Creating a startup incubator, Part 4
This document is intended to describe all the different aspects involved with creating a Y-Combinator style startup incubator, sometimes called a startup accelerator. This should be considered a living document, to be shared and improved upon by anyone reading it. Edit the document here. I’ve attempted to break things down into discrete buckets: Sponsors and Investors, Investment Thesis, Application and Interviews, Founding Team, Investment Terms, Office Requirements, Mentorship, Partners and Advisors, Speakers, Demo Day, Post-incubator experience, Community Building, and When Things Go Wrong.
Speakers
There are two main categories of successful speaker topics: Business Basics and War Stories. Startup teams typically need help in business development, pricing, community management, sales, fundraising, etc. Teams know they need to do those things, but many do not know best practices and common pitfalls. War stories, as told by founders, VCs, and early employees, are always illuminating, regardless of whether the outcome was success or failure. Experience comes from the shared knowledge of these topics and stories, and the introductions to the speakers can help make connections and lead to potential funding opportunities. One caveat: too many speakers or mandatory attendance can be very distracting.
Demo Day and Post-incubator Experience
Depending on the program’s business model, Demo Day could be extremely important. Most likely, it is. As such, it’s important to have several opportunities for presentation training and rehearsals (one is not enough). Start two weeks ahead of time, have one on one review of the slides, teach teams on good presentation technique, and have teams rehearse in front of their peers.
The target audience is an important factor here: potential investors should not receive the same presentation as members of the press. It may be worthwhile to have two Demo Days, one for the press and one for investors. Either way, PR is important. This is the program’s once a year opportunity to attract next year’s talent and establish a positive reputation. Attendees should be given a packet that lists each team’s contact information and elevator pitch (with space for note taking). Lastly, there should be a "trade show" style booth setup after the presentations for attendees to easily find and interact with the teams.
After Demo Day is over, what happens? There may be some teams that still have lots of potential but did not reach important milestones. Is there money available for a follow-on investment? Are there mechanisms in place for teams to stay in touch?
Community Building
Given the personality types and focus required to found a startup, some effort needs to be put forward to explicitly encourage the teams to intermingle and socialize. If successful, the teams will be more likely to collaborate, share advice, and pass along relevant opportunities. Examples of community building events are bowling with mixed teams and sharing meals away from the office. Technology like a program-wide IRC chat room or mailing list are also recommended.