Business ‘incubators’ and ‘accelerators’ have entered the popular lexicon in the past six years or so, as very hip terms associated with tech-oriented start-ups.
But what do they actually mean and what do they deliver?
Accelerators assist new ventures by providing accelerator programs. They have been identified as having five defining, partially interdependent features – seed funding, cohort based, co-location, a structured program and mentoring.
Accelerator programs are designed to help cohorts of new ventures with the venture process, which includes defining and building their initial products, identifying promising customer segments and securing resources (both capital and employees).
Incubators are distinct from accelerators and tend to provide shared office space and facilities together with a value-adding intervention system of monitoring and business assistance. They are characterised by their tendency to buffer promising ventures from the environment and generally provide their services for a period of one to five years. This contrasts with the limited duration, and the intensity of mentorship and education provided that are defining features of accelerators.
Melbourne-based CyRise, who participated in the 2019 Cyber Security Trade Mission to the US in February, is one of the first business accelerators in the Asia Pacific region with a focus on cyber security. It was established in 2017 by serial entrepreneur and co-founder of Startup Victoria, Scott Handsaker, at the helm.
Over the past two years, CyRise has provided support to ten start-ups from Australia including $50,000 in funding for each team plus mentorship trips to the US and Israel. CyRise is funded by Deakin University and Dimension Data.
Scott said CyRise is a positive contributor to the growth of the cyber security sector.
“Generally, accelerators are a great thing for the start-up ecosystem,” he said.
“Only the best accelerators genuinely help a business, so it is critical that startups do their research and choose one that is appropriate for their specific needs. If your execution is great, then an accelerator will help you go faster and further than it is possible to go on your own. But if your execution is lacking, you will fail faster as well.
“That might sound counter-intuitive, but the best accelerators help you collide with the market repeatedly in order to test your ideas. You need to find out whether what you have will really work or not.”
But the CyRise CEO cautions not all business accelerators are equal.
“If you look at accelerators around the world, all evidence suggests they work,” he said.
“But it depends. If you’re a start-up and you go to a mediocre accelerator you won’t get the core value, you want out of it and your idea may flounder. World class accelerators have world class standards with highly respected mentors and networks.”
He said what they were looking for were highly scalable businesses – businesses with worldwide application.
“Like any savvy investors, they’re looking for an eventual pay-off,” said Scott.
The CyRise CEO said his company was focused on growing the cyber security ecosystem for entrepreneurs in Australia, which is why he joined the USA trade mission.
“We’re an early stage venture accelerator and keen to foster innovation in Australia. We have set cultural values and apply those to our start-ups and mentors about what we expect and what we’re looking to achieve,” he said.
CyRise is on a mission to be the number one cyber security accelerator in the Asia-Pacific region. Based in Melbourne, CyRise is a partnership between Deakin and Dimension Data that’s dedicated to supporting the local ecosystem for the long term.