VCs can beat accelerators at their own game — here’s how
Start-ups have been rejecting the traditional VC model and preferring the more fashionable accelerator route. To change this, VCs must figure out what start-ups need them for.
Why do start-ups choose accelerators over Seed VCs? To be blunt it’s because they feel they aren’t getting enough of what they need from business angels and VCs. Most of the time, the need is infrastructure and input. The attraction of accelerators is that many entrepreneurs view them as a ‘safe space’. They can be a good place to refine business ideas and provide the education and mentorship needed to get businesses off the ground. Joining an accelerator is a far less pressurised environment for most early-stage companies. But for some founders, once they pull back the curtain, they don’t so much get the red-carpet treatment, more of a one-size-fits-all approach.
For many start-ups, the accelerator pathway is more of a distraction than an effective route to market. They often find themselves wasting too much of their time on the ‘bells and whistles’ that come with joining an accelerator programme, such as marketing seminars and CEO round-tables. Nice to have? Certainly, although perhaps a bit too hit and miss for many. Maybe the start-up will gain access to a handful of people who can move their business in the right direction, or maybe not. If anything, the sharpest founders tend to learn just enough in an accelerator to know it’s not the best place for them to build their business. But it’s too late, they are a shareholder.
What founders really need is to be having frank and honest discussions with experts who can recognise gaps in their business model, identify the areas where they need critical support, and connect them with hands-on resources. Many would be much better served by being put in front of the right people who can help them do the hard work and are going to be paid for getting results. This is where VCs can — and should — be able to add greater value. So where is it going wrong?
The challenge is that VCs are often cash-rich, but resource-poor. And with the competition in the VC market growing, many VCs have too much on their plate. It takes time, headcount, and tech, to organise their networks, source, analyse and win deals, and add as much value to their portfolio companies as they can. Most VCs have loosely assembled communities co-existing on Slack and WhatsApp groups. But for ambitious start-ups, that’s not enough. Money may help bring new start-ups on board, but throwing money at the problem is not the solution. VC is — and always will be — a people-first business. It takes people to create great products and thriving cultures. You need more than deep pockets to keep start-ups in your portfolio feeling engaged, productive and successful. You need deep insight, a deep pool of talent at your disposal, and a community that’s aligned and moving in the same direction.
VCs are at a crossroads, and many are recognising the need for greater, clearer, differentiation. The question to ask is how to become more like a start-up accelerator, but without dismantling the structure of the organisation. Can they apply the key elements of the accelerator model, resourcing and business building expertise, without also on-boarding the negative aspects? This is where Consilience Ventures has a valuable card to play. We want to be the world’s largest sweat equity investor, not in competition with VCs, but working alongside them and be 100% aligned with them and their LPs.
Our platform-led community approach is gaining traction, and is helping to turn VCs into end-to-end accelerators. We’re now a partner of Microsoft and IBM, and we have already co-invested with several VCs, including Village Global, SOSV, Symvan Capital, Delta Partners, The Wealth Club, Allocations, Welsh Development Bank, and more. These firms know that partnership with us means they don’t have to buy tech, they don’t have to reorganise their company structure, and they don’t have to build a talent network from scratch. They become a member of Consilience Ventures, use the platform, and have unfettered access to our global expert network to augment their operations.
And when we co-invest, their start-up can use this shared community to accelerate their growth far more imaginatively and productively than if they were entering another incubator or accelerator (with their own agenda).
As well as providing start-ups with outstanding curated experts across multiple disciplines, we are also working with some carefully selected VC-focused studios, including Studio Graphene, Obecto, MDxp, to help with product strategy, design, testing, and development. One of the key benefits of our network model is that it can expand to meet the needs of start-ups at all stages, regardless of the scale of their ambitions. We think this is enough for VCs to persuade more ambitious start-ups that they don’t need to go down the accelerator route, because everything they need is already available, now and well into the future.
How can VCs win in an increasingly competitive market? By beating accelerators at their own game, and proving start-ups don’t need an accelerator to get where they want to go. Helping them find the talent capable of giving them valuable insight into the projects they need to undertake to get to the next crucial stage in their development. It starts with giving them an end-to-end solution featuring a connected, engaged and incentivised community of talent, available via an easily integrated technology platform. And doing it in an efficient and cost-effective way.
Here’s a real-world example. One of our portfolio companies spent a few years bouncing between some well-known accelerators. They struggled to articulate their needs and to be listened to, and they couldn’t find the right talent to execute on their key projects. When they joined Consilience Ventures, they were able to leverage the collective strengths of our community of experts, and began making headway. Some of those experts are now working on an almost exclusive basis with this start-up, which is very happy with the arrangement. They get to retain talent — without increasing their headcount — on project after project, while the experts benefit from a consistent pipeline of work and the chance to participate not just in the success of one portfolio company, but on the entire Consilience Ventures platform. As the CEO of that company told us: “Accelerators serve a vital need, and are a great way for ambitious, albeit inexperienced, entrepreneurs to learn the ropes of starting a business. But for our stage of growth, we needed to work directly with the best people, hands-on involvement on a per-project basis without increasing our burn. We found this with Consilience Ventures, who helped us to identify what we needed and then connected us the fully aligned talent pool capable of driving those projects forward”.
If you want an example of the direction that the VC world is inextricably moving towards, I would point to Andreessen Horowitz (A16Z) in California. It’s not a VC in the traditional sense, but a platform boasting some 300 employees on LinkedIn. In the words of David Teten from Versatil VC: “A16Z gives portfolio companies structured support through an exceptionally large team, divided into market development, technical talent, executive talent, marketing, corporate development, policy, board partners and professors”. That’s the kind of pitch that would see any ambitious founder head A16Z’s way instead of trying their luck at an accelerator.
But the key message is that any VC can acquire this kind of plug-and-play platform. Most can become a platform tomorrow, if they want to. Consilience Ventures can be the platform that VCs build their own communities on top of, providing portfolio companies with active, engaged and aligned experts, all the way through the business value chain.
To arrange a meeting with Consilience Ventures, the start-up market network where all members own a stake, email contact@consilienceventures.com.
To arrange a meeting with Consilience Ventures, the start-up market network where all members own a stake, email contact@consilienceventures.com.
