As debate continues over funding by the City of Evanston of the Technology Innovation Center, an incubator for growing very early stage technology-based businesses, it might be time to adopt a model that is both more aggressive and potentially more financially rewarding to the city – an accelerator program.
As the founder of Breakthrough Technologies, a software development firm with a staff of 35 in the heart of the Northwestern University and Research Park campus since 1998, I’ve both witnessed and been a part of the evolving business landscape for startup technology companies and high-tech incubators. In recent years many fledging tech startup businesses have been drawn to participating in short, intensive accelerator programs, like Chicago’s Healthbox and Excelerate Labs, which offer business venture systems that are highly successful at systematizing the entrepreneurial process.
While accelerator programs differ from one another, their ultimate goal is to get participant companies funded. They do this by immersing these companies in a rigorous, short-term – perhaps three months – “boot camp” which provides seed capital, space, business and finance classes, mentors, advisors, and networking opportunities with fellow entrepreneurs. In exchange, the accelerator program secures a small equity in those companies’ future success.
This accelerated program prepares participants for a culminating “demo day” where each graduate company presents their product in a business funding pitch to a large audience of potential investors. Interested backers and these well-schooled young startups can then forge a funding agreement that benefits both. Or these companies, confident in their ability to grow their businesses themselves, can choose to forego this venture capital. The choice is theirs.
Either way, the overseeing accelerator program, as the business catalyst, maintains its equity option.
A period of economic recession is a time for innovation. While the incubator model offers young companies office space, access to resources and business training opportunities over a comparatively long time, the accelerator model can provide these and more as their startups “sprint” toward secured funding.
By embracing the tenets of the accelerator model, the TIC could give the city a true stake in its small tech startups and the potential for a significant return on investment to the Evanston community.