The accelerator to venture capital model is well established and is seen as the de facto path for startups to follow. However, for emerging tough technologies such as robotics, medical devices, and wearables this tried and tested model is not the best fit to fuel growth. If we are to realize the potential of technologies such as robotics then the investment ecosystem needs to evolve and embrace new models to help stimulate and support all startups.
It is important to recognize that the accelerator to venture capital route has been an important catalyst for growth and innovation in the US particularly over the last decade. It has played a key role in helping fuel the growth of software companies including well know unicorns such as AirBnB, Dropbox and Stripe, among others. For less capital-intensive startups, the accelerator model has been proven to be very effective. However, for startup organizations requiring specialized and expensive equipment such as robotics, another type of support ecosystem is needed to help them flourish.
There is currently a lot of hype around emerging technologies like robotics and AI, and startups in these sectors need to seek out support that will help make their vision a reality. For robotics startups, they need to find a partner that will provide the business acumen to help package and productize their technology vision and fuel their growth. In order to do this they need a partner that understands the challenges of developing both hardware and software.
One of the key issues with the accelerator model is the limited time period during which it provides help. For example, the traditional accelerator provides support for a three or four month period. This short-term outlook does not support the needs of a robotics startup as the limited timespan does not allow for the development of a prototype or a minimum viable product (MVP). Just as critical is the lack of specialized equipment and tools necessary to develop the hardware.
So what should tough technology startups such as robotics look for?
Rather than looking for an accelerator to support growth, robotics companies should look for a ‘startup escalator’. These escalators provide a combination of shared, specialized equipment and labs, co-working space, plus an extensive virtual network of mentors, investors and other specialized support structures. At their core they provide the expertise and equipment to go beyond software and create successful commercial products.
A startup escalator provides:
- A network of specialized investors, corporate partners and service providers
- Access to specialized equipment and infrastructure
- Deep industry knowledge
- A rent or membership-based model that does not have a fixed time period
In essence startup escalators are always on, you just step on them whenever you are ready to move from one level to the next. An escalator also provides the support needed to allow robotics startups to move beyond the validation stage to commercialization and revenue generation. By providing specialized equipment this removes a huge barrier to success for robotics and other tough technology startups.
Investors need to accept that the typical returns over a short period of time for software startups are not applicable in the robotics space. However, successful robotics companies will generate significant revenues once they build out an installed base, which will allow those companies to sell services and software on top of the hardware components.
The emergence of the startup escalator is a significant addition to the startup ecosystem that will hopefully enable tough technologies including robotics, to thrive and flourish in the way that software and apps have over the last decade. Many of these fledgling companies have the potential to transform lives on a global scale and to provide substantial returns to their investors. If society is to benefit from robotics and other tough technologies, then the startup ecosystem needs to evolve and embrace the escalator. One size does not fit all!