Stage 5: Enterprise Acceleration
Enterprise Acceleration
Once a disclosure has gone through the Derisking stage and successfully exits it with the intention of becoming a startup, it enters the final stage of the Commercialization Engine: Enterprise Acceleration. This stage accelerates the disclosure to market. Key milestones in this stage include capital funding, team formation, board operation, unit economic analysis, and business execution. Companies accelerate through the stage by completing the following three steps:
- Incubation
- Acceleration
- Monitoring
Incubation
The purpose of the incubation step within the Enterprise Acceleration stage is to attract high-level talent to lead the new startup company. High level talent means seasoned and effective entrepreneurs and other subject matter experts specific to the company. Once a founding management team has been formed the disclosure becomes a startup and moves on to the next step in the Enterprise Acceleration stage: Acceleration.
Acceleration
When a startup company enters the acceleration step of the Enterprise Acceleration stage it must:1) Either raise an institutional seed round of $100,000 or more or generate enough sales for the company to be self-sustaining, and 2) Form an effective board of directors.
1. Institutional Seed Rounds Institutional seed rounds are the first professional investment a company will receive to accelerate its growth. They come after pre-seed rounds (which are generally small investments of less than $1 million into the company funded by angel investors as well as friends and family and are designed to get the company off the ground). Institutional funding comes from established venture capitalists and represents external validation that the company has strong potential. We expect our companies to raise at least $100,000 in this round. For perspective, the average seed round in the United States in 2019 was between $1 and $5 million. The most common path for companies is to raise capital rather than trying to “boot-strap” the enterprise.
2. Effective Board of Directors The most successful startups create boards of directors that bring experience and direction to the company. Best practice is to have no more than two founders sit on the startup’s board with the remaining being a mix of investors and independent experts. Effective boards set the strategy, long-term vision and priorities of a startup. It is common to allocate a new board seat for the lead investor in a seed round and every subsequent funding round thereafter. We expect our companies to not only create a board of directors, but to follow best practices when doing so.
Monitoring
Once a startup has formed a strong board of directors and either raised institutional seed funding or become self-sustaining in revenue, it will be designated a “potential high impact startup” and will have transitioned successfully out of the Commercialization Engine. The IDEA Center will, however, monitor the company through its lifecycle and require that it report on its status at regular intervals. We will also assist where needed to help the startup execute its commercialization strategy. This assistance may come in the form of helping to locate additional growth capital, customers, management team members, business partners, scaling, distribution, and overall strategy.