When Anthony Margida took over as CEO of the Akron Global Business Accelerator, one of his goals was to keep Northeast Ohio’s best and brightest tech entrepreneurs from taking their innovative business ideas someplace else.
Contracted through his company, TechGrit AMX2 LLC, Margida pulled together a group of a leaders who had experience in the space to craft a business plan to support technology innovation that would both fit the Midwest and appeal to potential investors.
“This isn’t Silicon Valley,” Margida says. “The personalities are different, the money doesn’t flow as steadily and the pipeline is much thinner. We put together an adaptation of a Silicon Valley plan that was built for Ohio and we did it within the facilities we had. We were able to leverage some of the clientele we were already paying and we brought on some specialized mentors who agreed to work on a success basis. We were able to pull all that together in a very sustainable fashion.”
Margida designed and co-founded The Bit Factory, Akron’s software business accelerator, and ran a startup development initiative for 35 technology companies that included bioscience, advanced materials and software/IT. His Technology Company Acceleration strategy helped hub companies secure $75 million in investment and created 450 new jobs. It all paved the way for the creation in January 2018 of Bounce Innovation Hub, housed in the former B.F. Goodrich plant where more than 50 organizations come to work, create and re-imagine Akron’s entrepreneurial innovation community. Dealmaking has played a key role at every step.
“In my experience, everything is about dealmaking,” Margida says. “All our deals are about raising our clients’ capabilities and giving them sustainable strategies for building new companies, creating new jobs and attracting investment on a large scale.”
In this week’s Dealmaker Q&A, we spoke with Margida about another key difference between business accelerators in Ohio and Silicon Valley and his thoughts on speeding up the flow of funding for startups.
How does your approach to business accelerators differ from Silicon Valley?
If you look at organizations like Techstars or Y Combinator at a top level, they offer companies that apply to their program a chunk of money and then they take them through a 12-week program. It is intense and there is a lot of relationship development. Then they get a sendoff with a demonstration and an exhibit to introduce themselves to the investor world. It’s one size fits all. So if 12 companies come through at once, they get the same experiences on a particular day. They’re instructed a certain way and there is a set curriculum.
What we did that we felt was better for the Ohio clientele was we met the client where they were in their business development and customized the program for each client. We had a rolling admission so we could take new companies on when they were ready and when they needed our support and we gave them a cool place to work. The investment that we provided, they didn’t get it upon entry. They had to show they were committed and could work with The Bit Factory team to develop a business plan that we all could get behind. The investment could fall into place after that. That’s what we felt we needed to do to make this thing successful and sustainable and it’s still running today with some very good companies going through it.
What can be done to speed up the flow of funding?
Any company is going to be able to get investment if they have the essentials in place. It’s just a matter of where that money comes from. A lot of young companies and organizations are concerned about: Am I part of an accelerator? Am I part of an incubator? Am I doing the right thing to develop my company? My experience has been that what’s essential, whether you are within a program or not, is that you are working toward three essentials.
The first is a validated value proposition. Do you have a compelling market scenario? Do you have customer validation of that? Second, do you have a commercial champion? Investors get behind people and have a lot of confidence in people who have been there and done that. A commercial champion is one who has raised startup money before and has a track record of getting a product to market. That’s a big plus in being able to secure investments to get the company to a Series A and beyond.
The third piece is customer engagement, which is critical. It doesn’t matter how articulate an entrepreneur is or how compelling he or she can be in conveying their business or value proposition. At the end of the day, you know your company is on the right track and validated when you have customer engagement and customer relationships. If you have investment from your customers and they are putting money into your company, that’s great. But that’s not what I’m talking about.
You need customers that are spending time on your product and your business, testing and evaluating within their business. That’s when you have something, the third-party validation that investors seek for the ultimate validation. Are your customers spending their own time and their own resources to advance your product? That’s where you want to be.