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Accelerators pivot to next generation
THE startup ecosystem is at a tipping point, one where accelerators are starting to disrupt themselves.
Accelerators - an ecosystem stalwart that has helped many startups disrupt traditional industries - are pivoting to become "innovation enablers", say observers. While still instrumental in grooming startups, they have reached a new generation (see table) where they must change their form to keep up with the times.
Singapore's first accelerator, JFDI, said last week that it was ending its startup boot camp programme to evolve with the global startup ecosystem, citing also high costs and finite talent. Reactions to the event were mixed: some worried for Singapore's startup ambitions; others called it an evolution; and at least one questioned the gap accelerators fill. Nonetheless, there was significant praise for JFDI's accomplishments.
Thomas Gorissen, organiser of JSConf.Asia Singapore (reportedly South-east Asia's largest Web developer conference) said on Twitter that JFDI "defined entrepreneurship in this city". Ben Joffep, general partner at hardware accelerator HAX, said that the early 2010s was "Ground Zero" in Singapore and South-east Asia and JFDI had "pushed the cart harder than anyone", while Bernard Leong, head of Post Office Network and Digital Services at Singapore Post, said that JFDI's contributions would "remain part of Singapore startup's history".
Alex Lin, head of Infocomm Investments Pte Ltd (IIPL), told The Business Times: "JFDI has been the forerunner in our ecosystem since the start of our acceleration strategy (in 2014). They plugged the gap when our startups needed a structure to increase their chances of survival, catapulting them to their next stage of growth."
JFDI is due for a transformation, added Dr Lin. Its shift from accelerating independent startups to co-creating startups with corporates "fits into" Generation 5, a period he defines as marked by a decentralisation of knowledge and "co-opetition".
"The majority of the ecosystem stakeholders will possess knowledge or know-how in building startups. They will also have the desire to build better innovation-driven enterprises, which lead to better jobs, market revenue and return on investments."
Dr Lin said that next-generation accelerators will become "innovation enablers" - they will work more closely with corporates, groom more entrepreneurs and focus on uncovering customers' needs. If this is it, local accelerators appear to be keeping up.
Lawrence Morgan, CEO of Hong Kong-based accelerator Nest (which runs The Open Vault at OCBC FinTech Accelerator programme), said that it now offers more "bespoke" programmes for corporates, noting that the accelerator model has evolved from an education and marketing piece into an engagement tool for corporates.
"Corporates are looking to us more to help them source tech that is at a sufficient stage of development, so that it can be successfully piloted within a business unit over the course of a programme. Corporates want to be able to deploy this tech in the near term (6-12 months) to their clients."
Mr Morgan said that one of the main factors affecting this change is the current global economic climate; corporates are under pressure to develop tech that will have a positive effect on their bottom line. "The acceleration model can no longer just be considered a marketing tool."
NTUC Income CEO Ken Ng, when asked why the company opted for an accelerator programme (which it launched in August), said that it allows for co-innovation with entrepreneurial teams to quickly scale and commercialise ideas. "Business scalability and speed to market are essential for business success in this digital age."
Copenhagen-founded Startupbootcamp (SBC) too believes that there's a role for accelerators, but notes that it isn't the only means to corporate innovation. SBC FinTech Singapore managing director Steven Tong said: "Serial entrepreneurs and industry veterans may not benefit as much from accelerators, as they probably have the know-how and industry connections."
He added that JFDI's exit does not mean that accelerators here should start panicking. "It boils down to having the right business model to sustain operations and providing equal value to startups and investors."
SBC FinTech Singapore is primarily supported by corporates including CIMB, DBS, MasterCard and IIPL. Mr Tong said that its expansion plans for Asia prove that this is a right business model. They include a fintech accelerator in Mumbai next month, a digital healthcare accelerator in Chengdu in November and a fintech accelerator in Shanghai next year.
Entrepreneur First (EF), a London-founded firm that spots tech talent and grooms them into founders, is equally bullish about accelerators, even though JFDI chief Hugh Mason last week suggested that there could be challenges in transplanting the EF model from London to Singapore. Mr Mason had said: "Undoubtedly, bits will work immediately and others will need some adaptation."
In response, EF director Anne Marie Droste said that since EF's debut here in January, it has selected 55 individuals for its first cohort, some 40 per cent of whom have a PhD in computer science or engineering, and are leaving jobs at firms such as JP Morgan, Facebook and "local success stories" Garena and HOPE Technik.
Ms Droste said: "These statistics shows the appetite of some of the best tech talent here to want to build companies. That's partially due to JFDI's efforts in putting startups on the map, for which we're very thankful."
She added that the academic and corporate talent pool here are "amazing", and contrary to accelerators, EF does not fish from the same pond. "We actively encourage the best tech talent to consider starting a company, invest in them before they have teams or even ideas, and then help them build startups from scratch. That's literally a new pond."
On Monday, homegrown social trading app Spiking announced that it has raised S$1 million in seed funding from "capital market" investors such as Koh Boon Hwee (former DBS chairman), Loo Cheng Guan (of Valuetronics), and Douglas Foo (Sakae). The app allows retail investors to follow the "big investors" as they buy and sell shares on some 10 stock exchanges across the Asia-Pacific, and make the most informed investing decisions.
Spiking was among the 20 finalists for the 2015 SBC Fintech Singapore cohort, though it did not make the final 10. Spiking CEO Clemen Chiang said: "In retrospect, we were fortunate not to win! Feedback from the panel made us pivot from our original business model (which was based on the US stock market) and resulted in our end product, a more refined product."
Mr Chiang said that this attests to a key role of accelerators, that is, as validators, notably when founders are unsure of their business models.