Accelerators offer intense training for aspiring, and even experienced, entrepreneurs to design appropriate business strategies based on a “lean startup” approach to growth. Accelerators encourage companies to test their ideas in the real world from day one to get critical feedback on whether their product or service is really one of use, whom it would most benefit and how best to reach those customers. Through constant feedback from potential customers – and from mentors, coaches, professionals and peers in the accelerator programs – entrepreneurs learn to make fundamental changes in their business models to blaze the straightest path possible to market.
They also build connections with professional networks of people who can help them navigate the often complex process of creating a new business, such as managing legal, accounting and marketing issues.
To date, five business accelerator programs have begun operating in Albuquerque. Some of them, such as ABQid, have received city backing to reach as many startups and aspiring entrepreneurs as possible. That’s part of the city’s newfound “grow your own” economic development strategy, which seeks to encourage local entrepreneurship and homegrown industries, rather than depend on federal assistance or outside investment.
The accelerator lineup includes ABQid, the IGNITE Community Accelerator at Central New Mexico Community College’s STEMulus Center Downtown, Creative Startups for businesses involved in creative enterprise, the Village Capital program for companies marketing new water technologies, and Hautepreneurs for women-owned startups.
Two other programs have joined the lineup: the New Mexico Angels’ Startup Factory, plus the new annual Mayor’s Prize, which awards grants to nonprofits that provide services to startups. Some professionals are calling those two programs business accelerators, but neither one follows the traditional model since they don’t provide the kinds of intensive training that the other programs do.
The Startup Factory is an entity for individual investors to build the foundations of new startups based on University of New Mexico technology. Angels then pool their capital to invest in those emerging companies.
The Mayor’s Prize aims to strengthen the entire ecosystem by encouraging more programs and services via nonprofits.
Taken all together, the programs are creating a vibrant environment for aspiring entrepreneurs to get an immense amount of assistance to succeed. And that’s something that didn’t exist here before.
The city and state already has many seasoned entrepreneurs and professionals who work in different economic development programs, such as traditional incubators. Many also provide mentoring services on an individual basis.
But the accelerator movement has pulled all those human resources together into a new, premier network of support services, said ABQid Chairman Bill Bice.
“Together, we’ve created a tremendous amount of startup activity,” Bice said. “All the players and the pieces were already here, but now we’ve pulled together into teams to get everybody in the game and be a catalyst, not only for the specific companies that we each work with, but as collaborators who together are building the overall startup ecosystem.”
The accelerators have trained more than 60 companies since last year, when the first cohorts were launched by ABQid, IGNITE and Creative Startups.
Some accelerators directly invest in companies that graduate from their programs. Others help connect their graduates to different sources of capital, allowing many new companies to gain access to the critical seed and early stage money they need to move forward.
ABQid has established a private equity fund for investment in select companies that show the most promising potential for rapid growth. That fund is separate from the $1.8 million that ABQid won from the city for program operating expenses over a three-year period.
Most companies in ABQid receive a $20,000 investment to help finance their initial activities. After graduation, they become eligible to seek between $50,000 and $200,000 from the ABQid venture fund.
ABQid has included 25 startups in two cohorts since last year. Eighteen of them received the initial $20,000 investment, for a total of $360,000. In addition, the venture fund invested more than $400,000 in some of its graduate companies.
Those seed investments, in turn, have helped recipients raise more capital from other sources, with a total of almost $6 million flowing into ABQid graduate companies to date, Bice said.
“One metric we use to evaluate our success is whether we’re creating ‘fundable’ companies,” Bice said. “That nearly $6 million has been raised for our graduates shows they’re getting real leverage out of the initial investments we make.”
Grateful for the help
Most companies that graduate from the accelerators say the training has helped them build solid foundations for their startups to succeed, while providing the resources and skills to move forward on their own.
“I love how much the community has rallied around entrepreneurs,” said Trish Lopez, a native New Mexican who participated in ABQid this summer to build her company, Teeniors. “There’s so much support now for local businesses. It’s giving young people a lot of opportunities they didn’t have before.”
Teeniors unites tech-savvy teenagers with seniors who need help navigating their personal electronic devices, such as laptops or smartphones. The company has assisted more than 200 seniors in Albuquerque at senior center events or individually, with about 40 teenagers now participating.
“ABQid gave me access to networks of investors and advisers that it otherwise would have taken me months to develop,” Lopez said. “They also offered fantastic guest speakers and workshops with people who all have a basic, real interest in seeing Albuquerque and New Mexico grow.”
Some accelerator graduates are getting traction locally and even nationally. PlugSolar, for example – which created a device and online tracking system for individuals and businesses to record their energy use and then convert their payments for that electricity into direct support for solar power – is grabbing attention from national media and industry associations. The company has been profiled by Forbes magazine and MTV, among others, and it won a pitch competition in Las Vegas, Nev., in October that earned it a free booth at the upcoming Consumer Electronics Show in January. It also raised $120,000 through a Kickstarter crowdfunding campaign this summer.
“ABQid helped us figure out how to easily explain our product and how to effectively market it,” said Nick Williams, PlugSolar co-founder and director of information systems. “We’re now focused on our near-term strategic goals of raising money, and growing and scaling our business.”
‘All about connectivity’
Albuquerque’s accelerators are part of a broad network of support for entrepreneurship that has emerged over the past two years. That includes frequent “pitch competitions” for new companies to earn cash and in-kind prizes, community workshops and weekly events, such as 1 Million Cups – a networking forum Downtown where aspiring and veteran entrepreneurs come together to share ideas and support one another.
All those initiatives were on display last week as part of Global Entrepreneurship Week, an annual event in Albuquerque and other cities to celebrate local technology, innovation and entrepreneurship.
“Albuquerque is working hard to improve the efficacy of its entrepreneurial ecosystem,” said Jonathan Robinson of the Kansas City-based Kauffman Foundation, which helped to launch 1 Million Cups here and provided funding for the Mayor’s Prize. Robinson spoke at an event last Wednesday at the city’s Epicenter Downtown to celebrate Albuquerque’s emerging entrepreneurship.
“It’s all about connectivity and collaboration,” Robinson said. “People are really working together here to create a system where you can grow your own businesses to build a vibrant economy.”