Vibranium.VC, a Silicon Valley-based venture capital firm, is thrilled to announce a Softlanding program tailored for IT startups in the B2B and B2C SaaS sectors. Designed for entrepreneurs seeking to relocate their businesses to the United States, this program presents an opportunity for startups to unleash their potential and grow in Silicon Valley.
Starting in September 2023, the Vibranium.VC Softlanding program spans over two months, offering efficient and streamlined content for selected startups. The initiative is entirely cost-free. However, founders are encouraged to invest their time and dedication into the program, which promises valuable insights and support throughout the relocation journey.
What to Expect from the Softlanding Program:
Expert Guidance: With Vibranium.VC’s network of seasoned experts and industry veterans, participants will receive personalized guidance on the entire relocation process to the US. From overcoming logistical challenges to navigating legal and regulatory requirements, every aspect is supervised.
Fundraising Strategies: Understanding the significance of funding for startups’ growth, the program will equip founders with proper fundraising strategies tailored to the competitive landscape of Silicon Valley.
Exclusive Access to Silicon Valley Ecosystem Players: Softlanding program alums will get an opportunity to expand their network by adding key innovation ecosystem players to their contacts to ensure the best possible chances of entering Silicon Valley.
Zamir Shukho, Founder and General Partner at Vibranium.VC: “The launch of Softlanding Program 2.0 marks a significant step in Vibranium.VC‘s efforts to help SaaS startups enter the US market. We analyzed the feedback provided by the first batch. We customized this year’s program specifically to founders’ needs and expectations by inviting top experts and adapting content based on startups’ requirements regarding the relocation process. This program will help founders answer all the essential questions about relocating their startup and save time and resources. It is the right time to make a move.
Don’t miss an opportunity to take your startup to a new level. Apply now for the Vibranium.VC Softlanding Program. Applications are open until September 24.
In July, Vibranium.VC added a new company to its portfolio by investing in the Intelligent Automation platform HuLoop Automation. For HuLoop, it’s the fifth recent VC investment as the company aims to attract $4M in total in the Seed round.
HuLoop’s solution generates and manages a digital workforce to automate tasks and processes, freeing up human capacity for more valuable, cognitive work. HuLoop delivers huge client benefits – every $1 invested results in $20 ROI.
Zamir Shukho, Founder and General Partner at Vibranium.VC: “HuLoop Automation became the first portfolio company focusing on business productivity as we identify this direction as one of the key ones for our fund. We are happy to welcome HuLoop Automation on board and hope that the company will grow and succeed with our support. ”
Prior to Vibranium.VC the company secured investments from Growth Factory, Rebellion Ventures, Nurture Ventures, and Team Ignite Ventures. This round of investments will be allocated 50/50 – to innovation and go-to-market accordingly.
“We are thrilled to announce Vibranium Venture Capital’s investment in our company. With their invaluable support, we’re poised to redefine the future of work and revolutionize key industries worldwide,” said Todd P. Michaud, CEO of HuLoop Automation.
Among the key clients of HuLoop Automation are companies from industries such as Consumer commerce (retail, wholesale, hospitality, CPG), Financial services (banks, credit unions, collections agencies), and Software developers (product companies and enterprises).
It has been almost 3 months since we had the Demo Day of our first startups batch within the framework of Vibranium.VC Softlanding program. During expert sessions, we did talk a lot about networking and communication challenges founders face in a new country. In this article, we decided to highlight the top 5 communication challenges when relocating to the States. Spoiler — knowing the English language is #1.
Challenge #1. Language.
Language is crucial — doesn’t matter where you plan to move. If you want to blend in with society — language is the tool that will help you to do that faster. Spelling of USA, it’s important to learn and practice English intensively, constantly improving both your vocabulary and pronunciation. The better your English language skills are, the higher your chances of success.
Non-US founders often need to learn English for several reasons, especially if they plan to operate in the international business world or wish to access the global market. Here are some key reasons why speaking English is essential:
Networking and collaboration: In the business world, networking and collaboration are crucial for growth and success. English enables non-US founders to engage with other entrepreneurs, industry experts, and potential collaborators from different parts of the world.
Try to expand your network of English speaking innovation ecosystem players, do not only stick within your language speaking community.
Participation in international events: conferences, trade shows, and business events often take place in English-speaking countries or involve participants who primarily communicate in English.
Legal and regulatory matters: when dealing with international business transactions, contracts, and legal matters, English is often the language used in official documents. Understanding English ensures that non-US founders can comprehend and negotiate the terms effectively.
While English proficiency is essential, it’s worth noting that many successful non-US founders have achieved remarkable feats without being native English speakers. The ability to speak multiple languages and understand diverse cultures can also be advantageous in international business. However, English remains a crucial language for global business communication and opportunities.
Challenge #2. Cultural differences.
The first problem is a lack of understanding of the local business etiquette and mentality. It’s essential to invest time in learning the nuances of conducting business in the USA, understanding communication formats, business correspondence, and cultural norms. In general, the USA has a large number of immigrants.
Fully 55% of billion-dollar startups were founded by immigrants.
There’s no expectation that you’ll know and understand everything perfectly from day one. Americans are understanding and open-minded toward those who have moved here and are trying to build a new life. However, they won’t tolerate ignorance.
Challenge #3. Diverse teams.
The ability to work collaboratively in diverse teams is crucial for non-US founders as it fosters cross-cultural collaboration, enhances adaptability to foreign business environments, and promotes innovation and creativity. Embracing diversity enables them to build a broader network, navigate cultural sensitivities in communication, and make better-informed decisions. Additionally, it contributes to a positive reputation, attracting top talent, investors, and potential partners, ultimately supporting the success and growth of their businesses in a global market.
The more diverse your environment is, the faster and more effectively you can integrate into the innovation community in the USA.
Challenge #4. Reputation matters.
Work on your reputation and image. Reputation matters a lot here; well, actually, anywhere. Update your social networks, create a quality LinkedIn profile, attend events, make new connections, expand your network, and carefully build your reputation as a reliable, high-quality, and business-oriented individual with whom it’s pleasant to do business.
They say that first you work for your reputation then it works for you — always keep that in mind.
Challenge#5. Giving back to the community.
Giving back to the community is an essential principle in the innovation ecosystem. Find something you’re willing to give back, without expecting anything in return, just to help someone else. Contributing to the community enhances the founder’s reputation, attracting more support and opportunities. It enables startup founders to have a positive social impact and inspires further innovation, creating a cycle of support, growth, and collaboration that benefits both the innovator and the broader ecosystem.
The act of “giving back” will be appreciated, and you’ll not only find satisfaction but also receive positive attitudes towards yourself and your initiatives.
You are an early-stage startup seeking seed investors. Not an easy endeavor, at Vibranium.VC we know that first-hand. Your solution is great, you have a clear growth strategy and strong profit potential. If you think these are the key evaluation factors for investors — you are absolutely right.
But there is something else equally important — the startup’s team. And that’s exactly what we will dive into in this article.
The 6Ts of startup screening
When evaluating a potential investment opportunity, we follow the 6T methodology, which was originally developed at Stanford University. Here are its main criteria:
TEAM — an A-team that has a vision, passion, and necessary skills
TAM — a large, growing, accessible, and strategic market
TECHNOLOGY — disruptive technology and/or a disruptive business model
TRACTION — customer, technical, market or product validation
TRENDS — why now? Micro shifts that support the thesis
TERMS — does the investment fit us? Is there any hair on this deal?
While performing due diligence, we carefully evaluate each element of the framework to understand whether we are comfortable investing in a given startup. It has to be a match!
Criteria within the 6T methodology follow a hierarchy of importance. Assessing the team itself is a priority for a number of VCs. If this element seems weak, in most cases the investor won’t even look at any other factors that follow.
By screening approximately 35 startups every month, we figured out that the majority of founders do not prioritize these criteria and focus mainly on technology, specific features, and the product itself. This misguided approach can actually result in the startup’s inability to secure the necessary funding.
Why the TEAM?
Is this an A-team? Do the employees have enough experience and a solid track record? Are they future champions? Have they ever failed? Do they run other businesses? All these questions are running through EVERY investor’s mind — trust us.
When it comes down to choosing between a strong product and a strong team, at Vibranium.VC we always go for the latter. A good team can pull off an average business model and improve the product by being resilient and experimenting.
We have witnessed many times how a great product idea never saw the light of day because the startup’s team could not take it to the next level of implementation. The ability to build a sustainable business around the product — this is what investors value most.
There aren’t many metrics that can be measured in a seed or pre-seed stage. This means we have to rely on assessments of “soft skills”: with this number of people, this kind of knowledge, and this experience — can the team make it happen?
Is motivation important?
One of the things that we often discuss with startups is the importance of the founding team’s motivation. Sometimes this factor is neglected. But in tough times of hardships and rejections that every startup goes through, the motivation of the founder and their team is key to success.
What drives you? Is it just making money, or do you have a bigger mission? Or maybe a personal attachment to the problem that you try to solve? Maybe you want to solve a global issue and help your community. Honest, self-aware answers to these questions are crucial.
If it is just about making money, then that motivation might not be enough. Investors want to see passion, adaptability, and good team dynamics. Some want a specific mix of skills. But most importantly, the reality is that the majority of investors want to see a team that has been there before (serial entrepreneurs). And no, this doesn’t mean having zero failures in the past — it means learning lessons and gaining experience from these failures in a way that later leads to success.
Silicon Valley is a dream destination of choice for establishing technology businesses. Many world famous companies such as Meta, Cisco, Google, Adobe, Apple, and other major tech giants have their HQs in Silicon Valley, and they continue to show great results and revenues operating from the region.
But what if you are new to Silicon Valley? It’s ok not to know everything — trust us, Vibranium.VC knows exactly how it is.
We decided to chat with one of our Softlanding Program experts’ investment banker Shawn Flynn about common mistakes new founders make in Silicon Valley.
Shawn Flynn is a Principal at a premier middle-market investment bank with a global presence. Shawn has expertise in mergers and acquisitions, capital markets, financial restructuring, and secondaries. He is the host of the award-winning The Silicon Valley Podcast.
#1 Going to wrong events
Going to the wrong events might be a waste of time. Sometimes founders don’t check who are the attendees, or the topics, they just go “It’s an event — I’m going”. Don’t get me wrong, it’s always great for expanding your network and meeting new people, but what happens is you attend an event, spend an entire day there collecting as many business cards as you can, but none of those business cards result in new partnerships, new customers or potential investors for your company. That entire, precious day and all that energy could be considered almost a waste.
The first thing founders need to know when arriving in Silicon Valley is to be careful with their time. Everything should be strategically planned out: the events you go to, the people you talk to etc. You have a company that you’re here to grow. You are here to fulfill your dream. Make sure that you plan everything out accordingly.
# 2 Not knowing who to connect with
While Silicon Valley is home to many great people wanting to help startups succeed, there are also lots of scammers who take advantage of entrepreneurs. They may promise introductions to investors and other services in exchange for money; however, they often don’t know anyone or provide referrals to shady service providers that won’t be helpful. It’s important for entrepreneurs to do their due diligence and carefully vet any person or provider before making a commitment.
# 3 Coming only to fundraise, forgetting about sales
It’s not uncommon for startups to come to Silicon Valley solely to raise capital. However, this type of approach isn’t always the most effective; if they used those six months to increase their sales and revenue, they’d be in a much better position. Investors are likely to only invest once certain milestones have been reached or a certain amount of money has been made — so it’s important that entrepreneurs track the number of hours spent fundraising vs building the company and generating income. This helps maximize efficiency and ensure productivity with time management.
#4 Not tracking the right metrics
Investors are interested in certain metrics — lifetime value of a customer, cost of acquiring customers etc. But often founders go from one investor to another still not clearly knowing the metrics they need to show and that are crucial for THAT investor. Often entrepreneurs don’t track their monthly metrics to see how things change over time. But this is the KEY. You need to show investors where your company was yesterday, where it is today and where it going to be in foresee future by presenting numbers proving you are heading the right direction and getting more efficient.
Often investors are investing in what they believe is going to happen. And numbers make it more believable by giving support and validation. You might have all the numbers in the world but half of them are not representing any interest to investors. Find out in your sector what are the numbers investors want to see and start tracking them. Even if you are not currently fundraising, or even plan to take outside capital, it’s still good to do your homework and reach out to potential investors and industry leaders and ask them what metrics they want to see, now and let’s say a goal to hit in six months. Your goal is to get better than industry average to impress investors and to run just a better company overall.
#5 Not being adaptable
What works in one country may not be successful when brought to Silicon Valley. It’s essential to tailor materials, such as taglines, to the US market. Translating word for word without making any localization adjustments is likely to leave companies with substantially less success than they had back home.
#6 What got you here won’t get you there
The roles and responsibilities of the CEO and founders are constantly evolving as a company grows and especially if the growth is accelerated by rounds of funding from outside capital. Only a few people can quickly and effectively adapt to these changes, otherwise they become an obstacle for the company’s growth. Investors may bring in other personnel who can help take the company from one point to another; this requires entrepreneurs to be agile learners and adjust their mindset with every development that occurs.
Good luck in Silicon Valley! Everything is possible — always remember that!
Raising money when you are an early-stage startup might be challenging, and, let’s be honest, quite stressful. Hearing “no” from one investor after another can be distressing and disheartening, but remember this: odds are, you may get tons of “no’s”, before you get that much-awaited “yes”. Rejection is part of the process. Doing your homework and being prepared is crucial to fundraising success.
In this article, we will outline 6 key steps startups go through before the investment fund makes a final funding decision.
Inside the investor’s mind
A VC fund’s end goal is to increase the value of the startup, then profitably exit the investment by either selling its stake or via an initial public offering (IPO). There are four types of players in the venture capital industry:
Entrepreneurs who start companies and need funding to pursue their vision;
Investors who are willing to take on significant risk to pursue impressive returns (the risk is high, especially at the early stage);
Investment bankers who have financial services industry expertise, analytical prowess, and effective communication skills to support institutional clients in activities like capital raising and mergers and acquisitions;
Venture capitalists who profit by creating markets for entrepreneurs, investors, and bankers.
An investor’s decision-making is based on three main pillars:
Diversifying an investment portfolio;
Finding a strategic asset.
These are the questions investors need answers to: is this a growing market and technology? How fast will this company develop? Would we be proud to have this company in our portfolio? How open is the team to training and feedback? How will I exit from this deal? Will this require a lot of my time? Answers to these questions are important to forming the final investment decision. But let’s not get ahead of ourselves.
Step #1 Prescreening
Before you reach out to a potential investor, make sure to carefully read the list of metrics you need to present and the criteria you need to fulfill. In our case, for example, these are posted on the Vibranium.VC website. Overlooking this step is actually a common mistake new founders make. We covered it in our previous post (check out Mistake #4). Remember that prescreening is an analysis — the scout evaluates whether the startup is in the fund’s area of focus.
If your startup does not meet all the necessary criteria chances are high you will be recommended to work on your current metrics towards improvement and apply later. Getting a “no” from an investor is all part of the venture capital journey.
Before moving forward, it’s crucial to fix all the weak points flagged during the application process. Based on our experience, exceptions are rarely made — time is money in the investment community.
Step #2 Primary screening
A VC analyst evaluates the team, market, technology, and business model in line with the 6T methodology which consists of the following elements:
TEAM — an A-team that has a vision, passion, and necessary skills
TAM — a large, growing, accessible and strategic market
TECHNOLOGY — disruptive technology and/or a disruptive business model
TRACTION — customer, technical, market, or product validation
TRENDS — why now? Micro shifts that support the thesis
TERMS — does the investment fit us? Is there any hair on this deal?
Every fund has its own screening process, but almost everyone pays attention to the team, traction, and terms.
Step #3 Interview with an Investment Manager
The Investment Manager looks at the business model, the technology and the o market strategy. This is when the fund and the startup talk about various metrics: current revenue figures, customer acquisition cost, LTV, and so on. These numbers can better demonstrate how exactly the business model is functioning. The investment manager asks about the tech looks “under the hood” at the product frontend and backend, and checks the demo version. Generally, there are also a few questions related to PR & marketing strategy.
Step #4 Interview with the General Partner
The GP evaluates the market and the deal in question. He or she interviews founders about the team, the sales process, the current market situation, competitor’s advantages, current transaction parameters, deal structure l, and involvement of other parties. At this point, it is important to have a clear understanding of whether the startup already has a lead investor, and what investments they had before (if any). The fund also needs to know startup’s investment strategy regarding the next round and be able to visualize potential exit opportunities.
Step #5 Due diligence
Due diligence is a form of a comprehensive assessment that an investor carries out before proceeding with the deal.
Typically, funds first sign a term sheet, which details the main aspects of the transaction. After that, they go through with due diligence to ensure everything is in order with the company.
However, we at Vibranium.VC have our own approach to this process. We move forward with due diligence prior to making an investment decision so that we can have as much clarity on the startup as possible. That way, we can flag any potential risks in advance and discuss ways of fixing issues with the founders before actually negotiating the terms of the deal.
P.S. We will dive deeper into the due diligence process in our next post, so stay tuned!
Step #6 Investment Committee
An investment committee is a group of people responsible for managing an organization’s investments. The committee oversees investment policies, advisor selection, strategy, and fund performance to ensure the best possible outcome for members or beneficiaries.
The investment committee makes the final decision on whether to close a deal (= to invest in a startup), which is based on the outcomes of all of the previous steps.
The whole process from the moment you applied for investment until you got your final answer takes up to two months.
Starting a new business can be overwhelming. A coach who has been through the process before can provide you with meaningful guidance and support. Startup coaching can help you clarify business goals, refine a strategy, and develop a roadmap to success. On top of that, you might receive insights and perspectives on your business that you may not have considered before.
Overall, startup coaching can be a valuable investment for entrepreneurs who are looking to build their businesses more effectively.
There are many different options available, from one-on-one coaching to group coaching programs. With the right guidance and support, you can navigate the challenges of starting a new business and achieve your goals more efficiently.
At Vibranium.VC we are always happy to welcome new insightful speakers to our blog. So today we are talking toJoshin Das. Joshin is the founder of IT solutions provider Oligosoft Corp, a mentor for university students from South Korea, the UK and UAE under EPIR (Early Stage Preparation for Industry Readiness) program offered for Economics, Business, Management, Technical and Legal students, as well as a startup coach.
Startup coach/mentor — who is she/he?
It’s an experienced individual who provides guidance and support to early-stage entrepreneurs and their startups. These kinds of coaches advise and consult in strategy, marketing, finance, and management to help startups address the challenges they face while growing as a business.
Preferably startup coaches/mentors possess direct experience as entrepreneurs, have worked with multiple startups, or have expertise in specific industries. They may work with individual founders or teams, and provide individual coaching or group mentoring sessions in person or virtually.
What can you get out of mentorship?
Networking: Mentors can introduce or connect startups with potential customers, investors, partners, and other industry experts.
Accountability: Mentors can hold founders accountable for their goals and help them stay on track. They can provide constructive feedback and suggestions, or sometimes question incorrect assumptions made by founders.
Perspective: Mentors can offer a different perspective on a startup’s business model, product, or strategy. They are able to identify blind spots that can help founders alter their course or make better decisions.
Emotional support: Mentors can offer emotional support, encouragement, and motivation to boost morale, which is crucial to overcoming obstacles and staying focused on goals.
Credibility: A reputable mentor may add credibility to the business idea and the startup team.
Where can you find the perfect coach?
Incubators and accelerators that offer mentorship programs are a great place to find the perfect coach. There are also plenty of online platforms that connect startups with mentors.
Another place to look for is trade associations and organizations that have mentorship programs lead by experienced professionals or industry veterans.
And never underestimate the power of networking events — there are lots of opportunities to meet your future coach who can really play a crucial role (in a good way) in your business.
When does a startup no longer need coaching
A startup can benefit from coaching or mentoring at any stage of its development. However, a startup may discontinue its mentorship program in a few scenarios. Number one: if it achieved sustainable growth and has a business model in place that is generating revenue. Number two: when the startup built a strong team with the skills and talent needed to run the business. Number three: if it received external validation in the form of funding, awards, or recognition from industry experts.
Even if a startup no longer needs consistent coaching, it may still benefit from occasional check-ins or advisory services from a mentor or coach. This can help the startup stay on track, remain focused, and identify new trends and avenues for growth.
Сoaching can sometimes turn into a professional partnership. As the startup grows and evolves, its needs may change, and the coach may offer additional services or consultations. The coach may eventually become an advisor or consultant to the startup. A mentor turning into a business partner or investor is also not rare.
When might a coach help?
Validation of the idea, and product market fit, identifying target markets, and business strategy development.
Financial planning, creating financial projections and fundraising. Startups may need guidance for product development and R&D.
Sales and marketing, creating marketing plans, developing sales strategies, and identifying channels to reach target audiences.
Team building, developing processes for effective recruitment, and establishing a strong organizational culture.
Startups also may seek advice from mentors with specific industry expertise (energy, pharma, telecom, tech and so on), to help them navigate unique challenges and opportunities in their field.
Lots of events happening in a startup community every day and they are all about networking. Founders pitching their startups to investors, entrepreneurs meeting companies to discuss potential cooperation, etc. Networking might and often lead to a successful collaboration.
80% of professionals find networking essential to their career success, almost 100% believe that face-to-face meetings build stronger long-term relationships, and 41% want to network more often.
Do you want to expand your network of contacts? Here are five essential networking mistakes to avoid in the innovation community based on Vibranium.VC’ observation.
Mistake № 1
Attending an event with someone you already know and staying with this person the entire time or talking only to someone you already know for too long.
Business events are the source of useful networking, but by sticking to only one person you are missing the opportunity to expand your circle of contacts. In order to avoid this situation follow this simple 10-minute rule — make sure you talk to as many people as possible, allowing yourself to spend not more than 10 minute with each one. Start with introducing yourself, let them introduce themselves as well and make your conversation straight to the point — ask questions and try to be involved in the topic. Sometimes it’s a good opportunity to pitch your project, but don’t be pushy — this might give an opposite result of the one you expect. Exchange contacts and move on to the next person by politely letting them know. It’s totally okay to move to the next person because that’s what networking is about.
Mistake № 2
Be carried away and take over the conversation or oversell yourself for the sake of your startup.
By boasting about yourself or your achievements you are not allowing other people to be fully engaged in conversation. Founders are leaders by nature passionate about what they do and always ready to pitch their project even when it is not necessary. Try to make your stories short, keeping in mind bullet points you want to mention — don’t turn a potential dialogue into a monologue.
Mistake № 3
Going overboard with jokes or comments.
Always be cautious about your messages, try to avoid sensitive topics related to religion, politics and other beliefs. Networking is about talking business, sharing experience and getting acquainted with the best practices. Inappropriate comments might put your interlocutor in an awkward position. And this is not what you are aiming for in this conversation. Also by trying to break the ice don’t go too personal towards other people — this might be perceived in a wrong way. Your goal is to make a professional contact rather than a personal one — always keep that in mind.
Mistake № 4
Not having your contacts handy.
When you talk to somebody for a few minutes the next important step — contacts exchange, especially if you believe that this is mutually beneficial to you and another person. It can be a QR code with your LinkedIn profile or a business card. It can be some other way of connecting like a messenger. While going to networking events, always make sure to have those contacts handy.
Mistake № 5
Not following up after the event.
This is the most crucial networking mistake you can possibly make. You met a person, exchanged contacts and then…silence. It means that all your efforts were pointless. Always make a short follow up whether it’s a Linkedin msg or short e-mail — reconnection is a key. To maintain a contact is your main task after each networking event. If you spoke about your startup, reaching out might be a good opportunity to send a link to the webpage or one pager about your company. Following up is always a nice gesture to give a little reminder about yourself — there are many people attending the event, lots of conversations happening, so it’s challenging to remember everyone.
Being at the event is a first step, getting into quick conversation and exchanging contacts is a second one and then after a follow up you need to try to build that relationship further.
At Vibranium.VC, we regularly attend focus events on a monthly basis, and sometimes even multiple times per month. The agendas for these events are always packed, and as a result, we have decided to start a new series of blog posts dedicated to sharing the insights and knowledge we gain from each event we attend.
In the beginning of April, our CEO & FounderZamir Shukho was among the panelists at the ACGSV’s C-Circle event called “Raising Capital in Uncertain Times”. The event focused on how companies are currently securing capital and featured the perspectives of a VC, Investment Banker, and a Lender.
2023vs.2022 statistics in venture funding
After record-breaking years of 2019–2021, in 2022, venture funding declined from 2021 levels by $236 billion (from $681 billion to $445 billion). Venture funding in January 2023 was 50% less than in January 2022 and startup company valuations are falling. Rising interest rates have made the cost of commercial loans much higher and banks are tightening requirements.
Moreover, executives and investors alike are still trying to decide if the US is actually going into a recession or might already be in one.
All of these factors are making it difficult for many companies to secure capital in this uncertain environment we are all trying to navigate.
Insight #1. The rise of regional banks
Following the collapse of SVB, many startups have been transferring their funds to large banks. However, these banks face two major issues. Firstly, they are regulated by the Federal Insurance Company and cannot immediately repay or write off the issuance, which negatively affects their overall rating. Secondly, they are not equipped to work with startups as they lack the necessary training and knowledge of complex organizations. Moreover, their speed and convenience do not meet the required standards.
However, there are concerns about reliability, as the insurance only protects up to $250,000, so startups are advised to split their funds across multiple accounts in several regional banks to ensure full coverage. This can be achieved through a sweep account, which consolidates the company’s spare cash on deposit into a small number of accounts.
Insight #2. Big banks challenges
Unfortunately, large banks were not prepared to serve the venture sector. Despite Vibranium.VC’ our own experience of opening accounts with these big banks was quite, it was difficult in terms of speed and responsiveness. They do not really understand how venture capital works. Their managers are not well-versed in the venture ecosystem and are primarily focused on offering conventional banking services to traditional businesses like coffee shops, restaurants, and pizzerias. As a result, it is extremely challenging to find a substitute for regional banks like SVB that can offer similar levels of customer service and high-quality products for the innovation ecosystem.
Insight #3. Early-stage startups suffered less
Startups in Series B and C were hit the hardest, as their valuations dropped significantly. Early-stage startups also experienced a slight drop in valuations, but it didn’t affect them as much because they are still in the pre-seed and seed stages.
Early-stage startups have some advantages, such as more flexible structures and lower burn-rate, which allow them to be more resilient to economic crises.
In addition, early-stage startups can attract investment using more diverse funding sources, such as family funds, angel investors, and early-stage venture capital funds.
Insight #4. Strong teams now — unicorns in the future
Startups that are capable of demonstrating even a small amount of growth now are the ones that will endure and potentially become future champions. This has been the pattern in all previous crises, where resilient teams emerged during the crisis period, and eventually became unicorns and achieved successful exits from their ventures.
Finding a startup incubator or accelerator in the USA that’s a perfect fit for your startup can be tricky. There are 2,301 Accelerators & Incubators in the US. With this amount, it is pretty easy to get lost and choose the wrong one. Here are some factors you need to consider before making the right decision:
The amount of funding they provide vs. the amount of equity they’ll take.
Profiles of the mentors and the industry they specialize in.
How many startups they’ve funded.
The community around it.
The percentage of startups they accept and the difficulty of the application process itself vs. what they can do for you.
Finding the right accelerator as well as participating in it might be a time-consuming process, that requires your full commitment and understanding on how it will help to grow your business. We decided to give you a quick overview of the top-5 most popular accelerators, their requirements, and their differences. It might help you to find answers during the evaluation process.
Difference between startup accelerators and incubators
Both startup incubators and startup accelerators offer support to early-stage startups and entrepreneurs. But they do have differences.
Astartup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training. The sole purpose of a startup incubator is to help entrepreneurs grow their businesses.
Conversely, accelerators focus on speeding up the growth of a startup that has already built and launched an MVP. Their product is already in the hands of early adopters and they’ve achieved some sort of traction.
The most famous startup accelerator on the list, Y Combinator has launched over 4000 startups. Portfolio companies include Stripe, Airbnb, Coinbase and Twitch.
You can apply to Y Combinator online. Your application will only be considered if you, as the founder, have at least 10% equity in your startup.
After finishing this procedure, you and your team will be requested to participate in an interview.
Recently, as part of Vibranium.VC’ Softlanding program for startups, we discussed the leading accelerators and the typical mistakes founders make when submitting applications to YC. Below are some of the mistakes we talked about:
Startups often fail to carefully read the questions, which can lead to some questions being left unanswered or the inclusion of irrelevant information in their answers.
Responses may contain grammatical and stylistic errors, which can negatively impact the overall quality of the application.
The company’s description goes beyond 50 characters, which may not meet the application requirements.
Some startups tend to reuse the same answer for multiple questions, which can indicate a lack of attention to detail and a failure to address the specific requirements of each question.
The length of the video exceeds one minute and the sound quality is poor.
If interview is successful, you’ll officially join the YC batch. During the 3-month batch, you’ll still have access to all mentorship, guest speakers, group office hours with other companies on your batch and the famous Demo Day.
TechStars is one of the largest pre-seed investors in the world, their portfolio is as diversified as their 7,300 founders are unique — from HealthTech and FinTech, to Web3 and CleanTech; from Miami and Silicon Valley to Lagos and London.
TechStars has funded over 3500 startups to date. Among famous alumni are Uber, Twilio and DigitalOcean.
Techstars invests up to $120k in each startup. They purchase the right to 6% of the company’s Fully Diluted Capital Stock at the Qualified Financing and provide $20k upfront. Their 6% common shares will be issued immediately before the Company’s subsequent equity financing of $250k or more.
You can apply to TechStars using the form on their website. It might take a few hours to fill out your first application — you can reach out to their mentors and advisors before submitting for extra help to ensure you’ve portrayed your startup correctly.
If your application passes the screening process, you will receive an invitation to interview with TechStars (this process usually takes around four weeks).
Ifyou successfully complete the interview rounds, you’ll be invited to meet TechStars screening committee.
If you pass that, you then join a three-month batch of other startups. During 3 months of intense work you are developing your pitch deck, preparing your investor collateral and learning how to communicate your vision to future customers, team members and other key stakeholders. TechStars will then continue to give you support via their alumni network.
With over 2700 startups funded, 500 Global is another leader in the incubation/acceleration arena. Their portfolio companies include Udemy, Talkdesk and Canva.
The 500 Series A Program delivers growth marketing and investment for post-seed and pre-Series A companies and runs in multiple locations globally. They accept applications from Nordic startups to their seed programs in Silicon Valley and San Francisco, and their series A programs in Europe (London and Berlin).
500 Startups offer every company that joins their ranks $150k investment in return for a 6% stake.
Roughly 71% of startups who apply during the first 45 days after the application window opens are accepted into 500 Global programs.
After filling out the application form, you’re in with a chance of being invited to an interview day. The day consists of three back-to-back interviews with members of their investment team. They suggest allocating around three hours for this process, but it can be shorter.
If accepted, the fast-paced program lasts for four months at the location you applied to. Their mentor team consists of experts with operational experience at companies like PayPal, Google, YouTube, Apple, Twitter and more.
On top of the hands-on mentorship, they offer talks and office hours on everything from distribution and customer acquisition to design, UX and fundraising.
At the end of the four-month program, you’ll take part in a Demo Day in front of investors and industry leaders.
Founded in 2012 Alchemist accelerator with total funding of $2.1B runs a 6-month long program. It accepts startups operating in sectors such as IoT, digital health, Fintech, etc. The firm takes 5% equity in return for its services.
You can fill out the online form on their website. The total amount of startups accelerated exceeds 500 and around 52% of startups were funded after graduating from the program.
Plug and Play Tech Center
Plug and Play Tech Center is a California-based accelerator. Founded in 2006, they’ve helped over 1360 startups get to market. Portfolio companies include Dropbox, Honey, and PayPal. They are active in 50+ locations globally, including the U.S., China, France, Germany, South Africa, Singapore, Indonesia, Brazil, and more.
Plug and Play typically invests between $50k and $250k in startups ranging from Pre-Seed to Series A. You also have the opportunity to gain up to $1M in follow-up investments from Plug and Play directly.
There is no fixed equity percentage associated with these investments, however, they typically get between 1-5% of the company depending on the amount invested.
The industries they focus on include Agtech, Animal Health, Brand & Retail, Crypto & Digital Assets, Energy, Enterprise, Fintech, Food & Beverage, Health, Insurtech, IoT, Maritime, Media & Ad, Mobility, New Materials & Packaging, Real Estate & Construction, Smart Cities, Supply Chain, Sustainability, and Travel & Hospitality.