It takes more than elbow grease and moxie for someone with a good idea to find their place in the startup ecosystem. Even with the best idea, the pitfalls of building a real business are countless, the work required for success is daunting, and the reward often lies years in the future. To address this question we spoke to Miriam Roure, program director of URBAN-X, a startup accelerator that’s been instrumental in investing in and supporting new companies using design and technology to improve city life.
As the program director for URBAN-X, you look at hundreds of applications from startup founders hoping to work with you. What are the things that make a company stand out?
The first question that we ask ourselves is, “Is this the right team?” We evaluate their level of commitment, if the founders have complementary skill sets, or if they have started a company before. What is harder to evaluate is if they have the kind of marathon mindset it takes to build a startup, if they are quick learners, and if they are able to take advice in a constructive way.
Second, we look at the size of the opportunity. Even with a great team, if the market is too small or will take too long to mature, it can be hard to scale. The opportunity for us also means the potential impact that the solution can have. Can this solution reach 100 cities within five years? If so, what are some key KPIs that we could identify as drivers for positive change in these urban environments?
What’s the toughest part of making those decisions? Is it stressful holding the future of someone’s company in your hands?
We like to think about it as a matching process – some companies are too early and some other ones are too late, some fit our mission and some don’t, some have the growth potential and speed that the venture capital model requires and some might benefit from other kinds of funding. It’s important for us to be able to provide value to the companies in the program.
We are especially sensitive to our own biases and not dismissing opportunities because they might not fulfill a certain profile that we have in mind. We are also aware of founder stereotypes, “hot” markets and FOMO. Team selection is one of the hardest things we have to do and no investor gets it right 100% of the time.
You talked about how important it is to find companies that can have a real impact. Do you have a white whale? An urban problem that you’d love to have a hand in solving?
Our current white whale is water - no pun intended. For many areas, local sources are being exhausted and it’s really hard to find good, quality drinking water. Flint, Michigan is a touchpoint for what happens when archaic policy mixes with old technology. With climate change, cities need to find novel approaches to resilience dealing with sea level rise, storms and flooding. It’s hard to find solutions for problems that are so structural to how we have built our resource system.
For example, how we use water in our homes is the same water that we drink from the faucet and flush down our toilets. In the United States, the end consumer doesn’t perceive the true price of water and as a result, she doesn’t relate to the water crisis as much as other arguably less relevant challenges.
Does working in cities create unique challenges for URBAN-X startups?
Many URBAN-X companies face the challenge of operating in spaces that are regulated - and about 25% of our portfolio sells to or works closely with governments. This is not only challenging in and of itself, but it also can be tricky from a fundraising perspective. Many investors don’t know how RFPs and sales cycles with state or municipal governments work. We believe these solutions are not only necessary, but also operate in markets prime for disruption. In our last cohort, which concluded in February 2018, 100% of the companies have gone on to close their next round of capital, with many operating as B2G or in highly regulated markets. With the Urban Us team, we have been proactive in building a network of investors and key players in government, policy-making and city services that are able to advise, connect and continue to invest in our startups.
By the end of the year, we will have roughly 40 startups in our portfolio. This growing network is also proving to be incredibly valuable as founders share resources, insights and respective networks.
Another challenge all early-stage startups face is their limited amount of runway and small teams. These limited resources make it such that staying focused becomes crucial. For first time founders, this is even more challenging. Beyond the investment, having access to expertise around the fundraising process, product strategy, team culture, customer discovery, design and engineering resources, and media exposure dramatically increases the chances of startup success and helps reduce the risk of failure.
What does it take? What are the qualities that a startup, or its founders, absolutely need to have to be successful?
It takes a committed and complementary team, an actionable vision, a relevant problem and a great solution, and the passion and wherewithal to not give up and make it happen.
Most important, optimism. As Clayton Christensen points out in his famous book “The Innovator’s Dilemma,” founders systematically underestimate the amount of risk that they are taking. This necessary underestimation is actually really inspiring – the idea that one can create a business that can improve the lives of people at scale makes it worth the effort. When we find a founder that’s in love with the problem they have taken on (more than their solution), we know we are on the right track.
URBAN-X, the accelerator for startups reimagining city life, invites you to Demo Day 04 on September 27, 2018 at A/D/O in Brooklyn, NY. Come get inspired by what’s next for more efficient, enjoyable, and livable cities. If you can't make it in person, we'll be live streaming the morning session from Futurism's Facebook and YouTube pages!
Futurism fans: To create this content, a non-editorial team worked with URBAN-X, who sponsored this post. They help us keep the lights on. This post does not reflect the views or the endorsement of the Futurism.com editorial staff.