FounderFuel emphasizes mentor interaction in second cohort

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By Francis Moran

FounderFuel is a Montreal-based startup accelerator for which I have been a mentor through its first two cohorts. I recently caught up with John Stokes, a partner with Real Ventures, the seed-stage venture firm behind FounderFuel. Following is an edited and condensed version of our conversation. I started by asking John how FounderFuel was going in general, now that it was well into its second cohort of teams.

“Most of the people involved here, certainly myself and (Real Venture general partner) Alan (MacIntosh), have been pretty involved in other accelerator programs to one extent or another. But when you are running on your own and you really get down to brass tacks, there’s always more to it than you see. We took a long time to decide when we were ready to do it, and I think that decision, that preparation was worth while.

“The one thing we always thought was really important was making sure that we have the strength as a community, both mentors and the community itself, in order to really make it a viable offering both for the entrepreneurs who come and also for investors. When we look at the first cohort, we did manage to get a good mentor turnout, we did get a good community turnout. I think that Demo Day was a massive success, and we have managed to get already four companies well funded, and I think there could be a fifth just around the corner. So in terms of being able to make them venture-ready, we are certainly pleased with how that’s gone.

“I think the entrepreneurs who went through it are happy. I think we are happy with the community. We were happy with the mentor support, so in general it was a good performance.

“Looking forward, I think the first thing that has gone through our minds is recognizing that mentors like yourself are essential to the success of the program and that we put quite a bit of time and effort into improving the quantity and quality of interactions with the mentors. We really try to reach out to them and embrace them more and make sure they are really getting something out of it.

“What we are realizing is it’s quality over quantity. And I don’t necessarily mean just the quality of the mentors — we’ve always been happy with the quality of the mentors — but the quantity of quality interactions with the mentors, as opposed to having them just drop in and move on to other stuff. (With this cohort,) we probably have fewer ongoing mentor interactions, but more in terms of the actual depth and the quality of those interactions. And I think the teams are certainly responding to that.

“We are almost at the end of the first month, the first four weeks of the second cohort, and we start to remember how it was in the first cohort. Things move so quickly and we sort of forget how raw people are when they come in to these cluster programs. They really are raw, and I actually think that a lot of people who came to the first mentor day were pretty freaked at how raw some of the companies were, and the contrast between that day and the demo day is really phenomenal.

“The first month of the cohort really is an exploration of the idea and a twisting and a turning and it sometimes feels on paper that there’s less that happens in that first month, and it sometimes makes people nervous. But it’s in that time we are stepping back from the code which means that when you do put the pedal to the metal, you are really heading in a clear direction. We are now getting to that situation again where there has been some navel gazing, some soul-searching, some twisting and turning, not just on messaging but on the vision for the products. And I think next week we are really getting to that point where people are locking in what it is that they are going to be pushing the hardest for in the next month. And that’s when it moves from discussion and inputs from mentors to looking to put in place the business development relationships, to really starting to turn the idea into the business. That’s what sorts the men out from the boys, or the women out from the girls.”

Q: Did anything surprise you, through the tenure of the first cohort?

“I’m almost thinking no. I mean I’ve spent a lot of time on these things. I have been mentoring for three years and been involved in TechStars in one way or another for a while. The key thing is the feedback that we got (from the teams) to be harder earlier. There was, with the first cohort, a period of settling in. It was a honeymoon. (This time,) there has been no honeymoon. You know, you walk in through that door and within 48 hours, everyone pretty much realizes that they are in something different. I guess of all the things (that have changed), getting them in deeper quicker, making them really realize what they are up against is something we’ve have been very conscious of doing.

“I think we have been very pleased. I mean, you expect something to happen, but when it really happens and you see it in the flesh, it’s sometimes surprising to see it at all. But the idea of the teams helping each other, and the peer feedback and that peer-to-peer support is something I always knew was important, and it really became very obvious with the teams challenging each other and pushing each other, helping each other, supporting each other. That’s something we anticipated, but we were really pleased to see it actually taking off, because that’s not something we can control.”

Q: Did the fact that you had a first cohort successfully under your belt, that you had more time to really promote and talk about the program,  add up to a bigger or, even more importantly, a better class of applicant for the second cohort?

“I don’t know that it necessarily meant bigger and I really think the proof will be whether the cohort is better. But it could be that the cohort was better and we were just worse pickers. I do think that the applicants were more aware of what it was they were getting into. And obviously, we’ve only done one cohort, and I think we’ll get better and better and better at understanding what it is that makes a good team. Certainly on the first cohort, we thought we had a sense of what makes a good team but I think our selection process was somewhat influenced by the first one. I’m sure our next one will be influenced by this one, and it’s sort of getting an understanding of what doesn’t work. You actually find out what doesn’t work before you find out what works.”

Q: As a mentor, it has been visible to me some of the changes you have made from a mentor-facing perspective. What significant changes have you made from the team-facing perspective?

“The teams have been exposed to more input, more ideas, more people in the first months, than the first cohort was, and they’ve been challenged more. (Additionally,) as the program’s notoriety gets up, they’re getting more and more exposed to the sort of offers and services and other sorts of things that other starter programs are offering — discounts on this, special deals on that.”

Two separate film productions are being made of this cohort, and Stokes said he was looking forward to seeing what that process did for the teams and for the program itself.

“It’s going to be interesting to see what impact that has on the teams actually being filmed and involved in that. I think it’s good in terms of increasing the awareness of what this program’s about.

“One of the other things is: I don’t think it necessarily matters what stage your product is at, we can still really have a major impact even if you’re further ahead than you might traditionally have thought might benefit from accelerator. I really do think that even companies that are in market and are generating revenues or have good traction, also are genuinely able to benefit from an accelerator. Maybe that’s reflected somehow in the teams that are applying (because) here are a couple of teams that are further ahead, from a product and from a market point of view, than were in the previous cohort.”

Q: Finally, FounderFuel is a significant initiative of Real Ventures, not something that every venture firm chooses to do and presumably not something you had to do. Why were you keen on starting an accelerator program and has FounderFuel so far met those expectations?

“Success of a venture fund is based on identifying talent and, more than that talent, identifying the good ideas. Our objective when we were starting to look at FounderFuel, and how we work as a seed fund, was how can we identity talent quicker, cheaper, more effectively than ever before. So I think that’s one aspect, and FounderFuel certainly is a way of identifying talent.

“The second thing is whilst FounderFuel has the investor behind it, we treat our partners as four mentors among a hundred. And we sort of stressed to everyone that we are just that. We try and involve other venture funds, other angel investors as much as possible, the reason being that it’s part of community building. I think that the accelerator programs, because of the way they attract mentors, are the networking events of today’s early-stage startup environment. It’s the place where you go to interact with successful entrepreneurs, it’s the place you go to interact with VCs, it’s the place you go to interact with industry execs. It sort of is becoming a networking event and a community-building event, and I think by getting that, it gives some gravitas and a central point around which everyone can network and communicate.

“So identifying talent is something which we can get on one hand, and I think the community-building aspect is not just the strengthening of your own community, but is the other thing that a venture capital firm needs to do. It needs to have connections, and it needs to identify talent, and I think the accelerator program does both.

“And you know, if we look at the first cohort, on paper it’s making us money. We’ve already more than recouped our investment based on current valuations of follow-on investment into our companies in the first cohort. So I do see it as something which can make us money.”

Q: Any final thoughts?

“An incubator goes from strength to strength to strength, and I think, still only going on with the second cohort, we need to prove ourselves to our entrepreneurs, we need to prove ourselves to the mentors and the groups that form around us, and we need to prove ourselves to other VCs in the market that it is a source of deals. It’s very, very early days, we are learning, we are iterating, and we are listening to other people running other programs and as they recognize it, right now it’s at an early stage and we’ve got to keep on building on that base.”

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