Bennett’s design background shaped his mentorship of the startups under his tutelage.
“I know a little bit about engineering,” Bennett said. “I know a little bit about human factors and user-experience design. I owned this design firm for years in Greensboro that had clients like Volvo Trucks. These are skills that entrepreneurs need to start companies. Building websites — that’s something I can do. I can help entrepreneurs come up with a concept and illustrate it. I’m not the only one who believes that design adds value to companies.”
Urban Offsets also participated in a modified accelerator program, but in a roundabout fashion the experience helped them secure funding. As a “first-step accelerator,” Groundwork Labs in Durham doesn’t provide funding to startups, while offering programming free of charge to participants.
Urban Offsets applied for an NC Idea Grant in the fall of 2014, but didn’t initially make the cut, just before landing a spot in the Groundwork Labs accelerator. Immediately after completing the program in the spring of 2015, founder and CEO Shawn Gagné applied again and secured the grant.
“It was critical; our success was directly determined by our participation in that program,” Gagné recalled. “I was by myself at that point with untested ideas. Although I knew what I wanted to do, I wasn’t sure how it would work. Through the accelerator program I was able to scientifically test my theory, to iterate. Why isn’t this working the way I thought it would? What would work instead? Accelerator programs will continually force a participant to test and re-test and learn from mistakes.”
The timeframe at Groundwork Labs was also more elastic than the traditional model.
“The official accelerator program I believe is eight weeks long,” Gagné said. “Like any good accelerator, if you’re making recognizable progress and showing coachable behavior you’re able to stay on. That’s why I was able to stay on through the spring of 2015.”
Through the accelerator, Gagné learned that his initial assumptions about the market were incorrect.
“One of the first assumptions we made was that sustainable for-profit companies would be the first ones purchasing our carbon offsets,” he said. “We interviewed Volvo and Burt’s Bees. We found there was a disconnect between what I thought they wanted — community-based offsets — and what they wanted. It didn’t matter as much to them where the offset came from. We had to pivot. We had to understand the marketplace a little better and find a way to serve it. All this stuff is self-learning.”
Gagné also came to realize that the voluntary market for carbon credits was different than the compliance-based market. “The standards in the voluntary [market] are very hard to work with on a small scale,” Gagné said. “We tried to use the California standards. They’re untenable at a community level. They’re too expensive. There’s no way we could bring the community up to them.”
Urban Offsets wound up collaborating with Duke University’s Carbon Offset Initiative to develop a new standard, and tested it in Wilson, NC.
While Joel Bennett was running the Triad Startup Lab in Greensboro, an entrepreneur named Peter Marsh cofounded Flywheel Coworking in Winston-Salem with Alicia Hardin and Brad Bennett (no relation to Joel) in 2014. The co-working space has signed up 130 member companies, including 80 tenants.
“We have created over 20 companies since we founded the co-working space in September 2014,” Marsh said. “A lot of those companies were founded by members, from the accelerated serendipity you get from the co-working space.”
Like HQ Greensboro, Flywheel hosts a seemingly endless stream of programmed events designed to push out information, promote collaboration and bring entrepreneurs, investors, designers and other members of the innovation economy into contact with each other.
“On any given month we’ll have around 400 people attending our curriculum — all designed to stimulate the ecosystem,” Marsh said.
From the start, the goal of Flywheel was to launch an accelerator, and to raise capital to support the startups that went through the program.
Marsh said he and his cohorts at Flywheel hold the theory that “there are three essential ingredients for a start-up ecosystem.”
The first ingredient is possessing a multitude of ideas. “Secondly,” Marsh said, “you need a very disciplined and structured method for helping entrepreneurs get from ideas to repeated revenue; that’s what accelerators are for.”
The third ingredient is capital investment. “The best accelerators are funded; that’s the fuel that makes them go,” Marsh said. “The investment accelerators attract the best of the best.”
Marsh and his partners at Flywheel leveraged their connections to raise capital for what would become the New Ventures Challenge Accelerator. Marsh is a vice president of the architectural firm Workplace Strategies and Brad Bennett is the cofounder and “chief firestarter” of the Wildfire marketing and advertising agency. Their track record of success with their respective companies gave them the credibility to ask for money, Marsh said.
“We went to not established wealth, which is who people usually go to,” Marsh said. “We went to the wealth creators who are developing wealth. We used some demographic tools to figure out who our potential demographic might be. We went to them and we got immediate traction, and they said, ‘We’ve been waiting for this.’ We were able to put together a fund in three months.”
Marsh said the partners at Flywheel assembled the fund through 200 one-on-one meetings over breakfasts, lunches and dinners, adding that they’ve created five sequential funds ranging from $350,000 to $500,000 per year that the New Ventures Investment Club plans to deploy through 2020 with the goal of creating 30 to 40 new companies.
“Our playbook, our principle, is that startup ecosystems do not get energized until the local entrepreneurs put their shoulder to the wheel,” Marsh said. “You’ll hear quite a lot of talk from universities, the Greensboro Partnership and the Winston-Salem Chamber, which is really good. What really makes it go is when entrepreneurs pony up with time and money.”
Investors are motivated by a mix of altruism and profit motive, Marsh said, but it skews towards the former.
“I think this is 55 percent altruism and 45 percent profit motive,” he said. “If we do our job well and create a highly curated portfolio of startups, we expect there will be returns on a few of the startups. It’s not going to be huge.”
Marsh and his partners raised $355,000 for Flywheel’s inaugural accelerator, which ran from June through early September. They chose Joel Bennett to run the accelerator.
“The startup community is a very open force,” Marsh said. “All of the investors, all of the angel groups, all of the accelerators get to know each other and try to support each other. We roam around the state going to lots and lots of events. I first met Joel at a startup weekend event I think three years ago. I admired his work, admired his passion and devotion to the startup community. He was running the Triad Startup Lab. At the time it was the only structured program around lean startup methods. And so we just felt like he was the top talent in the market, so we invited him to come over and manage our accelerator. He did a great job.”
Out of 230 applicants, five companies were chosen to participate in the New Ventures Challenge Accelerator. With one dropping out, four companies ended up going through the program. Catalant, a Greensboro company that collects productivity metrics to help businesses improve employee performance, was a graduate of the Triad Startup Lab. Scout IoT, also based in Greensboro, is a data collection company that serves industrial clients. Wilmington-based Petrics is developing a mobile app to help people manage care for their pets. And Leading Role in Winston-Salem is virtual-reality gaming company.
The companies competed for the first of three tranches of capital, but over the course of the program the funding was equalized so that each one received a total of $50,000 to support their growth.
The accelerator culminated in a Demo Day at BioTech Place, where the startup founders used PowerPoint presentations to pitch their businesses to investors. The Sept. 8 event drew luminaries like Mayor Allen Joines, Councilwoman Molly Leight and Wake Forest Innovation Quarter President Eric Tomlinson.
“I was talking to someone before Demo Day, and I tried to draw an analogy,” Joel Bennett recalled. “Have you ever seen the movie Code Black? I felt like I was running triage in an emergency room. I’ve got a group bleeding. I’ve got someone crying over there. This one wants its mom. It’s time limited and deadline-driven. You’ve got to get it done. There’s this urgency. I really admire the courage of people who launch startups and I enjoy being around them.”
Mike Oder, a cofounder at Leading Role, said as much as anything else the accelerator was helpful in providing moral support.
“We can actually have a more vibrant, open culture,” he said. “It can help us succeed. If we’re all working together we can do better. Being a businessperson can be challenging. You need that support structure…. When you get down because things aren’t going the way you want them to, it’s hard to get the motivation to keep going.”
Before the accelerator had finished, Leading Role had a first-person shooter game called “Cyber Threat” on the market as a kind of test-run in advance of the more ambitious “Sherlock Holmes: A Scandal in Bohemia,” a narrative virtual-reality game the company hopes to release in mid-2017.
“We’ve had 1,200 sales so far,” Oder said. “It’s about $18,000 in revenue. “This is a very small market. The estimates are it’s going to grow dramatically. It’s never going to be easier than now to get in on this.”
The release of HTC Vive and Facebook’s Oculus Rift headsets earlier this year stand to double the market for virtual reality games, Oder said. PlayStation VR hit the market on Oct. 13, and Oder said his company will probably target the platform sometime next year.
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