Ready, Set, Accelerate

An accelerator at the American University in Cairo strives to have an economic impact

Ready, Set, Accelerate - main

THE AMERICAN UNIVERSITY in Cairo has long been committed to encouraging innovation, and it has pursued that goal by developing entrepreneurship programs as well as a Center for Entrepreneurship and Innovation. But in 2013, its faculty redoubled that commitment with the launch of Venture Lab, or V-Lab, an incubator for high-impact startups that promotes scalable and sustainable economic impact not just in Cairo, but across Egypt, the Middle East, and Africa.

The incubator, one of the first in Egypt to be based at a university, resides at the School of Business, where a pool of 35 faculty mentors and trainers help founders develop their innovations. In addition to providing a co-working space, AUC supports V-Lab by offering participants access to the library, campus facilities, professors, computer labs, and student clubs.

But the incubator doesn’t just offer entrepreneurs a chance to make AUC connections, explains Sherif Kamel, professor of management at the business school. “We help them develop a mindset of evidence-based entrepreneurship so they can launch their services with the leanest viable business model that is also the most customer-centric.”

Over the past five years, V-Lab has accelerated the growth of more than 100 startups that have created more than 500 jobs—and it’s expanded its reach into the fast-moving world of financial technology. In time, Kamel believes, V-Lab might even change the perspective of local business leaders. He says, “Incubators don’t just aid in creating and supporting startups, but also in disseminating a culture of entrepreneurship, which changes the regional mindset into one that is more agile, creative, innovative, and competitive.”

CYCLES OF INNOVATION

AUC’s V-Lab conducts two accelerator cycles per year, with about ten startups participating in each cycle. To find candidates, V-Lab calls for applications through social media accounts and email blasts, and between 360 and 450 entrepreneurs apply for each cycle. “The opportunity is not just confined to the constituents of AUC School of Business on and off campus, but is extended to the community at large,” says Kamel.

Applicants go through a four-stage vetting process. First, the V-Lab team looks for innovative startups that already have minimum viable products (MVPs) with commercial potential; then, it interviews candidates to get a thorough understanding of their business ideas. Next, it invites applicants to attend a three-day boot camp training event, where they learn more about V-Lab offerings; during the boot camp, the V-Lab team gets a chance to assess the entrepreneurs, their level of commitment, and how much relevant experience they have. Finally, the most dedicated startup groups are invited to pitch their ideas to a panel that consists of investors, mentors, and V-Lab personnel, and this panel makes the final selections.

Each cycle begins with an intensive four-month acceleration experience. During this time, entrepreneurs attend activities such as workshops, where they learn to refine business models, define customer needs, and conduct market validation; and knowledge sessions, where they attend talks on topics such as pricing, marketing, legal issues, branding, and leadership. Participants also attend Mentor Mingle events, where they meet with industry experts, business professionals, and experienced entrepreneurs and are matched with long-term mentors.

In addition, selected startups participate in the V-Lab Expo, a two-day public event where they demonstrate their products and services to the AUC community. “The Expo is designed to be a ‘soft land’ for startups to conduct testing experiments and interviews, as well as to accumulate a number of first customers and early believers,” says Kamel.

Ready, Set, Accelerate V-Expo

At V-Lab Expo, entrepreneurs meet members of the AUC
community to describe their products and connect with potential
customers and investors.

Once V-Lab participants have finished the acceleration process, they participate in Demo Day, where they pitch ideas to potential investors. Using money supplied by the university and corporate sponsors, V-Lab offers financial awards to startup teams at the end of the cycle. Depending on the sponsors for each cycle, graduates of the program receive awards of between 20,000 and 50,000 Egyptian pounds, which translates to between US$1,120 and $2,795. The award money helps them kickstart their companies as they enter a one-year incubation period with the lab. V-Lab does not retain any stake in the startups.

Ready, Set, Accelerate Demo Day

An entrepreneur pitches his product during a recent Demo Day
at AUC’s Venture Lab.

Even once they have completed their incubation periods, entrepreneurs tend to stay connected with V-Lab, serving as mentors and guest speakers in later cycles. Some even receive one-year extensions of V-Lab services as they continue to refine their business models. “This reinforces the idea for which V-Lab was created—to support the entrepreneurs, the startups, and the overall entrepreneurial ecosystem,” says Kamel.

As complement to these activities, V-Lab engages in outreach events designed to stimulate innovation throughout the region. These include three-day hackathons, some held on campus and some at facilities run by partner organizations; hackathons are built around themes to stimulate the launch of startups in specific fields. During these events, inventors come to the location to work on their projects and receive input from tech and business mentors, before competing in a juried pitch competition. Winners receive monetary awards that vary according to the event; the first place winners are invited to join the next acceleration cycles, while those in second place through fourth place secure shortcuts to the final panels.

“These inventors benefit from the exposure to the industry and the connections they accumulate during the course of the hackathon,” Kamel says. “The objective is to generate positive vibes and create noise around the space of entrepreneurship, not just within the school, but across the community.”

EXPANSION INTO FINTECH

In 2016, V-Lab launched the FinTech Accelerator, one of the few accelerators in the Middle East focused on financial technology, according to Kamel. It is sponsored by Commercial International Bank (CIB), Egypt’s largest private-sector bank; many CIB employees act as mentors and advisors to the startup founders.

Thirty to 50 startups apply for each FinTech cycle, and five are chosen through a selection process similar to the one used for V-Lab startups. The selection panel looks for startups that are addressing current challenges in the financial sector—particularly those with the potential to be disruptive. Participants represent a range of sectors, backgrounds, and experiences.

Like V-Lab, the FinTech Accelerator incorporates events, expos, knowledge sessions, and roundtable discussions that highlight challenges in fintech. Because of the industry’s complexity, participants attend specialized training sessions and meet weekly with subject matter experts for one-on-one coaching.

The FinTech Accelerator also hosts specialized outreach activities designed to heighten awareness about financial technology and to prime the pipeline for future applicants. For instance, in 2016, the school conducted its first FinTech Ideation workshop, featuring CIB personnel who discussed trends in digital banking and analytics; members of T20, a network of Egyptian alumni from global universities, also presented.

Ideation workshops generally are held at least once during each acceleration cycle, and V-Lab works with CIB partners to determine the theme or problem to address. During each workshop, attendees apply design thinking principles such as rapid ideation and prototyping to create innovative solutions to the problem at hand.

“The purpose is to incentivize entrepreneurs to work in the fintech space and coach them toward starting high-impact startups with strong problem-solution fits,” says Kamel.

BENEFITS ALL AROUND

While entrepreneurs can benefit from standalone incubators, university-based incubators often supply them with a wider range of resources, such as easy access to faculty and mentors, libraries, workshops, and other support. “Universities offer a learning environment that is limitless,” says Kamel.

University-based incubators also offer benefits to faculty, who learn from industry representatives; to students, who gain hands-on experience via cases, consultancies, and internships with startups; and to corporate sponsors, who find their own entrepreneurial instincts kicking in as they work with entrepreneurs. “They start thinking of new and innovative solutions,” Kamel says.

In addition, as part of a strong entrepreneurial ecosystem, the university deepens its connections with regional business leaders and cultivates a campus-wide spirit of innovation.

Even so, it is not a simple task for a university to launch an accelerator. “It requires a mindset shift, because the practical nature of an accelerator requires the world of academia to collaborate on creating value,” Kamel says. And because business innovations tend to move swiftly, while university initiatives do not, he adds that “pace is always a challenge.”

To do it right, he believes, each school must first identify the goals it hopes to achieve with an incubator. Only then should it begin to bring the accelerator experience into the classroom to provide students with hands-on experience launching new businesses.

“Administrators should not allow themselves to be distracted by what other accelerators or incubators are doing. They should capitalize on their competitive advantages to create the best possible model that will serve entrepreneurs in their regions,” Kamel says. “This is a journey, not a destination.”

When managed correctly, a university-based incubator can foster economic development throughout an entire region. “The school develops resilient entrepreneurs who can handle market challenges, attract investments to their communities, and serve their customers in creative ways,” says Kamel. “In that way, accelerators become of invaluable importance to emerging economies like Egypt.”