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level: Week 5 (Incubation & Acceleration)

Questions and Answers List

level questions: Week 5 (Incubation & Acceleration)

QuestionAnswer
What is an incubator?Physical space for startups that offers the best environment (e.g., low rent, office supplies) possible to ensure startups hatch into healthy businesses
When and how did incubation start?In the 1960's landlords had empty factories they had to pay tax for every month so they decided to do something with it (first generation incubation)
How many generations of incubation are there?3
What defines incubation generation one?Using the empty spcae of a building
What defines incubation generation two?Realizing there's potential to increase the survival rate of startups -> offering mentoring and coaching, plus offering coffee etc
What defines incubation generation three?Policy makers and politicians became interested -> added to the portfolio of mentors and coaches into industry experts, accounting and financial advisors, marketing experts, investors etc (whole packcage)
What is a lurker company?Companies in an incubator program who don't integrate or share their knowledge with others
What's a zombie company?A company too poor to live but too rich to die, but it will survive under subsidized forms such as an incubator program (below market rent etc)
Definition incubator (as opposed to accelerator)?Non-competitive, non-cyclical selection 1-5 years Less intense education and mentoring Rent, service income
In one sentence, what is an accelerator program?A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo-day.
What was the process for the first (Y Combinator) acceleration program?Entrepreneurs were provided with a space -> worked intensively on their portfolio (sleep, eat, work in the office) -> well known guest speakers would come in (such as mr Zuckerberg himself) -> Demoday! (pitch event) -> gain investors
How did acceleration programs begin?First one was founded by Paul Graham (entrepreneur, essayist, philosopher), Y Combinator in 2005 ''summer founders program''
What are some example questions you may be asked upon application to an accelerator?-Six months from now, what’s going to be your biggest problem? -Who is “the boss”? -How does this become a billion-dollar company? -Tell us something surprising that has happened.
Name 3 design elements of a acceleration program1. Consultation intensity 2. Peer disclosure 3. Customized learning
What happens after the acceleration program is done, next possible steps (6 are mentioned in the slides)?1. Bootstrapping (move out, use return on sales, slowly grow business) 2. Incubation 3. Another accelerator 4. Merger and Acquisition (sell business) 5. Serier A fund (venture capitalist, investor) 6. Failure (60-80%)
How much do accelerators normally ask in return?Around 7% in equity
What are the flipsides of accelerators?-''Accelerators are venture capital in disguise'' (harder to obtain funding, can't exploit information asymmetri in an accelerator) -Rich vs King, the founder dilemma (give up part of the idea and value in order to develop it)
Definition accelerator (as opposed to incubation)?Cyclical, competitive selection Mentorship and educational components Culminating in public pitch event 2-10% equity stake
What is academic incubation and acceleration?Universities pay! (objective to foster entrepreneurship)
IXA/Amsterdam venture Studios are using a few policies similar to acceleration/incubation programs, which ones?-Funding/Access to capital -SSOP support -Entrepreneurship education -Univ. Commercialization -Entrepr. in residence