Apple Seed looks to plug the startup ‘valley of death’
By Benjamin Cher September 28, 2015
- Has 2yr programme to support and nurture post early-stage startups
- Focused only on local startups, as per its charter with Spring Singapore
ALL startups have big dreams about scaling and driving revenue after receiving their first early stage funding. However, the cold, hard truth is that 90% of them fail within three years, according to a study by Ubiquity.
This is the ‘valley of death’ for startups – burning money while trying to make their product or service successful.
This ‘valley of death’ is exactly what Apple Seed Venture Incubator is aiming to help startups navigate past, according to its chief executive officer Kumaran Pillai.
“The whole idea is to address the valley of death in the market – there is a lack of support structures for startups coming out of incubator programmes,” he argued.
This is the raison d'être for the company’s ‘growth accelerator programme’ and its apt acronym, ‘GAP,’ he told Digital News Asia (DNA) in Singapore.
Apple Seed, which is supported by Spring Singapore, the government agency tasked with boosting and developing small and medium enterprises in the city-state, currently has 12 startups in its portfolio, including Trakomatic, Fashory and Viswire.
Startups graduating from incubator programmes face a host of challenges when leaving to spread their wings. The same can be said of evaluating such startups for another incubator programme, according to Kumaran.
“To look at companies coming out of other incubators is challenging because they may not succeed, and the good ones don’t need further incubation,” he said.
“We’ve gone to a hybrid mode to look at companies at an early stage to nurture and develop them, to help them succeed in later rounds,” he added.
Apple Seed looks to support its portfolio companies via mentoring, and by helping them with the various challenges in running and growing a startup. The last includes help with an Intellectual Property strategy, as well as developing the financial model and testing it in the market.
“We have very specific programmes, and depending on where they are with their investors and whether they are in the growth stage, we match them up with appropriate providers,” Kumaran said.
Apple Seed is also only focused on helping Singapore startups, as per its charter with Spring Singapore, which is supporting it through its Incubator Development Programme.
“Our charter with Spring Singapore is to specifically look at local entrepreneurs and how they can succeed, which means we need to put in sufficient resources and energy into developing these young people,” Kumaran said.
“The [Spring Singapore] support does come with certain KPIs (key performance indicators) – we need to make sure these companies reach a certain level of traction locally, and overseas,” Kumaran said.
Setting the bar
In assessing startups, Kumaran (pic) listed down three key factors Apple Seed looks at.
“The key things we’re looking for is integrity – we look for companies with strong ideas, and whether it is addressing a particular need in the market,” he said.
“We look at the team and whether they can execute and develop this business further,” he added.
Apple Seed’s GAP runs for two years, which is considerably longer than other incubator programmes. Kumaran sees this as a boon to startups, rather than shackles holding them back.
“Companies pivot, and the Y Combinator model goes for 90 to 100 days – what happens when the companies don’t raise funds? The support ends there,” he argued, referring to the well-known Silicon Valley-based seed fund and accelerator.
Startups instead need time to test and reiterate their product to succeed in the market, and “that process is long,” Kumaran said.
With Apple Seed now closing in on a second year of operation, Kumaran says that support for its portfolio companies will continue past the two-year mark.
“We don’t have this concept of graduation … but what we do is provide ongoing support for our startups,” he said.
Citing his experience with his own startup, where it took three years to produce a minimum viable product and gain market traction, Kumaran believes that startups need that similar runway.
“I will still come in and support them whether or not Spring [Singapore] is backing us,” he declared.
“We want to see them grow – ultimately because we have a stake in these companies, and we want to have a successful exit,” he added. “That’s the endgame.”
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