The following was co-authored by Columbia student Matt Walker
When you combine the energy and mindset of sports, technology and start-ups; an accelerator is born. Starting up a new business can be incredibly difficult. After all, it takes more than a great idea and a pocket full of dreams in order to disrupt markets and generate success. New entrepreneurs need access to capital, mentoring from experienced executives and structural resources in order to prosper. Over the course of the last decade, the number of accelerators operating across the globe has skyrocketed. According to Angelist, there was only one American accelerator in operation in 2005 – today there are 578 registered across the US. Accelerators and incubators assist entrepreneurs in the journey toward becoming successful companies in their own strategic way.
Accelerators are organizations that offer a range of support services and funding opportunities for startups. They tend to work by enrolling startups in months-long programs that offer mentorship, office space and supply chain resources. More importantly, business accelerator programs offer access to capital and investment in return for startup equity. Startups essentially ‘graduate’ from their accelerator program after three or four months — which means that development projects are time-sensitive and very intensive. The primary reason accelerators have exploded in popularity is because they are designed to provide the best of both worlds for both startups as well as investors.
At present, sports technology is in high demand across the industry, and its potential revenues are only growing. By fostering companies through this style of program, accelerators not only earn the opportunity to invest in those products, but they gain early access and insight into how that technology could revolutionize their industry – not just on the playing field or at the stadium, but every single aspect of sports.
The LA Dodgers and R/GA were the first ever start-up accelerator program managed and supported by a professional sports team. Having just completed its second wave of companies, the Dodgers and R/GA look for any technology startup creating products and services at the crossroads of sports, technology, and entertainment. This includes training and coaching services, smart stadium and mobile applications, fan engagement, 2nd screen and VR, e-sports, fantasy, ticketing, and CRM technologies. The program aims to leverage the full resources of the LA Dodgers, its ownership and partner organizations, and R/GA’s global network to provide our startups with access to industry partnerships, distribution channels, and strategic support. Several have now followed, as the new ownership group in sports looks to find accessible young talent and smart ideas that can continue to grow into ancillary businesses.
On December 6th 2016, the NFL Players Association launched ‘OneTeam Collective’ a business accelerator with six founding partners–Harvard Innovation Lab, Intel, Kleiner Perkins Caufield & Byers (KPCB), LeadDog Marketing Group, Madrona Venture Group and the Sports Innovation Lab. The NFLPA aims to create a pipeline that helps match current players with up-and-coming companies that want to partner with athletes for licensing, marketing, mentorship etc. Product ideas have already begun with a focus on fan engagement, data analytics, mobile fitness, sports nutrition, fantasy sports, gaming, or virtual reality. The collective is unique in that it will help startups obtain the rights to sports-related intellectual property in exchange for equity.
What’s more, the NFL is bringing together sports tech startups through a platform called ‘1st and Future’. On 22nd December 2016, the NFL released the details on its first annual Super Bowl startup competition, in Houston on 4th February 2017, the day before Super Bowl LI. Accepted companies will be put into three categories — ‘Communicating with the Athlete’, ‘Training the Athlete’, and ‘Materials to Protect the Athlete’ — pitching their ideas to a group of judges that includes former NFL players, entrepreneurs, investors, and medical professionals. Winners from each category will receive $50,000, two tickets to the Super Bowl in Houston, and acceptance into TMCx, a startup accelerator housed inside Texas Medical Center.
In general, the accelerator’s staff and teams of investors, coaches and innovators work with the entrepreneurs side-by-side through the process of crafting a vision, deciding stakeholders, flushing out a value proposition, developing a strategy and deciding on a financial investment plan. All of this work and preparation boils down to an event where the entrepreneur will present his or her innovation to potential investors in order to go through their first series of funding for their invention and business. The combination and wealth of knowledge, skills and experience that are brought together from all the different start-up companies and innovators creates an incredible network of communication. This knowledge-sharing process assists in stimulating the companies involved in the program, and helps them see new ideas and action steps they can take to better their own inventions through the eyes and suggestions of others.
At first glance, accelerators sound incredibly similar to incubators — and they are. But there are a couple of key differences.
An incubator is essentially an organization that provides startups with a shared operation space. Incubators also provide young businesses with networking opportunities, mentoring resources and access to shared equipment. This concept of a creative haven for startups has been around for a pretty long time, but rose to prominence in the 1980s after a large number of colleges and universities began to launch school-affiliated incubators in order to bolster entrepreneurship and employability. They generally won’t ask for equity in a company in return for access to funding or resources in the way that accelerators do. As a result, startups generally receive far less access to capital by joining an incubator than they could expect to receive from an accelerator. Incubators differ from accelerators when it comes to the growth curve. Incubators do not generally put a time stamp on their support programs whereas accelerators sponsor intensive, boot camp style programs that last only a few months. At the end of the day, no two businesses are alike and different startups are going to need different types of support in order to prosper.
Finally, sports investment ventures are increasingly being launched around the world and for those looking to participate in many cases, even the best of intentions may not end up in the best of places.
The rush for young, underfunded passionate people who have an idea and want to bring it to marketplace is the entrepreneurial dream. Everyone has the best, the brightest, the boldest, or so it seems to them, and will be willing to do whatever it takes to make that idea successful. And for sure there are many passionate, accomplished and successful people willing to help.
Unfortunately there are many in the business world who are also looking to use the “Accelerator” or “Shark Tank” concept as a way to mine good ideas and people who are not well-versed in business, and take those ideas, or even more importantly the human capital and man hours that went into building their ideas, and either overpromise or fleece those entrepreneurs. We see it all the time, and with over 350 SCHOOLS NOW OFFERIING SPORTS BUSINESS, the opportunity for many to pass themselves off as “experts” offering hope and assistance with no real substance, is somewhat alarming. So for those looking to go the Accelerator route, or the incubator or taking on mentors or giving up rights on intellectual property in exchange for “advice,” some things to consider.
-What Am I Giving Up? Before signing any entry form, be careful what you sign. Have a third party agree to read over whatever document is put in front of you. The last thing you want to do is lose any of the intellectual property you have created and developed without a firm understanding of the business model or mentorship you are entering in to. Just because an “advisor” is giving you advice does not mean he or she owns anything; you own your work until you are ready to part ways with some of it.
-Is A Fee For Me? While there may be some legitimate reasons for charging fees to enter a “competition” be very wary as to where these fees are going. We see a growing amount of “contests” or “accelerators” being formed by for-profit organizations posing as mentor groups. Those fees do nothing but accumulate cash for the person running them, with no guarantee of anything.
-Do Your Homework On The Mentors. Big titles and big promises don’t mean anything. Sometimes those with big titles are also getting a fee to just show up. If people say they are committed to assisting and to mentoring ask pointed questions and find out how and why they are involved. You need to know the value of their time so that they will commit it to you effectively. Also make sure they are of a fit for the industry niche you are talking to. Just because someone is a success at player evaluation doesn’t mean he or she knows how to balance a budget or raise additional capital for your business. Ask very pointed questions and know who you are talking to.
-Look Carefully At Who And What Are Being Offered. Carefully understand what the value proposition is not just for winning but also for entering. Who is in the room, and how exactly is the payoff, be it case, expert time, office space etc. going to be distributed. Is it a first-time event, or is it being done multiple times. If it is not the first talk to one of the winners, or even the losers, from previous years. Shy and quiet will not get you success, it will get you trouble.
-If It Sounds Too Good To Be True It Probably Is. There is no shortcut for hard work and overnight successes never happen overnight. That is fantasyland. Failure is also a bug part of the road to success, so being able to take criticism constructively, listen to those being toughest on you and meld outside ideas into the process is key for success. If you are not getting those things from whatever the mentoring situation you are going into; if you are getting a warm cup of milk and a pat on the head with a trophy at every turn, or you are not getting reasonable answers to questions like “Who will mentor me?,” “When do you Think we will see some constructive results from our work?,” and more importantly “What can we do to improve?” you may be in for a long ride, and one that may be fraught with pain and disillusionment.
So there you have it. There is some great work being done to help bring a new generation along and help us all learn. However there are also a great number of people passing themselves along as experts only to get access to ideas or man hours at a very cheap and disingenuous rate. The most important capital you have is the idea, the passion, the creativity and the business sense; it cannot be wasted and has to be used at a very smart price.
Accelerate at the right pace, just don’t crash along the way.