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Seeqnce is a Lebanon-based accelerator.

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6 tips from failed accelerators

Aug 4, 2014

by Aline Mayard , August 4, 2014 It’s been four years since the first accelerator was launched in the Arab world. Now, almost every country in the MENA region has one, and some have earned international credibility (see our  list ). Inevitably, though, over these four years, some of the  pioneers  have disappeared. An accelerator is like any startup; it has to do with timing, competition, team management, funding, cashflow, among other things. Sometimes, even though they offer a great service, things just don’t align. This is what happened to Seeqnce, Meydan, and Tahrir2. We sat down with some their founders and cofounders to understand what happened, and how their experiences can help build better acceleration programs in the region. Seeqnce, the Lebanese experimentation This Beirut accelerator, launched in 2011, was unique in that it was co-founded, funded, and managed full-time by five friends. It’s a huge team, but, acknowledges co-founder Fadi Bizri, “we couldn’t have done it had we been fewer.” The team had an intense (and very long) three-month outreach campaign to scout idea-stage entrepreneurs, and an equally long selection process. “We had no choice, and [for] the second round, we would have shortened it,” says Bizri. They also opened, and set up themselves, a well-designed space in the Hamra neighborhood, which took time. Once in effect, the accelerator quickly made a reputation for being intense, even for an accelerator, with entrepreneurs staying in the office late at night, and the organization team being really engaged. “We had to succeed,” says Bizri, “because it was a first time, and we [the accelerator and the startups] had to raise money.” Seeqnce invested $76,000 USD (half in cash, half in services) in each startup. Even though the team was happy with the results of the first and only session – three startups out of eight made it out; these were Et3arraf , Presella ,  Etobb  – they decided to stop the program. “There were some differences among the management which led to us going our different ways,” says Bizri. But both co-founders we interviewed, Bizri and Michel El Meouchi, are clear on one thing: had the team continued, they would have been able to raise money without a problem, and to attract more talent. Tahrir2, the post- Egyptian revolution dream Driven by a strong belief that the economy has to be decentralized, and that entrepreneurs have a crucial role in building the economy in the post-revolution Egypt, Samer El Sahn, the former CEO of eSpace, and Mohamad Gawadat, then Google’s Vice President for Central & Eastern Europe, Middle East & North Africa, founded and funded Tahrir2 in Alexandria in April 2011. The accelerator was open to idea-stage entrepreneurs “with challenges,” meaning young graduates and women, say El Sahn. The acceleration period was initially meant to be six months, but turned into a one-year session as startups needed more time. The program invested between $90,000 and 140,000 USD in each startup; funding was doled out in four stages (read how in our  profile ). Of the seven startups they invested in, four are still operating. But this wasn’t enough to raise money for the accelerator. In 2013, says El Sahn, Egypt was crippled with economics and social issues, and business angels remained skeptical of tech industry projects due to their novelty, and angels wanted to see return on investment, which the accelerator couldn’t yet demonstrate. So, they put the program on hold, while continuing to manage their portfolio. But El Sahn is confident that they could reopen the program once the environment is more favorable. Meydan, the Jordanian pioneer Launched in May 2010 by seasoned entrepreneur Maher Kaddoura, this accelerator offered a 100-day acceleration program, and 10,000 JD to bring startups from the idea stage to MVP. But after 18 months, the applicant pool dried up, so they had to shut down the program. This scarcity has several explanations, the most important of which was probably that the market wasn’t mature enough and “Oasis 500 came up, and sucked up all the remaining candidates,” explains Kaddoura with no bitter feeling. A good outreach campaign could have helped but the accelerator didn’t have the funds or staff to promote the program. The accelerator also had a hard time proving its concept and getting a good track record due to a lack of motivation on the part of entrepreneurs, as well as a lack of communication with investors, which made it harder to get follow-on investments for the accelerated startups, causing them to shut down. 6 tips Despite everything, the founders of these programs have drawn some lessons from their experiences. Here are a few tips they have for acceleration programs. 1) Find the right balance between helping and propping up At the beginning, Seeqnce’s startups were spending two hours a week with each of their two mentors, but soon, the founders ended up spending all of their time helping the startups. “This was beneficial,” says Bizri, “but then we noticed we were spending most of our time with the startups that were progressing the least. If this startup is underperforming, you realize you shouldn’t be putting more time into it.”. “You have to find that right balance,” says Bizri. “Spend time but don’t hold their hands.” Tahrir2’s El Sahn faced a similar issue. “We found ourselves unconsciously helping startups we’ve invested in. You have to make sure they can grow by themselves, see if you should put more money and more time, or pull the plug.”  Seeqnce's workstation 2) Communicate with the community Seeqnce might have spent a lot of time doing outreach, but this brought them great candidates who developed several great projects. Conversely, Meydan’s demise is mostly due to a lack of outreach and communication, believes Kaddoura. “You won’t have enough deal flows if you don’t promote your program,” he argues. His tip: build partner relationships from day one. El Sahn believes the only way to get great candidate is by being part of the community. Before investing, build your community, give TED talks, and go to events, he recommends. 3) Work on the selection A startup at the idea stage is basically just a team, so you have to pay attention to the teams first, agree the four entrepreneurs. Back in 2011, in Lebanon, building a team was a huge challenge, so Seeqnce decided to integrate team building in their process in order to get teams that would work well together and have all of the necessary skills (development, design, and business). They gathered the candidates a few times to do mini hackathons, giving different groups three hours to work on project. This way, candidates had the chance to size each other up and choose with whom they would work best. “Back then, I don’t think there was any other way,” says the entrepreneur. Meydan didn’t have selection process like this, but Kaddoura strongly believes it’s crucial to go through a phase to prove that candidates have potential. For El Sahn, selecting a team at the idea stage is first and foremost an intuition thing. “Don’t try to put reason in because it’s too early,” he says. “If you like the entrepreneur, invest.” Tahrir2's work place 4) Pay attention to the teams “After two months in a high intensity environment, people fight, that’s normal,” says Bizri. “But there are a good type [of fights], one caused when all the team members want to do well, and another, bad type, caused when some is doing more than others.” Four moths in an accelerator is a good test for teams because they go through a lot, and can spot problems that might explode later, probably causing more damage. “Teams need to define the relationship: are you in for the long-run, is it a side project, what do you expect from it, etc. It’s ok if someone leaves,” Bizri says. The accelerator team has the important role of mediator, he believes. 5) Engage the investors The four managers agree: it is difficult for startups to raise money, so accelerators need to engage investors from day one. For Kaddoura, you need to arrange funding deals with partners from the beginning; Seeqnce’s El Meouchi believes that you need to let the investors know how the startups are doing so that when the startups are looking for money, investors already know and trust them. The challenge, he says, is that you don’t want to saturate them or bore them with updates. Another challenge, Bizri believes, is that angel investors don’t know about startups: “There is work to be done on the investment side to make their approach a bit more sophisticated. It’s a work in progress.” 6) Don’t burn through your cash “You need to practice what you preach,” says El Sahn. He acknowledges that he encouraged startups to be careful of burning through their cash, but Tahrir2 made that very mistake, spending a lot of money on a great office, amenities, etc. Now he believes he should have saved this money, and spent it on follow-up investment or on investing in additional startups, which could have led to return on investment and attract more investors. He believes startups should pay for rent and overhead themselves to create a sustainable model and save money. His tips to startups: make sure you have enough money to last five years. -- An accelerator is like any startup: it’s in constant evolution, and it has to learn from its experiences. Like startups, accelerators have to share their knowledge in order to progress. Have you attended an accelerator? What did you like? What failed? Share your experience below. -- Aline is French Editor at Wamda. After having worked for a French startup, she moved to the Middle East. You can follow her on Twitter  @aline_myd , connect with her on  LinkedIn , or reach her at aline[at]wamda[dot]com.

Seeqnce Investments

1 Investments

Seeqnce has made 1 investments. Their latest investment was in Et3arraf as part of their Seed on January 1, 2014.

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Seeqnce Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

1/9/2014

Seed

Et3arraf

$0.15M

Yes

1

Date

1/9/2014

Round

Seed

Company

Et3arraf

Amount

$0.15M

New?

Yes

Co-Investors

Sources

1

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