Business Incubator Series: Troy Henikoff, Excelerate Labs – Chicago, Illinois (Part 4)

By guest authors Irina Patterson and Candice Arnold

Troy: So, by all objective measures, [last’s year program], it was a success. There is a lot of energy and passion in the Chicago marketplace and we’ve decided, obviously, to continue. We have funded the program for the next three years. We raised a fund for three years. We are in the process of admitting our class for 2011, which will be 10 more great companies to shine that bright spotlight on and show what Chicago can do.

Irina: When does the class of 2011 start?

Troy: We try to keep things as simple as possible. Our classes are June, July and August. Our first day is June 1. Demo Day is August 31. In between is three months of really hard work.

Irina: When you ask for applications, do you have any industry preference?

Troy: We’re looking for companies that will get the most return on Excelerate. We’re looking for those companies we can accelerate the most in terms of their growth over the course of those 90 days. In general, that tends to be technology-based companies.

As an example, in the Midwest, there’s a big push and a lot of green tech going on, whether it’s photovoltaic, wind manufacturing … and those are great businesses. But the reality is we’re not going to be able to help move a company that manufactures a wind generating windmill very far along in 90 days. We definitely have a bias toward Internet technologies or businesses that leverage Internet technology as a core piece of their business.

Irina: At what stage of development would you suggest companies be when they apply for your program?

Troy: We have a fairly wide variety. Last year we had some companies that had no revenue and hadn’t even finished what I call working prototypes, certainly not minimum viable products. We had another company that when they came in, they had a run rate of almost $1 million in sales. There’s definitely some variety there.

Generally, we’re looking for companies that have a proven concept. They have some indication of traction. Again, it’s harder to have some indication of traction if you’re not out in the marketplace, yet. There are other ways to prove that through having done some real market research, having done some focus groups, those sorts of thing.

We’re not as concerned about the stage. We even had some companies last year that had raised some significant angel funding, mid-six figures of angel funding already, but we felt we could help them a ton in moving their businesses forward in those 90 days.

Irina: What would be the ideal company that could benefit from your services?

Troy: An ideal company would be a great team. We focus a lot on team. We want smart, passionate, coachable people, a great team with an awesome idea so they have a great business model. We obviously prefer business models that have a clear path to monetization. In terms of stage, they’re early enough that there’s still lots of opportunity to mold the business model, but they’re far enough along that there are indications of traction and market acceptance.

My average company would have the minimum viable product out there. They have a lot of work to do. They maybe have a handful of customers who really love what they’re doing, but they need a bunch of help in market position; understanding their product market fit; understanding how they’re going to take this to market and scale it in terms of what’s real value proposition there; who is the customer who’s willing to pay; how much; pricing, positioning, all of those things. But they’re poised for success.

If we get those things right, and it’s a scalable business – most of these businesses aren’t going to be Internet based – but if we do it right, they can really take off. We can start showing some of that traction before Demo Day, so when they get on stage at the House of Blues, investors will be pulling out their checkbooks, ready to invest, based on what they’ve seen in actual traction.

In the first six months, the entrepreneurs had received $7.2 million cumulatively and created 65 net new jobs. That’s just in six months. The trajectory is good. We have every reason to believe they’re going to continue. I know most of the companies are in the process of hiring as we speak. I know a couple have raised more money since that six-month point. They’re moving along on a pretty aggressive trajectory.

This segment is part 4 in the series : Business Incubator Series: Troy Henikoff, Excelerate Labs - Chicago, Illinois
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