As Europe’s first B2B focused startup accelerator, Startup Wise Guys was founded in 2012 and can easily be described as a pioneer in the accelerator business. The Tallinn- and Riga-based investment firm offers an excellent 3+1 month acceleration program coupled with seed investment of €20K, great mentors and a well established business network. With already more than 50 accelerated companies, Startup Wise Guys is becoming the largest investor in B2B companies in the Baltics and the entire CEE region.
Application are now open for the next batch in September and we thought this might be a good opportunity to talk to Cristobal Alonso, the ultimate “make it happen” person at SWG.
Applications are now open for the next September batch in Riga. What are your expectations?
We are actively recruiting till July 9 and already getting some pretty awesome startups from all over the CEE. Batch 8 that just graduated has set the benchmark high – 9 nationalities within 11 teams, almost half already mature entrepreneurs with launched products and even experience at some other accelerators. We hope to keep it up the same way with Batch 9 in Riga. Definitely want at least the same level of diversity – so international crowd, female founders, various age and business experience combinations. We have done some program adjustments during last batch in Tallinn, so I think the startups will benefit from our added elements such as dedicated marketing, tech weeks, as well as “hacker in residence” – a technical advisor working more closer with the tech teams of each startup.
How is the program structured at SWG and what makes SWG stand out from the other accelerators?
A typical SWG program runs for 3 months and is based on intense mentoring. First month is all about business model, legal setup, accountancy, then we smoothly move into sales, customer discovery, marketing, last month is less active in mentoring and more focused on preparing the startups for fundraising while continue pushing sales. Right now we are also working hard on an option for supporting startups additional 3 months with office space and mentoring to get them ready for pre-seed round.
We are a boutique accelerator, which also means flexibility and ability to adapt to the needs of our startups. 11 teams is a maximum we can take in one batch to provide a quality program. So we will grow in terms of more locations, but we have no plans to grow the number of teams, as then you lose the personal touch and possibility to tailor the program. As one of our Ukrainian teams from last batch said – it was amazing to see that SWG functions as a startup themselves, gathering feedback, making real changes and showing that you can always improve, when listening to your customers.
But what truly makes us stand out is the business focus and family! For example, although we do regular and intensive pitch training, it is only a result of all the “back-stage” work with business model, product, customer discovery etc. We are trying hard to make the perfect business, not the perfect pitch. The other thing is that startups that become part of the family, stay and stick around for years. We support them long after the program has finished and starting with this year are also providing lots of additional opportunities after graduation, such as CEE All Stars fundraising event, CEO Alumni getaway, visits to top tech events and some partnering investors. And we see the benefit of that, not only the community of more than 70 graduates are using each others help, but some of them even return to us as angel investors in our newest batches.
SWG is successfully accelerating and investing in the CEE region for more than 5 years now. What is your favorite moment so far?
For us as an accelerator, the biggest thing was our first exit – company VitalFields from our very first batch was acquired last year in December. Also having the first expansion and successful program in Riga, as well as – first ever in Europe equity crowdfunding for an accelerator bringing on board with us more than 100 investors, some of them actually being our own alumni.
But looking broader, it is great to see CEE startup ecosystem bonding and understanding that for small markets to make it big, you need to collaborate. One such highlight was CEE All Stars event in Warsaw hosted by Google Campus and co-organized by us and other biggest hubs and accelerators – top CEE startups raising seed rounds met with regional and international investors. Hope it will become an annual event.
SWG is quite international, including startups beyond the CEE region. How do you reach out to potential applicants beyond the local ecosystem?
We try to have very little local startups in a batch. Our internal joke goes that Estonians accelerate way better in Riga, Latvia (our currently second home) and vice-versa – Latvians in Tallinn, Estonia. We are also very active on pre-accelerator activities which we have organized together with corporates like Telia in Estonia or Denmark and also judging in many startup battles in the region.
To get the most of CEE and beyond, we do very active scouting and roadshows. Just as an example I travel more than 150 times a year to reach out to communities, conferences and so forth. This year for Batch 9 we are visiting more than 24 locations, providing mentoring help, early stage funding workshops and organizing pitch battles. Local partners like Civitta, Microsoft, startup hubs and co-working spaces and investors in each of the countries we visit and build relationships make a huge difference, as they are the ones, who can do direct outreach to local startups.
Apart from that, we of course do some social media marketing and PR, but our best channel is our “family” – alumni, mentors, investors, partners. More than 80% of intros and recommendations come from our extended network, and usually that brings us also very good quality startups, making the final selection process quite challenging.
Beyond the formal requirements, what is that SWG looks for in a startup?
Team, product, market – those are the three things we look at, along with initial traction with pilot, paid customer that proves that there is a real need for the product. However, it is always about the people. So ambition, international mentality and coachability play equally important role. I’ve actually just posted a blog post on our webpage about, why it matters so much and why we pay such an attention to personalities and group setup.
Coming from a vivid startup ecosystem, what is the most interesting thing in the baltic startup ecosystem at the moment?
Oh man, Baltics are booming in so many ways right now! Estonia with its hassle free e-residency and well developed ecosystem is at the forefront, but both neighbours Latvia and Lithuania are catching up with various support tools, startup visa and awesome hubs. Also the tech events in the region like TechChill, Latitude59 and others are providing great value both for startups, but also investors.
To me as an expat in these countries, it has always been striking, how globally they think. And it’s natural, because – what can you do with a 2 or 3 million people market, if you don’t think globally? In a way – it also runs in SWG blood – we are not the biggest accelerator, but we think big and want our startups to do the same.
Many of our international startups have said they’ve been amazed about the friendliness, openness and support level from the ecosystem in the Baltics, as well as availability of quality mentors (take Estonia, where you can get guys from Transferwise, Taxify, Pipedrive mentoring, or Riga with info.gram or their Fintech startups like Twino and Mintos).
Overall, I’d say that it is the perfect place to be for early stage startups from CEE, before conquering the world, as the living and business costs are relatively low, the mentality is right and especially Riga has good flight connections, making it an easy access for international mentors and investors. And while the ecosystem is lively there’s no too much noise so startups can focus on what matters – product / market fit and building sales traction fast.
Your partnership with Lattelecom is a good example of how corporations can help the startup ecosystem grow. How would you describe this relationship and what recommendations would you give to other corporations thinking about this issue?
We have had several collaborations with corporates, and would name VUNK pre-acceleration program with Telia as a good example on synergy between corporation and accelerator. The same goes for JUMP program in Denmark. With Lattelecom we collaborated only for 1 program in Riga and now have gone our separate ways.
It is important to realize that startups and corporates are very different animals, they operate at different speeds and have very different governance mechanisms. For example, their tolerance for failure is so radically different that it can bring along lots of frustration.
I think the most important factor is for the corporate to have a clear objective / expectation on what they want out of a collaboration with an accelerator or startup initiative. It can be talent attraction, culture change, service portfolio diversification, brand awareness, etc. But you need to have clarity. I’ve seen a lot of failures, where either of the sides, but usually more the Corporate one, has not been honest or has not clearly communicated what they expect. That’s a road to disaster!
Additionally – collaboration should be for a long-run, at least a 2 -3 years vision not just a short term one, and for it to work, top management needs to be “on board”, supporting and preferably also deeply involved.
I guess the perfect corporation and startup / accelerator fit depends on each situation, and given a successful setup, both sides can benefit greatly. Corporations in attracting talent, seeing business development opportunities, and upgrading internal processes, by bringing innovation. Whereas for startups, especially in our speciality – B2B – corporations can be the perfect partner for pilot projects, tests and also synergy between industry experts and startup founders.
As for startups, in your opinion, what makes a startup become the next big thing?
Well it is important to define what is the next big thing… I don’t like the unicorn topic, so I’d say we talk about a startup with a chance on a big exit within 5-7 years. There’s a mix of many factors, some of those objective like the right timing and a bit of luck, but on the other hand I think it’s a lot about subjective factors like: clear understanding on why you are different and compelling story on why to use your service, then a clear focus on customer validation and initial sales, a small but well balanced team that has what it takes to be successful (ambition, perseverance, good sense of humour, values) but at the same time can leverage enormously their network for advice, intros and global scale.
As for SWG, what are the next steps?
While we still want to keep our boutique approach, the plans are quite ambitious – 200 companies accelerated by 2020, at least 2 or 3 additional locations in CEE region, a campus in Western Europe and launch pad in US and Asia. As for programs – we plan to have partnership with strong corporates in the Nordics and CEE to launch several vertical accelerators and have also several ScaleUP programs for seed investments. Last but not least, we want to have sufficient funding to be able to do follow-up seed investments in at least 25% of our portfolio. And overall – have lots of fun and positive impact to ecosystems while doing so.