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Startups from scratch as London group funds people, not plans
[LONDON] Entrepreneur First, a London-based sparring group for startup companies, seeks to get ahead of its US peers by catching technical talents before they even know what to build or to whom to sell it.
"The idea is to get them before Y Combinator does, so that you don't only get the second best," said Philip Wilkinson, a partner mentoring startups in the Entrepreneur First program, referring to the California-based financier which has seen success in early involvement in companies such as Airbnb, Dropbox and Reddit.
"If you're good enough to walk into Google, don't," says a sign next to a pitching stage set in a central London room filled with potential investors preparing to hear nine startup teams formed by people who mostly didn't know each other six months ago and for a large part had no business idea to speak of. Today's display includes an affordable robotic arm with compatible software, 3D medical imaging for surgeons and algorithms detecting insider hacking.
Entrepreneur First seeks to find the best technical talent, such as computer scientists and engineers, and then bring them together to see who gels with whom and what they come up with, according to Alice Bentinck, co-founder of EF.
"We're not trying to build the next Twitter or Facebook, we know that time passed," Mr Bentinck said in interview on the sidelines of the event. "We're looking for technology that's defensible, preferably patentable. Some of the world's best engineering schools are in Europe. Why not use that as a competitive advantage?" Programme graduates have raised more than US$40m of external funding since the first pitches were made in 2013, Index Ventures and Octopus Ventures among financiers. The programme alumni list has names such as video compression developer Magic Pony Technologies, advertising technology platform Adbrain and bicycle light maker Blaze.
Entrepreneur First provides accepted candidates a monthly stipend of 1,100 pounds (S$2,379.60) for the first three months, followed by a 10,000 pound investment to the company in return of a 8 percent stake. About 30 per cent of entrepreneurs entering a program drop out without creating a company. Even with this seemingly risky proposition, EF raised 8.5 million pounds in July to finance its people-first approach for the next three years.
During initial screening, "one of the questions we ask is 'what have you built in the past?'," Mr Bentinck said. "It's so easy now that there's really no excuse not to do that." In recent years, the accelerator model as well as venture capitalism itself has taken new shapes. Examples include pre- accelerator programs such as Startup Weekends or Startup Next, which teach prospective entrepreneurs about idea development and finding customers; or Germany's Rocket Internet AG, which specializes in cloning business models to untapped markets, providing initial marketing, design and management know-how.
Silicon Valley-based Founder Institute, which also takes in applicants lacking a team or a project, takes 3.5 per cent stake in exchange for 1,000 pounds and a four-month part-time curriculum. It's expanding outside of the US to places such as Mexico, India, Egypt and Finland and started its program in London earlier this year. Even so, EF operates on a unique model with its focus on technical individuals before they have set up a company, according to co-founder Matt Clifford.
"The accelerator model is pretty broken," said Mr Clifford, who worked as a management consultant along with Mr Bentinck before establishing EF. "We didn't scour the world for these companies, we scoured for the individuals."