What we look for
Our purpose is to find great teams in promising markets who can build a business which will attract follow-on investment– and then grows! So our selection criteria are based on the type of startup that can take our initial investment and raise a larger round. Ideally, this happens within six months. Here are a few headline points we look for when investing.
Firstly we look for startups at an early stage. It doesn’t matter if the product has been launched as long as we’re confident launch (even a beta launch) can happen within a month of the programme starting. Sometimes teams change their idea, and that’s ok; as long as the team is right and the market is good, then we don’t mind if the idea pivots or changes entirely. Our investment is always the same: €25,000 for 5%, and unlike some accelerators, we don’t charge in any way for our support.
Lots of different types of people and teams succeed. We have teams straight out of university and teams who have ten years work experience. In fact, some of our best teams are fresh from university. The most important factor is that teams work together, have complementary skill sets and show each other respect. We have a minimum requirement of at least two founders. Single founders often can’t develop their business quickly enough and take all the advantages of being in an accelerator at the same time.
Within this team of at least two, we like various bases to be covered. The four bases are technology, product, business, and sales. It can just be one person who does all the business (non-technology) parts, and we are open to gaps in these skills, but there must be a clear plan to fill the gaps. Having work experience is not the only way to demonstrate that you have these skills. Having a clear plan and proving you’ve thought about tackling the problem are good ways to show us you can handle the demands of your startup. We need team members who can put 100% into their business with no other jobs or commitments. Although some consulting hours here or there to increase runway can make sense, any other material commitments will hurt the startup too much.
In our experience, teams that work well together and are the most successful are firstly built on respect. So many startups pitch to us, and we don’t hear anything from the tech person in the meeting. We get the impression that a lot of startup CEO’s see the techie like someone who unquestioningly carries out their dictat. This shows a lack of cohesion and harmony in the team. When the technology person was involved in the discussions and the strategy this almost always leads to a better result.
The business must be scalable. The goal is to gain investment and no-one will invest in a further round unless they can see significant growth potential. Lifestyle businesses such as agency businesses are great, but they’re not right for our model of helping startups grow fast.
We’re an accelerator specifically for digital technology. Scale comes from building a great piece of technology that can be used by a huge number of businesses or consumers with low or no marginal cost for each new user.
You’ll see from our portfolio that we’ve invested in some pretty diverse sectors, and we’re very open to hearing about different ideas from all kinds of markets. The market is vital; our ideal market is ripe for disruption with enough size to grow significantly. Media, finance, and insurance are good examples of markets which are being disrupted. We can help startups who tackle problems in these industries with the extensive networks of our shareholders and corporate partners. We also consider niche markets when we see the potential to transfer a business to adjoining verticals. Whatever the sector we need a team who can credibly explain why their solution is going to disrupt the market.
To qualify for our investment, you must have a working visa for the country where your company is incorporated. This is ideally Germany or another European country. We are pretty strict on this one since it takes such a lot of focus working on a visa. It has the potential to disrupt the crucial early period in the life of the startup.
Ideally, we want all our investments to be 100% owned by the founders when they come to us, if there is up to 5% in the hands of family and friends this is ok, if that is a bigger chunk or there are equity partners who offer only advice then we won’t invest. A big part of this is because our investors need a clean cap table when they invest and they hate another lingering investor from the very early days, especially if those investors own a significant chunk of the startup.
How we can help
The most important question we always ask ourselves when reviewing applications is: “Are we able to help this business with our resources and our network?”. We have a unique set of partners workshops and mentors. We’ll only invest where we know we can add value. So you should walk in the door with a clear vision of how we can help and why we are right for you.
We’re friendly, experienced and if you work hard and smart you can be investor ready by the end of our accelerator. Over 50% of our teams get further funding so if you fit our criteria, we’d love to hear from you.
Author: Axel Springer Plug and Play Accelerator GmbH
Published on June 15, 2016
Usage right photo: Dominik Tryba
Original Blogpost: http://www.axelspringerplugandplay.com/blog/what-we-look-for-at-aspnp