The Alchemist Accelerator started two years ago with the goal of creating a platform to help promising enterprise seed-stage startups. Today, it announced $2.1M in funding that should provide enough capital keep the company going through the first quarter of 2018.
The round is led by Mayfield with help from Tyco and previous investor Cisco Investments. Other investors include Draper Fisher Jurvetson, Foundation Capital, Khosla Ventures, Salesforce.com, SAP Ventures, Siemens and US Venture Partners.
Ravi Belani, managing partner at Alchemist says before his company came along, accelerators tended to be focused on consumer companies. He created this company to give promising enterprise startups a bit of money, access to mentors and some serious training in how to generate sales and raise funds to keep the company going.
Danielle D’Agostaro, who is a partner and VP of operations at Alchemist says the funding is real validation for the company. “The fact that Mayfield — which is one of the oldest, traditional enterprise-focused venture funds — is putting a stake in the ground is intriguing,” she wrote in an email.
D’Agostaro explained there has been debate in the VC community about the viability of accelerators and whether they are a simply a fad or capable of creating real ventures of lasting value. She believes this funding round shows that an incubator focused on enterprise companies can be sustainable .
Belani says the new capital legitimizes what was originally an experiment. He joked the idea of an enterprise accelerator was thought of as an oxymoron when he first started, but he said he saw entrepreneurs with ideas for enterprise companies, who didn’t need a boat load of money. They needed the type of guidance that only VCs tend to provide. He called that his “light bulb moment.”
This really isn’t about money either. Participating companies get $30,000 for six months, but they get trained on customer development, sales and fund raising. They get to test and refine their ideas with real companies like Procter and Gamble, Siemens and Samsung. They can meet with these companies and drive their proofs of concepts, get meaningful critiques and help them focus their ideas.
The proof is in the results and so far, they’ve been impressive. The company launched in January, 2013 and have three acquisitions already including Cisco grabbing Assemblage and Dropbox acquiring Mobilespan, both in June last year.
According to Alchemist Accelerator, half of the remaining participants — around 30 companies — have gone onto get funding with an average raise of $2M from some of the industry’s top investment firms.
The program culminates in their Demo Day in which participating companies get to show off their work. The next one is this Thursday (Jan. 22, 2015) at Citrix in Santa Clara, and they say over 200 customers, partners and investors will be attending.
Today’s announcement also included new faculty members including Gary Swart, former CEO at O’Desk; Steve King, former CEO at DocuSign; Steve Teig, co-founder and CTO at Tabula and Sean Byrnes, co-founder and former CTO at Flurry.
Yammer houses the Alchemist Accelerator workspace in its San Francisco headquarters and Yammer personnel like co-founder Adam Pisoni are involved in helping to mentor participating companies.