When you enter Entrepreneur First’s (EF.) London Bridge headquarters, you are confronted by an energetic hum.
Its low ceilings and exposed brick walls are more comparable to a carpenter’s workshop than a new breed of tech startup incubator.
But with 37 companies now worth an accumulative $130 million rising from EF’s short 3 year history, the two ex-McKinsey’s founder’s gamble is beginning to show signs of paying off.
Companies such as Adbrain– a data intelligence company at the forefront of the multi-screen advertising revolution, and ClickMechanic– which bills itself as being the Uber for car mechanics, are just two of the success stories that have emerged from the “pre-pre seed funding” scheme.
In someways EF is similar to typical accelerators and incubators. It helps startups leverage mentor and investor relationships to get a leg up.
However, there is one significant nuance.
Alice Bentinck, along with co-founder Matt Clifford, have reverse engineered the concept by bringing together Europe’s top technical talent, before they have the big idea.
“In the UK we don’t have a Stanford, or a place where smart, particularly technical people can go and find co-founders to build startups with… so EF is becoming the place where the most smart, the most ambitious, the most technical individuals meet and build their own startups,” Bentinck said.
A meritocratic environment with a rigorous application process; EF brings together founding teams with a mix of outstanding technical ability, and individuals Bentinck describes as “semi-psychopathic megalomaniacs.”
“We fund individuals to build their own startups and take them from the point where they are pre-team and pre-idea…basically just a very talented individual…all the way through the team development process, the idea development process…to the point of seed funding.”
Creating founding teams from scratch
EF’s iteration of the traditional incubation/accelerator model which brings together founding teams, solves a problem resulting from the sheer strength of the Tier 1, US based incubators and accelerators.
With an alumni list that includes Dropbox and Airbnb, Bentinck explains that:
“The US accelerators are very strong, Y Combinator in particular. It gets to pick first, and it takes 200 of the best teams per year.”
In addition, Y Combinator has created an extensive network of mentors and investors. It’s the industry leader with good reason.
But by building companies from the ground up, EF. builds and invests in founding teams that, by default, no one else has access to.
It’s a smart move that creates differentiation in a monopolized market which has seen diminishing market for everyone other than the leading accelerators.
The role of the incubator
Evolving over the last thirty years, business incubation began by developing industrial estates and small enterprise service centers in the 1980’s.
The offering of affordable space and shared facilities with select entrepreneurial groups sent their popularity rocketing.
This shifted towards ‘innovation centers’ during the dotcom era, and has grown exponentially ever since.
Perhaps the biggest change we’ve seen in the role of incubators and accelerators, has been the shift away from helping companies to survive during their early stages, to creating a collaborative ecosystem, which forms a network of support throughout a company’s existence.
It’s this kind of progress that paved the way towards the changes in the tech ecosystem we have come to know.
Because new technologies and ideas have always come from new ventures.
Breakthroughs by small groups of people in startups, bound together by a sense of mission and progress have changed the world for the better.
First is horizontal progress, and Thiel suggests that this takes something already done, and copies it because it’s known to work. Otherwise known as staying exactly where you are.
Second is vertical progress. And it means doing new things that no one else has done.
EF sits firmly in this second category.
EF’s approach of creating founding teams from scratch, and investing in them pre-idea may be risky, but it appears to be showing signs of fruition.
One can’t help but feel there are shades of Darwinism pent up in this new model.
Could this be the start of a new fight against US heavyweights like Y Combinator?