teams to quit their day jobs, attend workshops or events, or even stipulations on how to spend the money.
Quitting a job seems to be a big hurdle for Hawaii’s potential entrepreneurs, especially given our high cost of living and the lack of an aggressive startup culture (where risk-taking and failure are celebrated, especially on a resume). Taking that leap to quit a job isn’t something most people in Hawaii would do on a whim.
Mentors vs. Expertise, Push vs. Pull
The concept of mentors is another area where Grand Rapids is similar to Hawaii, especially in tech: There just aren’t that many to choose from.
When you think about what makes a “good” mentor—CEO/executive, started a company, ran a startup, failed at a startup, deep domain expertise—you’re already looking at a very small group of local individuals, especially in tech. Consider further the willingness of people to commit, their interest in or knowledge of startups (vs. just having been an employee at a tech firm), the politics of association, and time constraints, and it’s going to be difficult to build a solid mentor program for one accelerator, let alone three or four.
“For Start Garden, we pivoted a little bit and focused more on domain experts rather than mentors,” explained Chocko. “We don’t have a ton of CEOs and startup founders in our area, so we’ve leveraged attorneys, designers, developers, retailers, and others who can give advice to our startup teams. Our experts hold office hours and they’re available at our networking events. It puts the responsibility more on the startups to pull the expertise rather than the mentors to push it. We provide access, but it’s up to the startups to take advantage of it.”
We’re Not Silicon Valley
Another major change was in opening up the program to more than just tech-based ideas. With Michigan having a deep manufacturing base, that was an easy and obvious area of expertise, which provides ideas, entrepreneurs, expertise, mentors, and many other existing resources.
As I’ve said before, I think it’s important for Hawaii’s accelerators to include more than just tech startups. While the state’s funding requires one accelerator to be tech-focused, hopefully that’s interpreted as “tech-enabled” rather than “Silicon Valley.” Sure, you can import the tech teams, talent, mentors, and expertise, but then you’re spending more money on operations and less on creating jobs and industries in Hawaii, and isn’t that (shouldn’t it be) the whole purpose?
Start Garden is just one of hundreds of accelerators, and their model wasn’t designed for Hawaii’s ecosystem. But, as others have already mentioned, Hawaii doesn’t have much (any?) experience in running an accelerator. However, we can learn from the experiences of those who have already started, especially those outside of Silicon Valley, NYC, Boston, and other tech hubs.
Here are my takeaways from the conversation with Start Garden:
- Leverage local resources, don’t try to create new ones from scratch.
- There are going to be a lot of failures. Learn from them, and ensure that the ecosystem is ready to accept them as learning experiences.
- Be creative. If what you’re doing isn’t working, try something else.
- It doesn’t take a ton of money to have an impact.
- You can’t create another Silicon Valley, but you can create your own localized ecosystem.
- Have a plan in place for the graduates who show promise, whether that’s additional funding, a bigger accelerator, or resources to ensure that they can continue.
- Realize that it’s going to take years, not months, to develop a startup ecosystem.
One of Chocko’s final comments really resonated, which she recalled from a Brad Feld quote, and I think this is critical for the success of Hawaii’s startup culture:
“Take a 20-year view, and realize that it’s going to take years to realize the impact of an accelerator,” Chocko advised.
Is our ecosystem prepared to wait years to see the impact of Hawaii’s new accelerators?
What do you think? Add your comments below.