Like the perfectly in-tune members of a symphonic orchestra, or graceful ballet dancers on pointed toe performing in Swan Lake, real innovation breathes effortless class and synergy (despite the years of behind-the-scenes grit determination and practice to get there!).
Innovation is the result of a relentless push to solve problems and make people’s lives better. When the innovators innovate, they apply tenacious mentorship, investment, and sharing of brainpower to improve life as we know it.
But even the greatest thinkers need support and funding if they want to see their inventions succeed.
Accelerators have been responsible for launching some of today’s most infamous unicorns, like Reddit, Dropbox, and Airbnb. In fact, they have become a major player in the current startup landscape, taking credit for one third of all 2015 US startups that raised Series A capital. Competition to be included among the accelerators’ elite, and companies like TechStars, is fierce, due to the mentoring support they provide and investor attention they attract.
“Accelerators are an integral part of the startup ecosystem and attractive to VCs as a source of deal flow,” says Brad Holden, Partner at TomorrowVentures. “The top accelerators help entrepreneurs validate the market for their idea by providing them mentorship, advice and practical training on technical and business topics. Teams that have gone through a top accelerator program are generally better positioned to both fundraise and scale their company.”
Investing becomes easier
Accelerators don’t just push their chosen racehorses to succeed; they make businesses easier to invest in. How so? By doing some of the heavy lifting for investors and vetting out the companies likely to triumph or fizzle out. Until now, their main role has been to keep a potential winner on track, ensuring VCs stay happy in the process. Win/Win. But lately, pressure has been mounting for accelerators to do more; to innovate in the same way that they demand their startups to push the envelope. This is where the fireworks begin in earnest, as the innovators step up their games to the next level.
One of the biggest challenges faced by accelerators are the limitations associated with investing in traditional accelerator programs. Mainly, that the VC investments fall far short of being liquid. But that’s all starting to change. Digital Arts Media Network (DAMN), the first Public Accelerator-Incubator (PAI) was developed by Ajene Watson, LLC. They recognized the lack of liquidity associated with investment in traditional accelerator programs and starting working on a model that would help bring more startups to life, making investing easier all round. After recognizing a problem from within, very often innovation follows close behind.
Businesses become more accessible
Until now, investing in well-vetted accelerator portfolio companies was almost entirely exclusive to angel investors with deep pockets. These investments were locked for years, given the amount of time it takes for ROI to mature. Angel investors aligned with leading accelerators to gather the cream of the startup crop, and then brought entrepreneurs together with venture capitalists as mentors. This limited risk, giving the startup expert guidance in its early stages, and investors the chance to oversee developments.
It was a small and exclusive club that reaped the benefits when a real winner appeared. Until now, getting in on these kinds of investment opportunities hadn’t been an option for the public at large. “We believe Mom-and-Pop investors, with little capital to invest or connections to leverage, should have an opportunity to participate in the same vetted startups as angel investors; fostering greater wealth through greater access.” says Ajene Watson, CEO of Digital Arts Media Network.
The future of investments might see small-time investors joining the same investment pool as larger backers, funding the same well-vetted startups, and making the same kind of returns. Thanks to innovation trends, everyone may have access to high-growth, high-valued, early-stage companies. Breaking with the traditional elitist investment model.
ROI gets faster
And the innovation continues, speeding up ROI and allowing investors to withdraw their profits earlier. With typical accelerators, private investors had to wait as much as ten years before their investment matured to liquidity. During that time they had no choice but to wait and see if their investment proved to be a success. If public accelerator innovations take hold, they may offer return on investment more quickly, including access to equity stakes in a public syndicate portfolio of startups, which may also allow investors to hedge against startup equity.
According to Ruben Porras, a Techstars Alum, Co-Chief Architect of PAI and Board Advisor to Digital Arts Media Network, “The investment community has never been a space for all people, until now. True access to wealth and financial prosperity through investments has never been within arm’s reach for the majority of people in this country… finally, microcap investors will… have the confidence they’re investing in solid teams and technologies.”
Startups go the distance
Flash in the pan: The Public Accelerator-Incubators also need to make profit, and ask startups for an equity stake in exchange for participating. But when a PAI takes on equity, they in fact have a real vested interest in the long-term success of the company. By following the PAI’s innovation model, it increases the chance for funding, which in turn increases the chance for success. And that seems to be a good thing all around, shaking up the way people invest in startups and making sure that startups go the distance.
By giving angel investors quick access to investment liquidity, Mom-and-Pop investors a chance at success they’ve never had before, and startups access to a more profitable capital model, this is one innovational masterpiece that’s a joy to watch.