seed funding
enterprise startups

Enterprise Startup Accelerator Gets Funding Boost From Cisco

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“Enterprise software is sexy again,” Box CEO Aaron Levie declared here at TechCrunch two year ago. Since then Yammer got acquired by Microsoft for $1.2 billion, and companies like Jive Software, Palo Alto Networks and Splunk went public with strong IPOs.

So yeah, enterprise tech startups are hot, if not sexy, and it makes sense that there’s are now a tech startup incubator/accelerator focusing solely on enterprise startups: Alchemist Accelerator.

And today Alchemist announced that Cisco is now a backer of the accelerator, along with existing backers Draper Fisher Jurvetson, Khosla Ventures and US Venture Partners.

Also, Alchemist is accepting applications for the next class, which will start September 27, 2012. It’s a 24 week program (most incubators are 12 weeks) and those accepted will work with advisers like Yammer CTO Adam Pisoni, Xensource CEO Peter Levine and Sean Ellis of Dropbox. Oh, and they’ll get $27,000 of seed funding.

Companies involved in the first class, which began July 5, 2012, have raised money from investors such as Andreessen Horowitz, Felicis Ventures, Greylock and True Ventures. For example, social CRM company SocialPandas raised $1.5 million from True Ventures and executives from Salesforce.com, VMware and Apple.

The managing director of Alchemist is Ravi Belani, who previously worked at Draper Fisher Jurvetson and worked in the startup world himself before that (at Zaplet and Extensity). He also teaches entrepreneurship at Stanford.

Belani says that the needs of an enterprise startup are very different from the needs of a consumer focused startup because VCs are looking for two different things when they look at companies in each category. While consumer focused startups are all about gaining as many users and as much “traction” as possible, enterprise startups need customer validation. This takes time, which is part of why the Alchemist program is longer than other accelerator programs.

Other than seed funding, which Belani says enterprise startups often have a hard time raising, accelerators provide entrepreneurs with a network of contacts. By focusing on enterprise startups, Alchemist hopes to build the right kind of networks for its entrepreneurs to build successful businesses and land their crucial early customers.

What counts as an “enterprise startup” then? For Alchemist, it comes down to the business model: if the revenue is coming from businesses, it’s enterprise. If it’s coming from consumers, it’s not. Simple enough. Both B2B companies like Salesforce.com and B2B2C companies like Square could be accepted. The exact business model, whether it’s freemium model like Yammer or a more traditional licensing fee, doesn’t matter. In fact, determining that aspect of the business is one of the areas Belani says the accelerator can really help a startup.

Much like Y Combinator, you can apply to Alchemist without an idea. What Alchemist is really looking for is strong technical cofounders. According the application FAQ: “We will admit purely technical teams, but the ideal team has one or two technical co-founders, and one business-side co-founder.”

Although the program doesn’t involve co-working, all participants will need to be in the San Francisco Bay area (East coasters might want to check out Acceleprise, a Washington DC based enterprise startup accelerator that launched earlier this year).

Photo: a still of Alejandro Jodorowsky as the Alchemist in the film Holy Mountain