Any good chef knows the importance of slow cooking and the quality that comes from allowing a dish to simmer and gradually gain full flavor. But there also are times when you need to pop things in the microwave and heat up your food fast. There can be value in both approaches.
If Birmingham’s Innovation Depot is the slow cooker, then the business incubator’s Velocity Accelerator program is the microwave. Over a 13-week span, startup companies that take part in the program learn how to crank up the temperature on their fledgling businesses and make as much as a year’s worth of progress in only three months.
Innovation Depot debuted its Velocity program earlier this year with 10 companies in the inaugural class. Nine of them successfully made it through the program, and four have since received follow-up funding that has helped their companies rapidly grow.
A prime example is Planet Fundraiser, a company that created a mobile platform making it easier for businesses to donate to charitable organizations and causes. Since graduating from the Velocity program, Planet Fundraiser has secured more than $1 million in investment funding and expanded to 14 employees, all while still operating out of Innovation Depot.
“Our experience with Velocity was a game changer for us, ” says Drew Honeycutt, who founded Planet Fundraiser along with Kasey Birdsong. “It introduced us to a lot of mentors and investors in the community, and it allowed us to work with other like-minded entrepreneurs. There’s no doubt that being part of Velocity was a huge piece of our success so far.”
That is exactly what Innovation Depot CEO Devon Laney wants to hear. He says the incubator began the Velocity program in an attempt to help startup tech companies receive the resources they need to give their fledgling business a boost beyond what can be found by simply being a tenant at the Depot.
“About four years we started to think strategically about how we could leverage this resource that is Innovation Depot beyond being just an incubator, to thinking of it more as a true technology-based, economic-development resource, ” Laney says. “With the Velocity Accelerator program, we provide these companies with all of the resources, mentoring and relationships that they need to help them gain traction and make a lot of progress in a short amount of time.”
Laney says more than 100 companies applied for the inaugural Velocity class, which was overseen by Depot tenant Nate Schmidt, founder and CEO of virtual gift-card provider Instagift. The program was designed to be similar to the Techstars accelerator development program that Schmidt went through in Seattle in 2010 during the early days of Instagift.
The program consists of a 12-week curriculum with a one-week break in the middle. During that time, the business founders receive advice from and make connections with more than 50 mentors, industry experts and potential investors. This group includes such major players in the business world as Shipt founder Bill Smith and Blue Cross Blue Shield CIO Scott McGlaun, as well as representatives from the Alabama Department of Commerce, the Birmingham Business Alliance and Alabama Power.
“If we had not been in Velocity, we probably wouldn’t have met most of those people, ” says Honeycutt, whose company ended up receiving investment funding from Shipt, as well as a San Francisco-based hedge fund. “Learning from people who have gone through all this definitely helped us navigate some of the waters better when it comes to raising capital and starting a business. Just having those relationships with people who were willing to share their stories with us and offer advice was very valuable.”
In addition, Innovation Depot was able to provide each member of the Velocity class with $50, 000 in seed capital, as well as more than $800, 000 in perks, such as software tools and various infrastructure pieces that the businesses could utilize while building their companies. Laney says funding for the Velocity program came from a combination of a partnership with the Global
Accelerator Network and donations from the local Birmingham business community.
“We’ve raised $3 million to fund this program for the first three years, ” Laney says. “We told people to think of this program as site prep for startup companies. But instead of clearing land and putting in infrastructure, we’re going to provide them with seed capital and leverage the resources that are already present at Innovation Depot.
“That resonated with the local business community. We could not have done this without their support. They aligned behind this and understood the importance of it. And just as important as the money are the people who serve as mentors and provide feedback to our companies. The money and the resources are great, but companies really come to (the Velocity program) for the expertise of our industry partners.”
Laney says the initial experience with Velocity was so successful that the Depot has hired a full-time employee, Sarah McFarland, to oversee the program moving forward. In addition, the Depot is bringing in a managing entrepreneur-in-residence for 2018, Beth McKeon, who graduated from an Iowa startup accelerator in 2014 and has spent the past two years as the managing director of the NMotion Accelerator in Lincoln, Nebraska.
“Beth understands the accelerator world from both a management perspective and from an entrepreneurial perspective, ” Laney says. “We’re thrilled that we were able to recruit her to come to Birmingham. Getting her here helps validate what we’re doing. It shows we’re getting the attention of the industry, and people don’t see this as just some little program we’ve thrown together.”
McKeon says her role will be to work closely with the Velocity companies, to help them solve problems and connect with industry leaders in the Birmingham community and beyond. She says she has experienced firsthand how accelerator programs can truly help accelerate the growth of a startup.
“I’ve seen programs struggle for a year on their own and then come into an accelerator program and in 90 days they have paying customers and a clear path to growth, ” McKeon says. “That kind of progress is possible because of all the resources and the access to the mentors that would be hard to reach outside of a program like this.
“When you surround a new company with all of that, some great things can happen. An incubator is wonderful for long-term growth, but an accelerator is a magical thing to add to the business ecosystem.”
Nine young companies graduated in the inaugural class from Velocity Accelerator
Planet Fundraiser: Helps businesses manage their charitable giving and support causes that their customers care about. Customers are able to raise money for their favorite school or non-profit just by making everyday purchases at local merchants.
Glow: An on-demand beauty app where women can find hair styling, spray-tanning and makeup services from qualified professionals. Glow recently expanded into Nashville.
Book-it Legal: An online marketplace that connects attorneys with law students to work on a per-project, on-demand basis.
Pointz: A mobile customer loyalty app. The app uses sensors in participating businesses to detect users and offer an award if the phone stays in the business for a set period of time.
Delect: Enables restaurants to offer mobile payments and rewards and to market directly to customers via mobile phones.
Healthfundit: A crowd-funding platform for discovering and contributing to medical research.
Covalence: An immersive software development boot camp. It’s designed to help cities meet needs for computer science talent by training individuals with no prior experience to become junior-level developers. Covalence operates in Birmingham and has expanded to Chattanooga, Nashville, Huntsville and Ft. Lauderdale.
Quantalytix: A software platform providing comprehensive risk analytics and balance sheet management for financial institutions.
LikelyAI: Predicts traction of images on Instagram using Artificial Intelligence. LikelyAI extracts thousands of data points from an image (objects, colors, emotions, shapes, lightning, size and positioning) and recognizes the most popular patterns to assist marketers in choosing the best image for their post.
UAB’s Fast-Track Initiative
Even though UAB is often called the economic engine of Birmingham, that engine was in need of a tune-up when it came to creating new companies. In 2016, the university saw a total of only six startups emerge from its research labs and classrooms, despite having $538 million in research expenditures.
In an attempt to increase that number, the university launched the UAB Commercialization Accelerator in August. The goal of this new program is to help faculty, staff and students turn their business ideas into reality.
“If Innovation Depot is the business incubator, then you can think about what we’re doing as being the pre-incubator, ” says Kathy Nugent, managing director of the UAB Institute for Innovation and Entrepreneurship. “We want to prepare these companies so when we give them a license and they go to the Innovation Depot or anywhere else, they’re better equipped to grow and produce economic development. But to do that we have to have the infrastructure and the initiatives in place that allow that to happen.”
Nugent says the early results are promising, as the program vetted seven potential new companies within the first two months.
“It’s a very focused and strategic approach to increase the volume of startup companies that we have at UAB and increase the quality because we’re putting so much work into them before we spin them out, ” Nugent says. “Then they can go out into the community and continue to grow, get funding, generate revenue and create jobs. Which is what economic development is all about.”
Text By CARY ESTES // PHOTO BY Cary Norton