Startup Accelerators Adapt to Pandemic Changes

Startup accelerators have emerged as significant players in the entrepreneurial landscape, yet, like all sectors, they’ve been compelled to adapt substantially in response to the pandemic. Remarkably, these programs haven’t merely adjusted to the new circumstances; they appear to be flourishing within the evolving virtual environment.

I consulted with the leaders of three accelerators to explore the challenges and opportunities arising from these recent changes. David Brown is the founder and CEO of the globally recognized accelerator Techstars (with plans to step down in 2021). Cyril Ebersweiler serves as a venture partner at SOSV and is the founder of the HAX hardware accelerator. Daniela Fernandez established the Sustainable Oceans Alliance and its relatively new Ocean Solutions Accelerator.

TechCrunch: What initial hurdles or advantages did you encounter when the pandemic began?

Brown: I would describe the situation as appearing calm on the surface while requiring considerable effort underneath.

The rapid transition to a virtual format in March was challenging, but our global presence proved beneficial. Having previously navigated lockdowns in Italy and Singapore, we were better prepared. Furthermore, we had already implemented a virtual program for four years.

Image Credits: Techstars

Ebersweiler: Activities requiring physical interaction and hands-on examination became considerably more difficult. People generally prefer a tangible experience. We now conduct virtual tech showcases where participants can present their work for feedback, which has proven effective. Pitching sessions also translate well to an online format.

Interestingly, participation and feedback levels seem to be higher online than in person, a rather unexpected outcome. Perhaps the lack of direct confrontation encourages more candid contributions.

Fernandez: Our program’s intensity has historically made it difficult for founders to simultaneously manage their startups and fully engage in a demanding curriculum. This year, the virtual format appears to have boosted overall founder engagement. Eliminating commute times in busy urban areas allows founders to dedicate more time to workshops, mentor connections, pitch preparation, and other crucial activities. Everyone benefits from increased flexibility and a more relaxed atmosphere.

What about the value of the in-person experience? Is that aspect diminished in a virtual setting?

Brown: Accelerators traditionally foster a shared environment where participants share experiences, meals, and even work through the night together. Replicating that dynamic virtually presents a challenge. We’ve implemented tools to simulate these interactions, such as icebreakers and virtual office layouts.

Fernandez: While nothing truly replicates an immersive experience like a week-long expedition, a sense of community and strong relationships can still be cultivated. We’re building these connections through consistent, well-structured programming. We also introduced weekly and daily feedback forms to address founder concerns and a “Founder Connects” initiative for confidential, one-on-one conversations outside of the core curriculum.

Ebersweiler: While the physical experience is valuable, some individuals were also experiencing “fear of missing out.” The internet, of course, allows for a broader reach.

Investors continue to prioritize meeting founders and examining hardware, which remains possible to a degree. However, even investors making smaller investments, around $200,000, are now directly contacting customers. Previously, customer interviews were reserved for larger seed rounds, but now they are becoming integrated earlier in the process. This shift will likely lead to increased automation and a reduced emphasis on personal connections in the market.

Image Credits: TechCrunch

Has the shift to virtual delivery yielded any unexpected benefits or improvements to the program?

Ebersweiler: It’s compelling startups to prioritize thorough documentation. Strong collaboration exists between our team and individuals involved in supply chain, engineering, and design. However, maintaining momentum requires exceptional discipline.

HAX is inherently process-driven, and that structure is essential. We’ve focused on optimizing time management and process management, utilizing tools we’ve developed internally.

In areas where we lacked remote capabilities, we’ve been actively developing solutions, such as an internal Q&A platform resembling a technical Quora, and web applications for purchasing, payment processing, and approvals.

Notably, the first six months (through midsummer) have been record-breaking for Indiebio, HAX, and our entire portfolio, signaling positive market trends.

Fernandez: It significantly expands options and promotes inclusivity. As a global community, SOA has always had access to exceptional speakers and mentors, but their physical presence at our two-month program in San Francisco was not always feasible. The substantial cost of living in one of the world’s most expensive cities also presented a significant barrier for founders.

Therefore, we were already moving in this direction, and the virtual component will likely become the foundation of these programs.

A Zoom call with members of the Ocean Solutions Accelerator attending. Image Credits: Sustainable Ocean Alliance

Brown: Demo day has experienced a substantial positive impact, attracting a significantly larger audience. We’ve seen a threefold increase in attendees and a fourfold increase in investor participation. Having run demo days for years, we’ve never simultaneously managed 17 events. Developing the technology to showcase 17 concurrent classes was a valuable learning experience.

I’ve observed, anecdotally, that many founders in our current cohorts express gratitude for the virtual format, as it allows them to participate while maintaining remote work arrangements and family commitments. They wouldn’t have been able to travel to locations like LA, NY, or Berlin otherwise.

Video conferencing was available before the pandemic, but now it’s become commonplace and intuitive for nearly everyone.

Consider a program participant in Chicago needing specialized technical guidance. There might be an expert in Berlin, also part of a Techstars class, who can provide that assistance. Previously, arranging such a connection would have been difficult. Mentorship was traditionally an in-person experience, but now, why should a Chicago company limit itself to Chicago mentors? The geographical barrier has been removed.

Has there been any discussion or consideration of altering the program’s contract, equity structure, or overall framework?

Fernandez: Initially, we were concerned that the health crisis would diminish engagement. However, we actually saw an increase in applications. This demand reinforced our commitment to continuing our work. Our decision was driven by our community’s expressed need for our support, making a step back unacceptable.

This represents the beginning of a long-term partnership with these companies. We continue to support companies from our first cohort.

Currently, and particularly this year, we must recognize that virtual programming is equally, if not more, valuable than in-person experiences. It serves as our primary means of connection, learning, and network development, offering more opportunities for immediate feedback, rapid interaction, and new systems for network support with instant introductions, along with the promising potential we’re witnessing in our current cohort: global reach.

Brown: My observation is that the most successful founders remain focused on building their businesses. When I speak with them about the pandemic’s impact, they often mention having a dedicated home office. They value access to capital, partnerships, and acknowledge the inability to socialize in person, but I don’t believe it significantly diminishes the program’s value. We’re still providing them with the resources they need.

However, corporate partners accustomed to in-person interactions are adapting to virtual meetings.

Ebersweiler: Not really. People recognize the value we provide regardless of the circumstances. Everyone anticipates that HAX will invest its resources, so there hasn’t been a need for change at this time. We’re satisfied with our model… but we operate somewhat differently in terms of investment. Startups have been pleased to receive initial funding and proceed. If this trend continues, I anticipate stronger syndicates forming in the future—potentially, will the cost of bringing a product to market increase?

It’s inherently challenging for startups to succeed. I believe that with the two crises we’re currently facing, you need to be significantly more resilient than you did in 2007 or 2008 to thrive.