Just like humans, companies have life cycles and undergo distinct developmental phases.
While every company is unique, almost all go through certain stages with specific challenges and needs. As a result, organizations such as incubators, accelerators, and co-working spaces have been established to help entrepreneurs nurture and scale their companies.
For less capital-intensive organizations, such as software and app startups like AirBnB, Dropbox, and Uber, this incubator-to-accelerator-to co-working space model has proven to be extremely effective. But for “tough tech” startups like robotics or biomedical there are many barriers to entry and stumbling blocks that traditional startup support organizations are not equipped to handle. Over the last few years, we have begun to see a growing need for a similar ecosystem to support robotics, biomedical, energy and new materials startups.
This has resulted in the emergence of a new type of startup support system: the startup escalator.
So what is a startup escalator?
Startup escalators represent the next generation of innovation spaces. They are unique in that they target “tough tech” companies — that is, companies developing technologies with long learning curves that often require highly specialized and expensive equipment for prototyping and testing, and that have significantly longer time to market than typical VC funded ventures.
This includes startups developing new materials, biomedical, or robotics technologies that all fall under this “tough tech” category for which traditional incubators or accelerators are less effective. A startup escalator addresses this critical market need by offering a combination of shared, specialized equipment and labs, co-working space, and an extensive virtual network of mentors, investors and other specialized support structures.
At a high level, startup escalators have the following requirements:
- Startup escalators should be industry-focused
- Startup escalator programs should not have a fixed duration
- Startup escalators should provide specialized equipment and infrastructure
- Startup escalators should employ a rent or membership based model
- Startup escalators should attract a network of specialized investors, corporate partners, and service providers
Like literal escalators, these spaces are always on – you just “step on” them whenever you are ready to move from one level to the next. These organizations escalate tough tech startups to go beyond the product and market validation stage to commercialization, job creation, and revenue generation, helping them to attract significant funding and provide solid financial returns.
One of the biggest challenges that these fledgling companies face is the limited availability of highly specialized, expensive equipment. For instance, many robotics companies need access to machining facilities and equipment, 3D printing, electronics labs, and testing tools, but these resources are far too expensive for a startup to procure. Even if such a company is able to raise substantial funding and has the financial resources to buy the necessary equipment, it is often preferable to invest in attracting the best talent, iterating on product prototypes, and acquiring strategic customers, rather than buying expensive physical assets. A startup escalator can help tough tech startup companies overcome these substantial barriers to entry, adding significant value that other startup support models fail to provide.
In an ideal startup ecosystem, organizations and support structures would develop to support every kind of startup, at every stage of the company life cycle. The flourishing of incubators, accelerators, and co-working spaces has been a boon to many startups across the country and around the world, but historically, it has tended to leave out companies developing capital-intensive, long-time-scale products that rely on tough technologies.
But that gap needs to be filled. These technologies, despite the challenges that accompany their development, are the foundation of some of the most important and impactful products on the market today. Technological advances in the fields of robotics, biomedicine, and other key tough tech industries are making new things possible every day, and it is no exaggeration to say that many of these products have the potential to improve lives on a global scale (and to provide substantial returns to their investors).
In recognition of this need, a handful of organizations have begun to spring up that target tough tech startups and escalate them to the next level of development. One example of a successful startup escalator is Lab Central in Cambridge, MA, an organization that focuses on biomedical startups and provides wet labs for experiments and testing in addition to an all-inclusive co-working space. Another example is Greentown Labs in Somerville, MA, which focuses on clean energy companies and offers specialized machine shop and testing facilities. The recently announced MIT-backed organization, The Engine, is another great example of realizing the existing challenges for capital-intense startups, and the need for a new model of support and investment for these startups.
Lab Central and Greentown Labs, both provide industry-specific support to companies in the biomedical and clean energy spaces respectively. It is exciting to see these and other organizations developing escalator programs to fill the tough tech gap.
As these startup escalators continue to gain traction, it’s critical that they incorporate the positive elements of the existing incubator, accelerator, and co-working space ecosystem which are applicable to tough tech companies, while at the same time ensuring that they add the value that these startups are unable to get from more traditional organizations.
It is clear that, in order to realize the potential of tough technologies such as robotics and biomedical, the startup escalator will have an increasingly important role to play.
Fady Saad is the cofounder of MassRobotics, an innovation hub for robotics.