It seems like every day another agritech accelerator is launched. Support for early-stage innovators is necessary, yet with all these new programs emerging, few players within the innovation ecosystem have had time to reflect on what is working and what is not.
James Bell-Booth, program manager at Sprout, New Zealand’s first agritech accelerator, agrees that “there has been quite an explosion of programs, and it will be interesting to see who sticks around.”
Sprout, which is owned by business accelerator BCC, launched earlier this year and really completed its first cohort. Three graduating startups successfully raised a total of $1.25 million in funding, mostly from angel investors and funds including as Punakaiki Fund, K1W1, Enterprise Angels, and BCC’s own MIG Angels.
There are few things Sprout did, or plans to do, to differentiate the program and effectively support startups within this increasingly crowded and confusing space.
Reflecting on the process, Bell-Booth has been able to make improvements to the agritech accelerator program and looks forward to launching the second cohort in the coming months.
Collaborate Nationally & Globally
Sprout is setting up a global agritech accelerator partner network with others such as The Yield Lab, Thrive, and AgLaunch. Bell-Booth says the goal is to, “expose startups quickly to other farming systems and other ways that their technologies could be applied in different markets, as well as to connect them with potential channel partners, investors, and collaborators.” The details of this partner network are still getting worked out, but it will likely start as a virtual resource for companies in the respective cohorts. Startups will be able to share their information across programs, and potentially leverage the mentorship network of other accelerators. Nationally, Sprout already has a network of agritech companies, farmer groups and agritech investors that aims to give startups quick access to market insights, potential channels, and development partnerships.
Tweak the Traditional Accelerator Model
Early on in the design process, Sprout hypothesized that an accelerator dedicated to supporting agritech startups would need a slightly different format. Traditional accelerators run a three-to-four-month curriculum and require startups to participate in person. In contrast, Sprout’s curriculum runs for six months, and startups do not have to relocate.
Bell-Booth explains that having a longer program enables startups in the cohort to conduct field trials or run pilots with growers. “We felt that a three-month, in person approach wouldn’t work for all ideas, especially outside of software,” he said. A few startups in Sprout’s first cohort were able to set up trials, and many were able to spend time working and talking with potential customers.
The Sprout curriculum features both remote and in-person segments across four phases. Each phase focuses on a specific topic and begins with a block course where the entire cohort convenes in person. During the block course, guest speakers give lectures and hold question and answer sessions. Then the Sprout team works with each startup in the cohort to identify action items and goals that will guide their activities over the duration of the phase. During the first phase of the curriculum, the cohort builds team cohesiveness and defines a strategy to achieve market validation.
The partially remote curriculum was a success and Sprout will be using this format again. But, Bell-Booth adds, the remote format “requires that we select companies with enough self-motivation to take advantage of this setup.” Startups need to hold themselves accountable for achieving their milestones throughout the program.
Success: It’s Not All About Funding
While many accelerators focus on helping their cohort to raise capital, Sprout acknowledges that this metric may not be appropriate for all startups. “It’s important to be clear about what you as an accelerator program team are trying to achieve. You have to define what your values are, and stay true to them,” according to Bell-Booth.
Rather than exist to create deal-flow for an investment fund, Sprout “seeks to add value to the cohort of companies in a hands-on kind of way…getting our hands dirty in startups and helping them, whether or not they end up raising money.”
Sprout’s advisory board helps them to focus on building business plans that are true to the opportunity and creating companies that are set up for long-term success. They take a broader approach to success, including IP strategy and team dynamics, as well as market validation and attracting capital. Bell-Booth gave a specific example of one company that built and validated a minimum-viable product, but because of their timing (i.e. it was the wrong season), could not launch at the end of the Sprout program.
“Instead of encouraging them to raise capital when they graduated, we helped them to set up trials. Then, in a few months when their trial converts people to customers, they will try to raise,” he said.
This approach is partially driven by the investment climate in New Zealand. According to Bell-Booth, “it’s really small here, and there are only so many investors. There’s investor fatigue, especially when everyone tries to raise $1 million when they don’t really need it or aren’t ready.”
Sprout does include the amount of capital their cohort raises as a success metric, but it does try to make sure startups are only raising money when they actually need it.
Emphasize Domain Expertise
Sprout has found that a key to success for agritech startups is having a domain expert on the team. Embedded domain experts can help to drive strategy and make sure the company is solving a real problem in a way that will add value to real customers. An expert also lends credibility to the startup.
“Having a customer in the development process gives investors confidence that the team will be capable of building the product,” said Bell-Booth.
To help future cohorts build successful teams, Sprout is building out its network. The goal is to find farmers who can step in as co-founders and help companies ensure they have customer representation on their team.
More than Mentor Network
Most accelerators tout the benefits of their highly qualified advisors and experienced network of mentors. However, there remains a lot of ambiguity around the terms “mentorship” and “advisors”, and it’s not always clear who these experts are, what value they add, and how much time they will dedicate to the startups they work with.
At Sprout, each startup is allocated a lead mentor that works with them throughout the program. Mentors help startups build a project plan and determine the associated cash flow projections for their plan, and hold the team accountable for realizing their plan. Mentors may travel with startups to talk to customers or investors, or set up trials. Bell-Booth highlighted one case where the Sprout mentor was able to provide a third-party perspective during a conversation with a potential customer to make sure the startup was “hearing what they needed to be listening to” and incorporating the feedback into their project plan.
In addition to in-house mentors, the Sprout cohort can call on a network of external mentors to help answer specific questions in their area of expertise. For example, startups might need help with sales and marketing, product development, or researching a particular market segment. High-quality mentors have busy schedules, so Sprout only reaches out to external mentors when the startups “know what they want to ask, and know that the mentor is qualified to answer their question.”
Startups may meet with mentors in person, over video conference, or for a coffee if they are close by.
There were some companies that didn’t raise capital, but the program still had an impact. One startup in the first cohort completed a licensing deal with a corporation. According to Bell-Booth, Sprout “helped negotiate a licensing agreement because the founders didn’t want to raise capital. We feel it was a huge success because the startup achieved their goals and Sprout was able to help.”
The remaining startups in the cohort are still working on product-market-fit or waiting for the results of field trials. Sprout is still closing their second round of investment, but Bell-Booth says that all of the first round investors are coming back. In fact, he says, “if anything we might have too much interest.”
Interested startups can register for the 2016 program here, ahead of an August 31, 2016 deadline.
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