On July 24th EST, AAIA held an online seminar to discuss how entrepreneurs have benefited from their incubator experiences. Guest speakers Livia Guo, Joseph Wang, and Jack Liu talked about the differences between Northern American incubators. They also shared their personal experiences of CDL, YC, TechStars and other popular incubators.
Jack: Think of campus-led accelerators as shared workspaces within the university where students can work and study together. Campus-led accelerator was helpful during my undergrad because it provided many useful resources, peer-to-peer reviews, and information seminars.
Livia: I got familiar with Velocity by attending some department-based incubators, such as H2i and UTEST. They provide resources and mentorship programs that helpedLSK win a competition in Velocity. Currently, my startup is based in Velocity.
Joseph: The University of Calgary has a helpful technology transfer office that helps startups commercialize their ideas. Innovation Calgary has been supporting me since I started my Ph.D.. I believe joining an incubator is beneficial for every entrepreneur.
Regional Innovation Centre （RIC）
Jack: I think RICs are similar to a resource centre with many professional services such as lawyers, accountants and marketing researchers to help startups. Imperatively, a regional innovation center can assist with governmental funding applications since many funding opportunities are designed for RICs. Therefore, a regional innovation center is recommended when a startup wants to apply for some government grant and funding.
Alex: It is great to mention that regional innovation is useful since the pre-application of government funding goes through the regional innovation center. Furthermore, many regional innovation centers have their own funding, such as AC Jumpstart of Accelerator Center, est.
Joseph: In relation to Alberta University, there is the TEC Edmonton. CDL is also considered region-based since it is developed from the Business Faculty of University of Toronto. It has a nine-month training program for selected startups. The training is not systematic courses, but the startups will need to reach the required objectives and milestones that are pre-determined by mentors. CDL is highly competitive with only less than ten companies graduating every year. Furthermore, most mentors in CDL are investors who have attended programs. The mentors are very experienced individuals who have unique sets of skills. In these nine months, mentors will provide guidance and suggestions to help startups succeed.
Livia: My batch is a little different from other batches because we were admitted during the pandemic. Startups should prepare an eye-catchy application to explain why they stand out from the rest. It is also required to prepare a one-minute video introduction about the business. There would be three instructors present at the interview. Usually the instructors will decide immediately whether the group is accepted at the success rate of 1%- 2%.
The biggest benefit of being admitted to YC is that the startups would have many opportunities to connect with exclusive investors and a network of companies and partners. Successful ventures such as Airbnb would host seminars to answer some startup questions.
Demo Day is the highlight of YC. It gives startups an opportunity to connect with many potential investors. In the case of online events, startups will also have access to the investors’ contact information if they liked your company.
Jack: After applying to Y Combinator and TechStars 3 times, I found out that the application process is similar between the two. If the startup has been picked, the investor would have an interview with the startup team. The difference is that TechStars would only select ten different companies, unlike YC who chooses dozens of companies.
Luckily, I have been accepted by TechStars in Toronto. In the first month, I have met about 120 mentors to receive feedback on business. Among these mentors, there were 5 who were interested in the program and had matching skill sets to provide value to my startup. My mentors provided tremendous help in terms of product, promotion and customer validation. We used the last month to solidify our value propositions and prepare a killer pitch deck.
Finally, there is an online Demo Day. Usually the startups have 8-10 mins to showcase and get recognized for their hard work. Demo day is a great opportunity for investors and startup founders to learn and connect.
Jack: Google has matured innovative resources and founded an incubator two years ago. It offers an abundance of resources to help companies compatible with the Google ecosystem. Google’s mentors bring their unique experiences and advanced skills to their mentorship programs. The difference between Google’s and TechStars mentors is that mentors have different approaches and focuses. A very established company’s incubator like Google provides guidance on marketing and product development. For example, the company Imagine H2O usually invites mentors with professional experiences in cleantech. Therefore startups in the cleantech industry will likely have a better chance of being accepted by Imagine H2O.
Alex: Can you guys tell us a little bit more about the similarities or differences between the incubators?
Joseph: CDL is a creative destruction Lab which is developed by the University of Toronto. There are 10 distributions in the world which include Canada, American, Paris, London and so on. In each distribution, CDL is separated into two-stream, one is a prime stream that can be participated by any incubator in any kind of field. According to the specific features of each city, CDL has the second stream. For example, the only energy-related company can apply for an energy stream in Alberta. The mentor in the Alberta stream also has the specific background to support start-ups. Therefore, CDL focuses on both regions and specific fields.
Livia： It’s not uncommon to see startups start from the university’s incubator to velocity and then to YC. In the early stages of my startup, we got accepted by the incubator at the University of Toronto, we practiced pitch competition and mentors supported us in detecting marketing. Later Velocity helped us build a bridge for the KW community which is a network of startups. Velocity also provides guidance on getting into YC by bringing a huge network of startups that can help us grow. Therefore, applying for an incubator is a step-by-step process for a startup company.
Jack: We first applied to Founder Institute, an incubator for startups in the initial stage. Founder Institute is a pre-accelerator, designed for graduated enterprises, which provides training for founders. Once we signed a few clients, we were accepted by TechStars. During the three months in TechStars, we shifted our focus to fundraising. We applied to Google Accelerator. With the help of Google, we were able to take our products to the next stage. Afterward, we prepared for the next fundraising.
Alex: Can you share your experiences on how to maximize incubator resources to help your startups achieve desired growth?
Livia: In terms of commercializing an idea, take advantage of the resources provided to you while you are in university. Once you get into an incubator, you will have an opportunity to showcase your business idea. It’s very important to prepare and practice your pitch before the opportunity comes. So take advantage of any competition you can to gain experience and exposure to potential investors and mentors.
Livia: Velocity does a pretty good job at maximizing the use of local networks and resources. Very often companies need accessible face-to-face connections with others especially when help is needed. It’s very helpful when people around us have been nurtured in the entrepreneurial culture environment and have relevant backgrounds.
Joseph: I was a one-man team when I entered CDL. The experience at the time was similar to the process of whack a mole. Different mentors required different things to be prepared, so the process was rather hasty. If I had a chance to do everything all over again, I would’ve prepared myself in advance. One of the most important preparations any startup should complete before the application is a very polished presentation to impress the interviewers.
Jack: I think the timing of the exposure you get from incubators is very important. I have a friend who once told me “I wish we had gotten in later so that we could’ve taken advantage of even more resources”. My personal suggestion is to go to the RIC or seek mentorship before you have a product yet. Do your market research and preliminary market validation first, once you have an MVP, apply for an incubator with a decent investor pool. I believe that the most optimal timing is to fundraise after about 3 months of incubation.
Alex: This naturally transitions to our last question – When’s the best time to apply for an incubator?
Livia: Echoing what Jack has said. The only thing I will add here is that timing is different for everyone because every startup has its own priorities. It’s also ok to get into an incubator if you simply need a larger sample size to test your MVP.
Joseph: I think that every startup’s situation is different. Like I mentioned earlier, I didn’t get into CDLthe first attempt. But during the process, I learned from many startup founders and like-minded peers. Startup founders apply to incubators for different reasons. My goal at CDL was to find a business partner with experience in medical devices. Over the course of several months, I was able to convince him to join me. So my takeaway is to use your resources and network to maximum potential, try to talk to everyone you come across.
Q: Incubators are like springboards, when should you leave？
Jack: Leaving the incubator is a very important step of the journey. Some founders may become reliant on incubators and the free resources they come with. For example, if you rely on the free workspace, you will not be able to justify the cost of rent and office supplies later on. This is not to say you won’t find any resources and assistance after you leave the incubator. I think it’s important to use your network wisely.
Livia: If the company is not showing significant growth, it is likely to stay in an incubator for a long time. If the company is growing then moving out of an incubator is not a question. So generally speaking, Velocity will give you up to 3 years, after 3 years,if you will likely have to leave if your company did not show significant progress.
Joseph: For startups in the medical device industry, the cycle is usually longer. You can still use the network you’ve built from CDL even after graduation. In my case, my company is dependent on the resources CDL provides because we have no sales yet. I am in the midst of applying to other industry-specific incubators such as MedTech hoping to bring my company to the next stage.