Los Angeles Business Journal

Pace Setters

Accelerators quickly establish value in driving startups By Tom Dotan Monday, January 28, 2013

This week, Start Engine will unveil the latest class of companies to emerge from its startup accelerator program.

The group is the accelerator’s fourth since it launched in 2011 and the unveiling is one of many during this graduation season for the regions’ accelerators. In the past few weeks, both Santa Monica’s MuckerLab and Amplify LA in Venice have also trotted out the companies under their tutelage in front of potential investors, family and the public.

The presentations are like a debutante ball for high tech, with a startup showing off its potential market size and revenue stream like an elegant curtsy. And companies carry the hope that a good showing in front of business’s high society might catch the eye of an investor-gentleman suitor.

A bit more than a year after four startup accelerators popped up more or less simultaneously in Los Angeles, the programs already have established a central role in tech’s local culture. About 80 companies have come through the area’s most active accelerators – MuckerLab, Amplify, Launchpad LA in Santa Monica and Start Engine, which recently opened up a downtown Los Angeles office in addition to its Westwood location. Many of the emerging startups have gotten investments within weeks of graduating; others have stumbled out of the gate. But beyond money, the local accelerators have helped bring credibility to a startup community yearning for respect.

“We’ve definitely carved out our piece of the puzzle,” said Howard Marks, who manages Start Engine. “It’s definitely not the only part, but accelerators are good fit for a company that can benefit from a college-type community and atmosphere.”

Up to speed

An accelerator is essentially a boot camp for startups, where companies can get guidance and some funding while working out the kinks of their business model. The ultimate goal is to attract investors at the course’s conclusion. Unlike incubators, such as Idealab in Pasadena or Santa Monica’s Science Inc. that traditionally develop business models in-house and then hire outside talent to build the companies, accelerators only accept existing startups. In return, the accelerators get a piece of equity in each business.

Generally, accelerator classes involve eight to 12 companies that work alongside each other for a few months while mentors help them develop their businesses. To the classes of entrepreneurs, that professional camaraderie has a big appeal.

“Being a CEO of a company can be a lonely job; we’re known as the hardest working people in Silicon Beach,” said Jerry Jao, whose startup, Retention Science, was part of MuckerLab’s first class “It’s nice to see other people struggle too.”

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