In a converted biscuit factory in Bermondsey, South London, 100 would-be entrepreneurs are searching for their perfect match. It’s afternoon on the second day of Entrepreneur First (EF), the six-month accelerator programme that takes technically talented strangers and moulds them into co-founders. Yet although the people in the room have left jobs at Google, Credit Suisse and the University of Cambridge to be here, all the skill and will in the world are no substitute for chemistry, and between workshops on creativity and customer acquisition, the would-be entrepreneurs talk intensely and sketch out plans on MacBooks, working out if they are right for each other. “It’s X Factor without the tears,” says Alice Bentinck, co-founder of EF. “Most of the time."
EF is the tech accelerator that’s also a training school for entrepreneurs. Since it was founded in 2011 the company has produced 75 companies that have gone on to raise $100 million (£70m) in venture capital funding. But whereas most accelerators look for startups with plans and people already in place, EF begins with individuals “pre-team, pre-idea,” winnowing the most suitable down from 1,000 applicants.
Read more: Twitter buys machine learning startup Magic Pony Technology
“They genuinely have some of the best technologists,” says Wendy Tan White, the co-founder of DIY website builder Moonfruit, who joined EF to support the extension of the programme. (Tan and her husband, Moonfruit co-founder Joe White, worked with Bentinck and Clifford to raise an extra £40 million to extend the EF programme to two years.) “This is not a normal fund. It’s a company builder.”
The EF process gained some significant validation on 20 June 2016 when Twitter announced that it had acquired visual processing startup Magic Pony Technology for a reported $150 million (£102m). Magic Pony’s founders, Rob Bishop and Zehan Wang, studied together at Imperial College, but didn't meet until they both joined EF’s third cohort in 2014. "You'd think if people were going to meet anywhere it would be Imperial," says Clifford. "But until you get to the point where starting a startup is a normal thing to do, you don't get that Stanford effect in even the top British universities."
Magic Pony is only the second EF company to exit, and the first since the opening cohort, in 2011, when the accelerator had less of a stake in the companies it produced. EF's initial $16,000 (£10,899) investment in Magic Pony returned $6.5 million (£4.4m). "It's definitely the first time we can say to people, 'Hey, we know it works,'" says Clifford. "There were many doubters, so it's quite nice to be proved right."
EF begins with three months of team-building and idea development. Originally the whole group stayed for the entire three months, living off a stipend of £1,200 a month. From March 2017, however, participants will be given a lump sum of £3,600 and will have a mere eight weeks to find a co-founder. If participants fail to form a team within this time, they will be asked to leave the programme – an exit eased by more structured training and assistance in finding a job, most likely with a startup in EF's growing alumni network. Bentinck describes the new arrangement, which goes by the name of the "EF Fellowship," as "a more formal way to exit the programme."
After this first phase, Bentinck and her co-founder Matt Clifford, both 30, decide whether or not to take an eight per cent equity stake in the newly-formed companies, providing successful teams with another £10,000 and (if they get all the way) access to a £70,000 convertible note.
To encourage substantial, money-making propositions, the pair get people to focus on their “edge” – their competitive advantage, usually a technical skill. “The status quo is to solve a problem you’ve experienced, but that leads to people solving small, trivial problems,” says Bentick. EF companies don’t build dating apps or social networks for pets, but “unsexy, enterprise things”: in the most recent, fifth, cohort, 20 of the 25 graduating companies were B2B and 15 were working on a branch of artificial intelligence.
The EF process is not infallible – at last count, 27 per cent of participants failed to make it through to Demo Day – but Bentick and Clifford, who set up a branch of EF in Singapore in January 2016, believe that in the intensely competitive world of venture capital, the best way to discover startups is to make them from scratch. “Our bet is, if you start with world-class individuals who are not in a company, you can build world-class companies,” says Clifford. “It’s early days, but on paper it’s starting to look like that’s right.”
This article was originally published by WIRED UK
