Over the last few years of growth in Accelerator or Incubator programs, the overall media coverage of early stage tech startups has increased in Canada. The lack of coverage before the programs existed made media coverage a metric of success. For any entrepreneur support program to be relevant there is a requirement to be mentioned in the media resulting in the Alumni Success Metric as a key metric used to identify success of any program.
I think we need to find a better way to measure these programs and the effect on the problem they are solving.
As more and more programs compete on this metric they spend more on marketing to rise above the others which results in an increase in the costs to deliver a program. I believe competing on this metric can foster animosity between programs and hurts collaboration between a large number of extremely talented people.
What is the problem?
Founders are taking advantage of everything offered to them (as they should) which results to this common scenario in Canada (not based on any particular company).
- Founders went to University of Toronto (and/or Waterloo and/or Ryerson and/or WLU and/or insert school here) and worked out of Banting and Best (and/or the Garage and/or the DMZ and/or any coworking space).
- Someone else on the team took a pre-accelerter or some other community education program.
- They are clients of MaRS and Communitech and Halton Innovation and…
- OCE has awarded them a grant., MaRS IAF will invest in them, IRAP might have had a role.
- They might get into another accelerator program before they finally get a few key investors at the table and start to grow.
When they get VC funding or something big worth a media push, what happens? Up to 10 organizations want to be listed and each of them release a story about how proud they are. Few if any list the other organizations or programs or people that helped (because the list is huge).
How this may hurt entrepreneurs?
Funding and product announcements aren’t success, they are a milestone that is blown way up in the local media as a result of everyone getting excited (excitement is good, celebrate the good things). It is possible that the positioning of programs media releases could confuse the market that the company needs to reach.
That said, the media coverage froth is likely localized to Canadian media so it probably has no effect on where the companies market likely is: the United States.
This intense market for credit can be frustrating for everyone who delivers programs. In reality it takes a community to raise a startup. From funders that have done it before to programs designed to focus attention, lower the risks associated with getting started, and build peer groups. We should all celebrate the entrepreneur and collectively be excited there is so many people out there helping them.
The metric is good for something.
Where I think the Alumni Success Metric does work is that helps inspire new founders. Knowing that good things have happened for those that come before them in the same program is the same metric Higher Education uses to recruit undergraduate and graduate students.
How do we avoid the zero sum game around credit?
The metric is not useful for defining the success of any program as most of the support happens in parallel in accelerators or incubators. It is extremely difficult to know what helped and when and where or what made the difference. It creates something for programs to compete over when they should be collaborating.
The stories about companies growing shouldn’t be “x program’s y company has done z” but instead be about how the company achieved this milestone and all the people that helped along the way.
A metric needs to exist that can demonstrate how effective a program is without having each program battle it out with marketing.
Step #1 is that we have to stop thinking of service organizations or accelerators or incubators as startups. They aren’t. They are philanthropic organizations offering a support group and networking services for founders, funders, and service providers.
The main goal is not to build sustainable models around these organizations (how can most realistically generate revenue outside of an education or philanthropic model?) but build a sustainable ecosystem that doesn’t require the current level of philanthropic support. Every philanthropic organization should hope that one day the problem they are solving is no longer a problem. That should be no different with supporting entrepreneurs and everyone should work together to achieve that outcome.