From Discovery to Selection: 3 Observations from Startup Ecosystems

In a hyper-connected world, a grueling road tour seems a counterintuitive way to recruit bleeding edge innovators; however, we've found it to be a key part of our success. In fact, one of the Microsoft Ventures startups from our last batch relocated to Seattle to participate in the Emerald City's strong startup ecosystem. By leveraging the many Microsoft Technical Evangelists in each city on our tour, we were able to connect with several talented startups in person.

From Discovery to Selection: 3 Observations from Startup Ecosystems

Each of the city tours had a viral effect, driving a large number of applications that continued to pour in for several days—even weeks—after the event had ended. We ended up traveling to a staggering 14 cities in the United States and Canada. Our goal was to invite 25-30 startups to participate in our “Jury Day,” the final selection process on December 15th, and select between 10-15 companies for the next accelerator class.

Between the city tours, recommendations from venture funds, and applications from our website, we selected 26 startups to join us on Jury Day. Our jury comprised almost 50% investors (who traveled from out of state and country to participate), 15% serial entrepreneurs, 5% external corporate executives, with the remaining participants coming from Microsoft. After deliberating and choosing our finalists, we are confident the next cohort will take the Seattle accelerator to a whole new level.

In addition to meeting top machine learning startups, it was fascinating to learn about and experience the blooming startup ecosystems around the country. All ecosystems appear in different stages and have slightly different focuses (e.g., Washington D.C. startups focus on government and education, while L.A. startups focus on consumer and entertainment). During my visits, I observed that strong and thriving startup ecosystems possess the same three core attributes: community support, anchors and access to talent.

From Discovery to Selection: 3 Observations from Startup Ecosystems

COMMUNITY SUPPORT: When I speak of community support, I am referring to government, access to venture capital in the local area, service providers (e.g., lawyers, accountants, etc.), and universities. It’s pretty common for people to bring up community support when describing a thriving startup ecosystem since most ecosystems have it at some level. While traveling to Chicago, I was introduced to 1871—a co-working space for startups and entrepreneurs—which has with over 50k square feet (soon to be 100k square feet). The space is full of investors, customers, partners, service providers, government, startups, and entrepreneurs.  It’s even home to a restaurant so you never have any reason to leave! Unlike other co-working spaces, 1871 is a non-profit and truly shares the same vision as the organizations residing within the building.

From Discovery to Selection: 3 Observations from Startup Ecosystems

ANCHORS: When you think of Seattle you think of Microsoft, Amazon, Expedia, etc. Silicon Valley is also full of large anchors like Google and Apple, to name just a couple. These large enterprises improve the talent pool, inject wealth, and provide tremendous support to the local startup ecosystem. It’s easy to think of anchors in some of the major innovation hubs like San Francisco and Seattle, but what about places like Texas or Utah? While visiting both Provo and Salt Lake City, it was easy to see the role anchors played in the ecosystem. Even TechCrunch recently discussed the success and momentum Utah is experiencing. The companies were numerous and the quality was far above par. We ended up extending invitations to six Utah startups for Jury Day. Here’s a list of just a few of the anchors molding the state’s success:

  • DOMO - Raised $500M @ $2B Valuation & Most undervalued unicorn by CB insights
  • Omniture - Sold to Adobe for $1.8 Billion
  • Vivint - Sold to Blackstone for $2 Billion

ACCESS TO TALENT: How many times have you heard “people are your most important asset”? Some of the smartest executives, entrepreneurs, and thinkers stand behind this notion. If it holds true, the geographical location of your startup should have a good talent pool to pull from. Both NYC and Boston have an enormous number of colleges and universities, with several being ranked as top schools. The areas are bursting with intellectual capital, which will continue to improve these ecosystems and the quality of local companies.

Academia is obviously only one way of acquiring intellectual capital, but other avenues typically involve some kind of facility for learning and networking with other like-minded individuals as well. Without a strong academic presence, a budding startup ecosystem will rely on self-taught technologists or coding boot camps like Startup Institute (founded out of Boston). With higher prices for formal education, I believe more ecosystems will be educated by private organizations like Startup Institute, or receive experience from local anchor companies. One thing is for sure, though, and that is startup ecosystems will likely continue to have three things in common: community support, anchors, and access to talent.

To stay up-to-date on the incoming class and application openings, follow us on Twitter @MSAccel, join the conversation by using #DoMoreData, and be sure to check back when we reveal the selected startups here on our blog!