Let the proliferation of vertically-themed startup accelerators continue! Today, a new accelerator focusing on the enterprise sector is launching in Washington D.C. Called “Acceleprise,” the program’s goal is to invest in 60 enterprise software companies over the next three years. Participating startups should be trying to solve problems facing large organizations, whether the Fortune 5000, large nonprofits, or government.
Acceleprise’s founders include Sean Glass (Higher One, EmployInsight), Collin Gutman (EmployInsight, formerly of NEA), and Allen Gannett (formerly CEO of Splash Networks).
“It started off with me thinking about how I wanted to do my personal angel investing,” says Glass of Acceleprise’s founding. After looking at his portfolio, the companies that had done the best – the ones he was the able to most help as they were getting going in the early stages – were enterprise-focused.
As with most incubators, participating startups in Acceleprise will receive shared office space, discounted and free software (some through Microsoft BizSpark), mentorship, and a small amount of seed funding ($30,000). But Acceleprise will offer some other advantages, too.
For starters, it’s located in D.C.
“D.C. as a physical location has a lot of resources that are useful to early stage enterprise companies,” says Glass. “Almost every industry has an industry association and it tends to be headquartered in D.C…if you’re an early stage company and you want to quickly get exposure to potential customers to learn about the marketplace, that’s a really good setup.”
Acceleprise will help facilitate those introductions, he says.
In addition, D.C. is home to the federal government, the largest enterprise software buyer in the world. And then, within a couple of hours drive or train commute, you have the East Coast corridor down to Atlanta and up to New York, where you’ll find the highest concentration of of really large company headquarters in the U.S., Glass says.
Another advantage for Acceleprise are the mentors, a large network that includes Scott Case, CEO of Startup America, Vijay Ravindran, the Chief Digital Officer of The Washington Post Company and Jonathan Bulkeley, former CEO of BarnesandNoble.com, to name a few.
Startups will also have access to “customer panels,” which will consist of large enterprises that have agreed to take sales meetings with each portfolio company. Panel participants, so far, include The Washington Post Company, Microsoft, and a few others than can’t be publicized yet. The goal is to have ten companies by launch day.
“We’re solving one of the major issues when you’re starting out in enterprise tech,” explains Gannett of the panels,”how do you access enterprise? How do you get those introductions? How do you get these first customers?”
“When you come to the accelerator, you’re not just coming for the capital, or the mentors, or the collaboration, or the community,” he says, ”there’s actually going to be customers that are waiting to meet with you.”
So if enterprise tech companies show so much promise for big returns, why hasn’t there been an enterprise-focused accelerator until now (that is, one that’s run outside of large companies)?
There’s not one easy to single-out reason, it appears.
“Enterprise tech entrepreneurs don’t want to be part of a GE internal accelerator,” says Gannett, “so why isn’t there a 500 Startups for enterprise technology? And it’s especially weird because the majority of software IPOs are enterprise software…there’s this huge pent-up demand.”
He notes that a lot of the regional efforts are focused on what’s in the news. “Consumer web is sexy, everyone wants to talk about it. Everyone wants to build the next Facebook.”
Adds Gutman, “it’s also about patient capital. A lot of the people who are doing accelerators are doing it because they’re seeing the technology that can produce a $100 billion company like Facebook, and they can take off in six months. Whereas with enterprise software, it takes a few years to build the business,” he says. ”It’s less sexy, less quick to explode.”
“A lot of investing in consumer web is the idea that somewhere in your portfolio is a lottery ticket, and when you do have the lottery ticket, you produce phenomenal returns,” Glass explains. “Part of it is that we’re all individuals in addition to being entrepreneurs and investors, there’s a natural inclination in wanting to see your company featured on CNN or the front page…if you’re solving a problem for a Fortune 5000 CIO, there’s a much more limited audience for hearing that story.”
Another part of it is the amount of money it took in the past to get enterprise companies off the ground. The cost of building a consumer technology company came down three or four years ago, but the cost to build an enterprise-class technology company has only started to come down in the past year or two, Glass explains.
“You can now do cloud development in a secure way, with sufficient uptime that can be enterprise class and meet enterprise requirements.” Before you needed a $1-3 million seed round, then a $5-15 million Series A, he says. “I think the economics are changing – we can do it now, I don’t think we could have done it a couple of years ago.”
The program is four months and the first class starts July 15th. Applications are being accepted now.