A chat with Cristobal Alonso, global CEO of Startup Wise Guys, who invest in B2B startup founders via their accelerator funds and programmes.
So, from the perspective of Startup Wise Guys and others, how do you define
yourselves, and how do you define an accelerator?
Well, we consider ourselves an accelerator fund and company. We focus on investing in early-stage startups through both investment and acceleration programs, helping teams find scalability. We increasingly work with teams that already have sales, traction, and even initial investors. The program serves to support B2B sales scalability and company growth while having an established VC brand in the early-stage cap table to enhance credibility. This represents a shift from where we used to be. This shift isn’t because we don’t want to invest earlier; it’s because market dynamics and ticket sizes have positioned us this way. Additionally, we’re moving towards more verticalization. This provides credibility in specific sectors, particularly in areas like XR or cybersecurity, where many generalist investors may not have the expertise needed at such an early stage.
Geographically, we focus on what we call the “Overlook,” which includes markets outside the trendier startup cities like Berlin, London, and Paris. We still operate in significant markets, although they might not be as glamorous as Italy or Spain. The whole CEE and CIS region make up 80% of our investment volume.
Looking ahead, do you believe that the key differentiator between incubators and accelerators will be the stage of attraction? Will accelerators increasingly focus on startups with established sales and revenue, while incubators handle earlier-stage companies?
I wouldn’t necessarily put it that way. I think there will always be a place for both. In the past, the market had Angel Investors, accelerators, and then seed-stage investors. Now, accelerators compete in the pre-seed stage with various players.
To be successful, an accelerator must offer not just money but smart money—a targeted approach with enough volume to build significant relationships with the subsequent VCs.
Incubators may still exist, possibly funded by governments, but they may operate more as impact organizations rather than profitable entities. In today’s competitive landscape, accelerators will need to prove their performance and compete with traditional VC funds.
Your program takes an equity position in the companies it supports. What value do you add to these companies after the program concludes?
We strive to remain actively engaged even after the program ends. This begins with proper reporting, enabling us to track progress effectively. Reporting helps startups gain credibility with potential investors and partners. We identify challenges, rectify mistakes, and monitor traction.
When it comes to fundraising, we actively assist startups by making introductions to investors. We target our efforts rather than sending generic emails to hundreds of funds. We also have LPs (Limited Partners) who are VCs themselves, providing startups with privileged access.
Legal support is another area where we often lend a hand, whether it’s related to IP issues or other matters. Additionally, we offer psychological support, helping founders navigate the highs and lows of entrepreneurship. Startups sometimes need advice on strategic decisions, such as pricing changes, and we engage in those discussions.
We are also working on enhancing our Alumni network, organizing events, and creating opportunities for networking. Maximizing the value of this network is an ongoing effort that we believe can greatly benefit our startups.
How important is the brand association for startups that have been a part of your program? Is it a significant factor for them as they progress on their journey?
Brand association is quite important, especially in the European context. We may not be as well-known as some of the prominent accelerators, but within Europe, our brand carries weight. This is particularly beneficial for startups looking to establish relationships with European VCs, as we have those connections and actively nurture them.
The significance of the brand varies depending on the startup’s origin and focus. Some Western European startups may prioritize the program’s impact over branding. However, in regions where our brand is more recognized, startups do value it. Ultimately, it’s a combination of the program’s quality and brand reputation that influences their decision to join us.
What are the key criteria you look for when startups apply to your program? What should startups emphasize to increase their chances of being selected?
Our selection process places a significant emphasis on the team. Team dynamics, skills, and their ability to execute their vision are critical factors. We also assess the product and its technical aspects to identify differentiation and defensibility. A deep understanding of the market, even if differentiation isn’t fully established yet, is important.
Additionally, we look for startups with a clear understanding of their financials, such as break-even points and run rate. This ensures they can sustain themselves as they grow. Many startups require more runway than they initially anticipate, so financial preparedness is essential.
Thank you for sharing those insights. Finally, let’s discuss the impact and sustainability aspect. How have you seen the number of sustainability-focused startups evolve over the past decade, and can you explain how your sustainability program operates?
Over the past three years, we’ve seen sustainability-focused startups becoming more mainstream. Sustainability is no longer a niche sector but has become just another vertical in the startup ecosystem. Many founders now naturally integrate sustainability into their concepts. It’s no longer about startups solely dedicated to saving the world.
What’s interesting is that these founders often exhibit a sense of entitlement and a belief that they’re on a mission to change the world. This can sometimes lead to unanticipated behaviors. However, we’re also seeing a shift in attitudes, and the second wave of sustainability-focused founders is more balanced and pragmatic. Sustainability is increasingly intertwined with various sectors. For instance, startups working on security or education can have a significant impact as well. Overall, sustainability is no longer a specialized area but an integral part of entrepreneurship.
It’s fascinating to see how sustainability has become more integrated into startups’ missions and objectives. Thank you for sharing your insights and experiences in the startup ecosystem.