Apr 30, 2021
Do you have a start-up that launched during the COVID-19 pandemic? Are you in need of help taking your business to the next level? Should a start-up join an accelerator? What is an accelerator and how can one help your start-up succeed?
I’m Hilary Topper and this is Hilary Topper on Air. Today I’m speaking with Laurie Cercone, Director of Investor Relations of the Newchip Accelerator portfolio, a subsidiary of ASTRALABS. Laurie, welcome to the show.
Laurie - Thanks, Hilary. Glad to be here.
Hilary - So can you tell us a little bit about yourself and your background?
Laurie - I have a background that stems for many, many years, working for companies of all sizes from startups, where I helped them scale and had a successful exit to larger companies. My first company was acquired by a Fortune 50 company, so stayed on for five years and helped with simulating the company into a much larger organization. And I have a real passion for startups though. So I have mentored startups in several different accelerators before joining New chip. And I'm also an investor. I belong to one of the largest angel networks in central Texas. And so, for the past five years, I've worked on several committees including the investor committee where we screen and we help companies that want to apply for funding, kind of get through the process and I'm on the board as well. So, I really have a passion for helping companies and especially, helping them gain funding.
Hilary - So that's awesome. So talk to us a little bit about Newchip and how it starts and helps startups.
Laurie - Sure. So Newchip as mentioned we're an accelerator. We are industry agnostic. So we work with companies in every single industry and we're also geography agnostic. So we work with companies in the US, and also companies abroad. I'd say about 25% of our companies are now from outside the country and about 75% inside the company, but are inside the country. But we, again, work with companies of all different stages from pre-seed seed and series a. What we do is we really kind of help them. It's a six-month program and we help them scale. And we've got a network of both mentors that they are paired with a large staff that helps them from the time that they are admitted throughout the course, we have people from our success team that stay with them throughout the entire six months to make sure that they're on track. We have an investor relations team, so I'll get into that a little bit more as we go, but that is pretty much what we do.
Hilary - Very cool. And why is it that accelerators, what makes them different and what makes Newchip so unique?
Laurie - Yeah. So, all, accelerators are very, I mean, what makes us unique is that, well, first of all, we don't take equity in the companies and that is pretty uncommon. Most accelerators take anywhere from 5% to 10% equity. And so, for a company, equity, I think is the most precious thing you have and you can't get equity back, you could always get money back but equity is one of those things once you give it away, it's, you know, so you have to be very careful. I think that's one of the main considerations companies should have, but we are just a fee-based program and that fee is, basically, just a flat fee and we don't charge for any extra services that we provide. It covers all mentoring, all of our workshops, all of our masterminds, all of our connections to all of our investor network. So it's very inclusive and we partner with a lot of services upfront with other people in the ecosystem. So it's quite a valuable program, all on one all around. The other thing is that we don't require companies to attend in person even prior to COVID we were online and the benefit of that is companies can actually go through the six-month course, but they can go through what their own pace and for a busy CEO or busy founder tying up or having to relocate to a city or being tied up in classes all day can be pretty disruptive to your business.
So really kind of having the flexibility to go through the course at your own speed. Whether those be in the evenings or on the weekend, that's a big plus. And even the mentoring. And I mentioned that we pair our companies up with mentors. Our mentors are world-class. We have over a hundred mentors in every single vertical and many of our mentors, most of our mentors have been founders and co-founders themselves. So even those mentoring sessions, which are several hours of mentoring per month, can be customized to best fit the schedules of the mentors and the companies that they're mentoring. And so it is pretty flexible and that's a big benefit. And then we really put a focus on teaching our startups, how to fundraise.
A lot of the course is just about how to build the network out. We give them tools to reach investors. We teach them how to build their funnel. And then we actually make those intros to them. We have a lot of different ways to do this. Every other month we have a virtual demo week and this is a week-long online conference that our companies can attend. Usually, they attend their first one about halfway through the program and then they can attend a second one usually about the time they graduate. But that can be pretty flexible. We've had companies that have graduated and attend as well. And so then, in addition to that, and we have over a thousand investors watch the online demo days and connect and request to be connected to companies that they see present during that demo week.
So it's really a great way. We do hundreds and hundreds of intros that way, but in addition to that, I mentioned we have a whole team in investor relations. And so our team works to build our network out. So every day we're reaching out to, and we're building relationships to invest with investors and those range anywhere from a VC, a corporate, a corporate fund or a family office, or an angel investor or an angel group.
And we understand and we learn about the investors’ thesis. And so then we curate companies that meet those requirements, meet from an industry perspective, a vertical perspective, and even a stage perspective. So we're sending our investors. Deal full that really meets their criteria. And so that's another way that we connect your companies in the final way is we have office hours, which take place every week. And through these office hours, we are our investors’ book. These are an hour to two-hour-long sessions. And then we invite companies to that meeting. And it's a virtual meeting and the companies rotate in spend about 20 minutes with the investor to give them an overview, and really kind of get feedback and see if they're a fit and then they move on to the next step if there's interest, but we've gotten huge recession because of that. So, again, kind of wrap it up, we just offer a lot more and really kind of put a focus on our companies, getting investments and connecting them to both investors to help them get funded, but, also, strategic investors as well, which could be very critical to getting to the next stage in their growth.
Hilary - So when you are a group you need entrepreneurs to apply to this or do they go through an application process and then…
Laurie - Yeah, they actually do. So they come in, they apply with our admissions team and we actually, as I mentioned, they do apply. They do have an interview with our admissions team and we're really looking. We want to make sure at the minimum that there's a product-market fit. And we do this by, we have three different tracks of pre-seed tracks. So we've been at the pre-seed Trek or pre-revenue track. We really want to make sure that the company's done their homework. And they've either sold a little or they've got some, a little bit of investment already from outside of their own family. So, they've raised a little bit, or are they at least gotten not letters of intent from customers or they have established a product market fit, but we do have, like I said, three different segments that we put the companies in and the segments vary a little bit from the pre-seed all the way up to the series A and so we help each one with customized content and really customized coaching based on where they are in their process. Of course, series A companies, a lot of times, you know, they're onto raising their second round. And so there, how we help them is more on scaling and growth. And maybe, you know, some companies that we have are post series A. So, we work with some investors that are more growth-oriented and we just kind of target more what we're doing just based on where they stage is.
Hilary - That's awesome. This sounds like a great, great program now. Um, You focus a lot on helping women in business, I was reading. So why are diversity and capital inclusion for women so key during this time and how does your company help?
Laurie - Yeah, so we have a lot of women-led companies who are within our portfolio. We have a lot of minority companies as well. And I really think that, if a woman-led company is, is critical and is greatly important to success. I mean, women are selling to women who are purchasers, whether they're purchasers in a B2B context, or the women are purchasers in a B to C context, women can relate to them. Minorities can relate to them. So it really depends on what is critically important for companies, to be well-diversified and to really have very diversified management. Well, how we can help that process is because we work with so many investors. When a company comes into our network, we have network investors that we've worked with and when we make those introductions, the first thing is that, because our investors understand our process, they know that by the time we were making those introductions, the companies are ready. They've been through our program. Usually, we don't make introductions until we know that the company has an investment strategy, which we work with them on, they have a pitch deck, which we work with them on. Do they have all their deal documents in order? And so our investors really understand that by the time we're making these introductions, the companies are ready. They've been worked with, they've got a clear strategy. And in addition to that, because we've worked with them over a period of time, they're more receptive once we make the intro. Then if companies in general just went to them and sent them an email, a cold email. And so a lot of times we're getting many introductions to founders or leaders that may typically struggle because maybe they're not in that inner network. Maybe they don't have that connection. So we provide that connection for them. And then we also have many in our network. That really liked to and have a focus to invest in women-led companies. So a lot of times what we look for is, you know, besides the company's industry, what other criteria do they have that we can kind of hone in on? So, besides it being a SAS, B2B company, or a consumer product company where we have investors is there any other thing that would allow us to connect them. So, you know, is there a woman leader where we might have investors that are specifically looking to invest in women-led companies? Is there a social impact component because we have a lot of investors that want companies that have a social impact, is there a health and wellness, is there an environmental impact? Is it sustainable? So there's all these different things and we really kind of drill down to really kind of make the best. A fit, not only for the industry but all these other factors, which really helped women-led companies.
Hilary - Hmm. So interesting. Well, before we move on, I just want to take a minute out to thank our sponsors. Please support our sponsors and tell them that you heard about them on Hilary Topper on air. Special thanks to the Pegalis Law Group, The Profit Express, Pop International Galleries, The Russo Law Group and Gold Benes LLP. So back to you, Laurie, we're talking about accelerators and how they can help startups get to the next level. I'd like to talk to you a little bit about COVID-19 recession and how businesses are really struggling, how can Newchip help? And can you tell our listeners what's really going on with new funding initiatives and why that's so important?
Laurie - Yeah. Definitely, this past year has been very challenging for businesses and there's been a number of programs out there to help businesses and I fully support businesses getting the help that is offered if they can apply and they can get that help, but we're accelerators and specifically, Newchip helps, which is different. Or in addition to all of that help is that we really have a whole team that really kind of helps a company take a look at their business and really determine what and how the business can expand, how they can pivot. And so, in any context and it's even more important during what we've just gone through is to really kind of look at, are you targeting the right market? Has the market changed? Is there anything that you can do differently than what you're currently doing? And we have a staff, we have workshops where our staff will take the companies through different workshops. What's really kind of interesting is our masterminds, because honor masterminds. We take the companies and we put them in groups of similar stage companies where the CEOs will actually collaborate with each other. And so, that network effect, I can tell you, in my experience, we've had one company collaborate with another company and together, the two companies kind of solve each other's problems in terms of maybe one can have a service that will help another company. This has happened more than, you know, so colaborate and actually start doing business together because they're a downstream partner. We have mentors, as I mentioned that work with the companies several hours every month and really kind of hone in expansion, should the company look to expand in other markets, which markets, maybe the company hasn't thought about expanding to another market. And that really makes sense, really kind of drilling down to different things that the company may have not thought of different products, different services. And the other thing I think is when, um, just cash is very limited. Maybe the sales have been down to really kind of critically help a company look at how they can lengthen their runway in terms of their cash that may be pulling back on some of their marketing expenditures, how to better optimize their workforce.
So there's just a lot of things where if a founder is struggling, going to somewhere like new chip and accelerator, where they're surrounded by a team of people from the mentors to the network effects of the other companies. That's the staff. The content that helps them really kind of take a look at and they go through many exercises of determining, what KPIs they should be measuring really helps the company reevaluate where they are and make decisions about where they need to be to get to the next level and, and survive in these challenging times
Hilary - So the PPP loan was very popular among business owners, but I heard that you guys have your own PPP. Can you talk a little bit about that?
Laurie - Sure. So, our PPP are the three P’s I should say the first is to pursue capital options outside of PPP loan. So what does that mean? That means that most entrepreneurs don't really understand what a venture studio or a startup, a factory can do. Really be open to that and look to those solutions. I mean, we have many, as I mentioned before, investors in our network who will both invest strategically as a strategic partner, as well as a cash infusion. We have some debt options as investors as well. And so again, just pursue some different options outside of PPP loans.
The second P is to pivot and re-engineer your entire operation. And again, as I mentioned, it's really to take a step back, to look at different ideas that we can offer both with the content and touring and all of the other companies that are going through our accelerator that we give exposure to re-engineer your operations and take it to the next level and then planning.
Prudent planning is the third P and it really is to look at your burn, right. Beef up your runway. So, I think just these days, you can't be too certain what sales are going to do or how much longer things are going to be shut down. So I think you have to have a very conservative approach. Try to curtail your burn, right. Try to extend your runway. And, again, we can help accelerators and New chip can help with that. So these are the ways that we, our three P our PPP, how we can help startups.
Hilary - That's great. Well, this is so informative, really. Thank you. Can you tell our listeners how they can get in touch with you and potentially become one of the entrepreneurs in your program?
Laurie - Yes, definitely. They could go to our website at launch.newchip.com and learn all about us. If any would like to reach out to me, I'm not on the admin team, but I could, definitely, refer you to our admin team. I am lcercone@newchip.com, but, if you do go to our website https://launch.newchip.com/, you can get information there. You can apply there and we'd really love to meet you. We love for you to apply and join our network. It would be great and we really look forward to being able to help more companies. One of Newchip’s main objectives is to eliminate barriers. We take on 80-100+ companies a month in our program.
Hilary - This was so amazing. Great interview. Thank you so much. This was really good information. And again, you guys, if you're entrepreneurs or your startups, um, and you need that extra help go to Newchip. That's launch.newchip.com or go to Laurie's email lcercone@newchip.com.
Thank you again, Laurie. I really appreciate you being on the show. This was really fantastic.
And I'd also like to thank our sponsors, the Russo Law Group, The Profit Express, Pop International Galleries, Gold Benes LLP, and the Pegalis Law Group.
And last but not least, I want to thank you, our listeners for tuning in.
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