While the “standard” path for successful startups classically involves bootstrapping, soliciting friends and family money, and then raising multiple rounds of venture capital, many new approaches to building innovative companies and cultivating growth have appeared in recent years.
While there are thousands of incubators and investment funds that invest in startups, I wanted to share information about three atypical organizations in the New York area that I have found to be especially interesting:
The Glimpse Group
The Glimpse Group utilizes a unique model to incubate Virtual Reality and Augmented Reality companies: portfolio companies become wholly-owned subsidiaries of Glimpse, and founders become shareholders in the parent; such an approach provides strong incentives for portfolio companies to share resources, refer business to one another, and collaborate in other ways. In many cases, the Glimpse model also allows companies to have internal resources that would otherwise be prohibitively expensive for early-stage businesses; several startups can share a full time employee, which also often costs far less to each startup than each firm hiring a part-time consultant.
Of course, to provide strong incentives for individual companies, portfolio companies’ management is provided with significant financial incentives based on the performance of their individual firms. The Glimpse investment model allows both founders and investors to diversify their holdings – something that dramatically reduces risk, and increases the likelihood of portfolio companies’ key team members staying with Glimpse for the long term.
Team8, founded by former leaders of the Israel Defense Force’s renowned technology and intelligence division, Unit 8200, incubates cybersecurity startups using a non-traditional model blending think-tank, incubation, and venture capital roles – all in an effort to create one new blockbuster company during each calendar year. The team identifies and researches what it believes to be the biggest technology challenges facing enterprises, and conceptualizes disruptive solutions that it believes can potentially serve as the foundations of category-leading companies with explosive potential. Simultaneously, Team 8 recruits great talent from which it finds the “founders” and other initial team members for those projects. Team8 recently enjoyed its first exit – the sale of Sygnia for approximately $250 million to Singapore-based Temasek holdings.
Prime Tech Partners
Prime Tech Partners, founded and run by a team with many decades of experience operating successful startups, incubates firms that have already begun to sell products, but are having problems scaling beyond bootstrapped/angel mode. Its incubation program provides firms with a year of office space, all around business services (legal, accounting, strategy planning, help with execution, etc.), bridge funding, and assistance raising venture capital; essentially Prime Tech assumes responsibility for administrative overhead, allowing management to focus on execution – while simultaneously providing strategic advice and assistance related to execution area as well. Prime Tech focuses on technology companies in the cybersecurity, augmented reality, blockchain, and e-commerce sectors.