Entrepreneurship Development

Case Study Solutions

01
Book: Barringer Page: 39
Prim: How a Lack of Passion and Resolve Can Kill a Business

Prim’s idea was to disrupt the laundry industry. A growing number of people in
the United States are using laundry services to wash and fold their clothes. The
problem with these services is that they are a hassle. In most instances customers
have to bag their laundry, drop the bag or bags off at the laundry service, and then
pick them up later. Many services have lines at the busiest times of the day, which
result in drivers having to wait to drop off or pick up their laundry. Prim launched
in mid-2013, after passing through the prestigious Y Combinator business
accelerator program earlier that year. Here’s how Prim’s laundry service worked.
A customer bagged her/his laundry, and then went online to choose a pickup and
delivery time. The price was $25 for the first bag and $15 for each additional bag.
The bags would be picked up by a driver recruited by a third-party delivery
service. (Rickshaw was the name of the delivery service in the city where Prim
started.) Everything would be back, washed and folded, later that day or early the
next day. No cash changed hands between the customer and the pickup or delivery
drivers. Everything was paid for through Prim’s website. Prim gained favorable
press and early momentum. When it closed, it was handling 1,000 pounds of
laundry a day from 40 clients and was growing. What went wrong? Two things
went wrong with Prim. First, once Prim got your clothes, it went from an
innovative disruptor to an old-school company. It would take your clothes to a
laundry service and utilize its wash and fold services. Prim negotiated volume
discounts with several laundry services; but, the discounts were verbal, not
written. What Prim didn’t count on was the partnerships going sour. While the
laundry services were initially receptive to working with Prim, they had their own
delivery services and eventually saw Prim as siphoning off their customers and
revenue. During its short history, Prim churned through three different laundry
services. The second thing that went wrong with Prim was a lack of passion and
resolve on the part of its founders. Faced with the reality that working with local
laundry services was a fragile business model, Prim’s founders, Yin Yin Wu and
Xuwen Cao, had a decision to make. Should they build or lease their own laundry
service? This was a daunting prospect, given the hundreds of thousands of dollars
necessary to build and staff a high-volume laundry wash and fold facility. Even
more daunting was the prospect that this step would need to be repeated in each
new market Prim entered. After two months of deliberation, Wu and Cao pulled
the plug. While they estimated that by constructing their own laundry service they
could build a profitable business in 5 to 10 years, with revenues of $10 million to
$15 million, it was a direction they simply did not want to pursue. Both were
computer science students in college and had no direct experience in the laundry
business. In an article published by CNNMoney, Garry Tan, a partner with Y
Combinator, reflecting on why Wu and Cao closed Prim, said, “They didn’t want
to actually have to wash the laundry—they wanted to be the connector.”
Questions for Critical Thinking:
1. Why is passion such a critical part of entrepreneurial success? Prim’s founders
were apparently passionate about building a company but not passionate about
the laundry business specifically. In what ways is this combination problematic?
2. How could Prim’s cofounders have better anticipated that laundry services
would eventually see Prim as siphoning off their own business and be reluctant
to work with them?
3. Rather than employ its own drivers to pick up and deliver laundry for its
customers, Prim relied on the use of third-party delivery services. In what ways
do you think this approach could have limited Prim’s growth in other markets?
4. San Francisco, the city in which Prim launched, has several innovative laundry
services. These services include LaundryLocker, where you drop your clothes in
a public locker, Sfwash, a delivery service where you pay by the pound, and
Sudzee, which requires special lockable bags.

Answers

1
Passion is critical in entrepreneurship because it provides the drive, resilience,
and determination needed to overcome challenges and sustain long-term efforts.
Prim's founders were excited about building a company, but not about the laundry
industry itself. This combination is problematic because passion for the industry
is often necessary to deeply understand its nuances, challenges, and potential
innovations. This lack of passion likely led to:
 Limited understanding of laundry service challenges: Not deeply
understanding the existing landscape made it difficult to anticipate and
navigate issues with laundry partners.
 Inability to adapt and pivot: Lack of passion for the problem limited their
willingness to explore alternative solutions, like building their own laundry
facility.
 Motivation drain: Facing operational hurdles, passionless founders might
not have the dedication to persevere and find workarounds.
2
One thing Prim's co-founders could have done prior to starting the business is
complete a thorough feasibility analysis. By talking to laundry services in
advance, the founders may have gained an awareness that their business model
was not viable. Prim's cofounders could have conducted a more thorough market
analysis and engaged in open communication with potential laundry service
partners to better understand their concerns and potential resistance. By clearly
defining and formalizing the terms of their partnerships in written agreements,
Prim could have established a more solid foundation and prevented
misunderstandings.

3
Relying on third-party delivery services may have limited Prim's growth in
several ways. Firstly, it could lead to inconsistencies in service quality and
reliability, as different third-party services may have varying standards and
practices. Secondly, Lack of control over delivery can create logistical challenges
and disconnect the customer experience from Prim's brand. Thirdly, using third-
party services decreases potential profit margins as they take a cut of each
transaction.

YQ 2021 Solution

02

[1. c) 8]2021
Islam is a successful first-generation entrepreneur who migrated from a remote
village of Sonagazi, Noakhali to Chittagong City. He started out as a mechanic in
Chittagong and dreamed of building a better future for his next generation. Islam
was thrifty and disciplined. Although in a low-status occupation, he was very
proud of how hard he worked. He took a few attempts with calculated risk and
that paid off until he could open his own garage and he now runs a successful
franchise business of several dozen oil and lube operations, where he trains other
mechanics.
Islam is a classical entrepreneur, but how should he teach his children? Does he
encourage them to follow his lead and create financial success as entrepreneurs?
The chances are he won't. Fewer than one in five do.
Instead, Islam wants his children to have a 'better' life. He encourages them to
spend many years at university, He wants his children to become physicians,
lawyers, accountants, executives and so on. But in encouraging them so, Islam
essentially discourages his children from becoming entrepreneurs. He
unknowingly has them postpone their entry into the labor market until they have
finished the finest education. And, of course, he encourages them to reject his
lifestyle of thrift and the self-imposed environment of scarcity and instead to be
consumers of material goods.
Islam defines 'better' as having better 'stuff': finer homes, new cars, quality
clothing and costly foods. What he doesn't include are the elements that were the
foundation stones of his own success: hard work, risk taking and perseverance.
Islam does not realize that being well educated but having materialistic mentality
has certain economic drawbacks. What Islam's well-educated children often learn
by the time they are adults is to be the grand consumers of material goods. And
at the same time, they are also underperformers as entrepreneurs. They are the
opposite of their father; the blue-collar, successful business owner. They are part
of the high-consuming, self-employment-postponing generation, and what's
worse they still live at home enjoying the old man's wealth!
i) In your own experience, what are the social and cultural reasons that
Islam's children are underachievers?
ii) Do you know people who are like Islam's children? Are you like them?
iii) What would you recommend 'to kick some sense' into their heads?

Answer
 (i)
In many cultures, there is a societal shift towards valuing formal education and
prestigious professions over entrepreneurial pursuits. This shift can be influenced
by factors such as societal norms, peer pressure, and parental expectations. Social
and Cultural Reasons for Underachievement:
Overemphasis on education and credentials: While education is
valuable, solely prioritizing prestigious degrees over practical skills might not
equip them for entrepreneurial success, which needs more than just academic
knowledge.
Fear of failure: Islam's success story might unintentionally create a fear of failure
in his children, discouraging them from taking calculated risks and venturing into
unfamiliar territory.
Comfort and reliance: Living with Islam's financial support might create a
comfortable environment that hinders motivation to become independent and
build their own success.
(ii)
It's important to approach such comparisons with caution and avoid
generalizations. While some aspects might resonate with personal experiences or
observations of others, judging an entire generation or group based on limited
information can be harmful.
(iii)
Recommendations for Encouraging Entrepreneurial Spirit:
Promote Entrepreneurial Education: Introduce entrepreneurship education at
an early stage to help individuals understand the value of risk-taking, innovation,
and perseverance.
Highlight Success Stories: Showcase successful entrepreneurs who have made
significant contributions to society.
Emphasize the Importance of Passion: Encourage individuals to pursue careers
aligned with their passions rather than succumbing to societal expectations.
Foster a Supportive Environment: Create an environment where individuals
feel supported in pursuing their goals, whether entrepreneurial or otherwise.
Address Misconceptions: Highlight the diversity of entrepreneurial paths and
the positive impact it can have on personal and societal levels.

03

[5. a) 6]2021
You are planning to open a restaurant near the CU Railway Station targeting the
students of CU. Your target customer will be those students who either earn a
good amount (more than Tk.20,000) or received the same from their parents.
Prepare a concept statement for the restaurant. Briefly write how would you use
the concept statement to conduct a buying intention survey.

Answer
Concept Statement:
Name: The Station Plate
Target Customer: University of Chittagong (CU) students with an income
exceeding Tk.20,000 per month or similar parental support.
Value Proposition: The Station Plate offers an elevated dining experience close
to the CU Railway Station, providing students with a vibrant, social atmosphere,
high-quality local cuisine, and convenient delivery options, all catered to their
busy schedules and evolving tastes.
Key Features:
 Affordable Gourmet Delights: Our menu is curated to offer a diverse
range of mouth-watering dishes at student-friendly prices.
 Stylish and Comfortable Setting: A trendy and comfortable environment
that encourages socializing, group studies, and relaxation.
 Special Offers for CU Students: Exclusive discounts, loyalty programs,
and promotions for CU students with a focus on enhancing their overall
dining experience.
How to Conduct a Buying Intention Survey:
Online Survey Platforms: Utilize online survey platforms to reach a wide
audience of CU students.
Collaborate with CU Clubs and Societies: Partner with various student clubs
and societies on campus.
Focus Group Discussions: Organize focus group discussions with a mix of
students who fit the target demographic.
Social Media Engagement: Leverage social media platforms frequented by CU
students.
By employing these strategies, we aim to gather valuable insights into the buying
intentions of our target customers, ensuring that Student Bites is not just a
restaurant but a vibrant part of the CU student experience.

04

[5. c) 4]2021
The following figure shows Dell's approach to selling PCs versus Traditional
Manufacturers'. Based on the figure, describe the concept of business model
innovation.
Traditional Manufacturer (e.g.. Hewlett-Packard or
IBM)

Forecasts demand

Obtains subcomponents from suppliers

Makes basic components

Assembles complete PC

Stores PCs in warehouse

Ships PCs to retailer

PCs sit on retaller's Shelf until sold

In hands of consumer

Answer
The figure illustrates Dell's innovative approach to selling PCs compared to the
traditional manufacturing model, highlighting key elements of business model
innovation. Business model innovation involves rethinking and redesigning the
way a company creates, delivers, and captures value. Here's a breakdown based
on the provided information:
Traditional Manufacturer (e.g., Hewlett-Packard or IBM):
1. Forecasts demand: Traditional manufacturers typically forecast demand
based on market analysis and historical data, leading to potential overstock
or shortages.
2. Obtains subcomponents from suppliers: Procurement of subcomponents
involves a structured supply chain with lead times and inventory
management.
3. Makes basic components: The manufacturer produces basic components,
requiring storage and additional production processes.
4. Assembles complete PC: The assembly of components into a complete
PC is a sequential process, adding complexity to inventory management.
5. Stores PCs in the warehouse: Finished PCs are stored in warehouses,
incurring additional holding costs and risking obsolescence.
6. Ships PCs to retailers: PCs are shipped to retailers, introducing another
layer in the distribution channel.
7. PCs sit on retailer's shelf until sold: PCs wait on retailer shelves, subject
to market dynamics and competition.
8. In hands of the consumer: The end consumer finally purchases the PC.
Dell:
1. Customer places order via phone or Internet: Dell's innovative approach
begins with a customer-centric model where orders are initiated directly by
customers through phone or the internet.
2. Contract manufacturers instantly view order information and ship
component parts: Upon order placement, contract manufacturers receive
real-time order information, and component parts are shipped promptly.
3. Dell assembles computer from component parts as they arrive and
maintains customer relationship: Dell assembles computers on-demand
as component parts arrive, minimizing the need for extensive inventory and
maintaining a direct relationship with customers.
 4. Computer is shipped "direct" to the customer via UPS or FedEx: The
assembled computer is shipped directly to the customer, eliminating the
need for intermediaries like retailers.
5. In hands of the consumer: The end consumer receives the customized PC
directly from Dell.
Business Model Innovation Insights:
 On-Demand Production: Dell's model focuses on on-demand production,
reducing the need for large inventories and minimizing the risk of obsolete
products.
 Direct-to-Customer Model: Dell's direct-to-customer model eliminates
intermediaries, allowing for better control over the customer experience
and reducing distribution costs.
 Customer-Centric Approach: By allowing customers to customize
orders, Dell fosters a customer-centric approach, meeting individual
preferences and needs.
 Real-Time Supply Chain Management: Dell's approach relies on real-
time supply chain information, optimizing production and minimizing
delays.

05

[7. 15]2021
Read the following article:
In the age of mass digitalization, BTCL launched locally assembled laptop
branded as Doel. It was assumed that Doel would capture entire market of
Bangladesh. But Bangladeshi locally assembled laptop Doel failed in marketing
competition with HP, Asus and other globally recognized brands. The consumers
of Bangladesh are habituated to buy at lower price, but when it comes to the
question of electric equipment, they like to purchase the one of higher quality in
spite of premium pricing. This is cent percent true for products like laptop. If you
offer someone a laptop of low configuration, he will rather buy a mobile of better
configuration with the same price. If you think consumers compromise with
brand quality in all cases, you are wrong. 'One size fits all' is a mass marketing
concept which has become back dated recently.
Walton offered mobile phone and laptop, but because of poor branding both
mobile and laptop of Walton did not survive the market competition. Sometimes
market leaders also fall for lack of strong succession. If father cannot leave behind
him a strong successor, all fall like game of cards. The best example is Otobi.
Inspired by global brand IKEA Hatil, Otobi and many entrepreneurs came to the
market of Bangladesh. But failure to retain business by son of Nitun Kundu,
owner of Otobi, caused it to become a bankrupt organization at the day end.
Instead of emphasizing on company strength, owners of Otobi emphasized on
business diversification and through fund diversion they tried to revolutionize
power sector. Consequently, both power sector and home furnishing businesses
failed together and now Otobi is now in existential crisis. It would have been
better for Otobi to invest more on house furnishing business instead of power
sector with its retained earnings and bank loans.
It is not possible for a global brand to gain popularity in all countries of the world
in same ratio. The common case study is of Starbucks failure in Australia. In spite
of becoming market leader in USA and many European countries Starbuck was
below the benchmark compared to coffee shops like Gloria Jeans. Because,
Starbucks expanded so fast in Australia from the beginning of the year 2000 that
it did not even get sufficient time to understand Australian customers appetite.
The coffee culture is historical is Australia but it was a different type of coffee
than the one Starbucks offered since Starbucks failed to understand consumer
behavior in Australia. When you will fail to understand consumer behavior of
some place, business is bound to meet with failure.
When Cell Bazar, an online shopping and delivery service, went into rebranding
as [Link] it started to lose its market share. Consumers in Bangladesh
especially in Dhaka were so much acquainted with the name cell bazar that the
new name just confused them. Again, the way [Link] tried to rebrand itself
was a blunder. Instead of understanding existing customer base they tried to bring
unnecessary change considering it innovation mistakenly. Online marketing
companies like [Link] which emerged as startup and competitor of Cell
bazar. com occupied their market share gradually and later became market leader.
At one point of time online sale shop [Link] was shut down with sudden
notice. From this marketing failure the learning is that it is not always the first
mover who retain the major market share for long. The world of marketing is not
for first mover, but for fast mover.
Now come to telecom sector of Bangladesh. Why all other telecom operators
crushed. before Grameen Phone one by one? Instead of focusing on the reason of
Grameen Phones success story, let us make an autopsy on the failures of its
competitors. In spite of becoming first telecom operator in Bangladesh, City Cell
failed to get customers trust and brand loyalty for shortsightedness. The case
study of CCD, famous Indian coffee brand, teaches us that if you divert your fund
elsewhere from core business (here coffee sale) while you run it with bank loan,
a day may come when you will be debt- ridden with huge bank loan and the
diverted fund will be of no use to save you.
This Indian local Coffee brand CCD case study is also applicable to City Cell
mobile that diverted all their earnings elsewhere, while they took huge bank loans
to run the telecom company and it ultimately resulted in huge bankruptcy. Even
their internet- based data business under the banner of Zoom failed to recover the
company ultimately. On the other hand, Warid Telecom Bangladesh, a subsidiary
of Warid Telecom Pakistan tried to play the best by strong investment on
marketing and branding but Warid Telecoms sudden acquisition by Indian Airtel
demanded rebranding and repositioning with huge and fresh investment.
Rebranding is also time consuming after new entry. Starting afresh, Airtel
invested no less than Grameen Phone for branding through newspapers and
television advertisements. But Airtel had failed to ensure similar network strength
and service quality like Grameen Phone.
Neither Airtel nor Robi were in a position to invest equally on tower building for
network expansion like Grameen Phone. Besides, while Airtel was defeating in
every step with Ambani Groups Telecom called Jio in India, Grameen Phones
parent company Telenor led the global telecom market with desperate success.
Grameen Phone inherited and exploited the success of Telenor as brand image
while Airtel failed to fight back with Jio in India. Robi had also option to
revolutionize with 3G and 4G technology where they also left with no significant
footprint.
Do you know why many globally reputed foreign banks are losing market share
in Bangladesh? They failed to explore financial inclusion and financial deepening
which many local banks have been doing successfully by branding credit card,
home loan, auto loan and app-based service offer etc. The paradigm shift from
corporate to retail and SMS banking is something which foreign banks did not
address positively.
Lastly, international coffee chains like Barista, Glorea Jeans and oldest Nescafes
failure before tea companies like Lipton or Ispahani is due to inadequate address
to Bangladeshi consumers taste level through branding, Equal branding,
marketing and Public Relation (PR) of coffee by concerned investors like tea
investors might have shifted many tea lovers into coffee lovers just like paradigm
shift from land phone into mobile phone which had taken place in 1990s and
onward in Bangladesh. These coffee investors, mainly overlooked the growing
purchasing capacity of the people of Bangladesh who are already ready to taste
shift.,
Therefore, changing of signboard, logo and theme color of an organization is not
enough for branding or rebranding unless. market penetration and expansion is
not prudent and judicious. If branding or rebranding gives wrong message or
insufficient message to the consumers, the result becomes rather one of disaster
than blessing.
a) Based on the article given above, explain the reasons for business failure. Cite
specific example.
b) Is it possible for a firm to grow too fast? If so, what are the potential
downsides? Did you find any such case in the above story? Explain the case.
c) Is it possible for something to be an enticing business idea but a poor business?
Explain your answer with an appropriate example from the above article.

Answer
a) Reasons for Business Failure:
The article highlights several reasons for business failure, including:
1. Poor Branding and Marketing Strategy: Businesses like Doel (locally
assembled laptops) and Walton (mobile phones and laptops) failed to
compete with globally recognized brands due to inadequate branding and
marketing strategies.
2. Diversification without Focus: Otobi's failure is attributed to the lack of
a strong successor and a misguided emphasis on business diversification,
particularly in the power sector.
3. Failure to Understand Consumer Behavior: Starbucks' struggle in
Australia is cited as an example of the importance of understanding
consumer behavior.
 4. Lack of Network Strength and Service Quality: Telecommunication
companies like Airtel and Robi failed to match Grameen Phone's network
strength and service quality.
5. Financial Mismanagement: City Cell's failure in the telecom sector is
linked to shortsightedness, fund diversion, and debt accumulation.
b) Possibility of Growing Too Fast and Downsides:
Yes, it is possible for a firm to grow too fast, and the potential downsides include:
1. Financial Strain: Rapid growth may strain financial resources as the
demand for investment in infrastructure, marketing, and human resources
increases.
2. Operational Challenges: Managing and scaling operations quickly can
lead to operational challenges, including supply chain issues, quality
control problems, and difficulties in maintaining service standards.
3. Loss of Focus: Fast growth may result in a loss of focus on core
competencies, with diversification and expansion efforts spreading
resources thin.
In the article, the case of Starbucks in Australia exemplifies the downsides of
growing too fast. The rapid expansion without sufficient understanding of the
local market led to a failure to meet consumer expectations and preferences.
c) Enticing Business Idea vs. Poor Business:
Yes, it is possible for something to be an enticing business idea but a poor
business. The article provides an example in the case of Otobi. While inspired by
the global brand IKEA and entering the home furnishing market seemed like an
enticing business idea, the poor execution of diversification into the power sector
and the failure to focus on the core business of home furnishing led to Otobi's
bankruptcy. The emphasis on business diversification, without considering the
readiness of the market and the strength of the core business, turned the enticing
idea into a poor business strategy.

06

[5. b) 9]2018
To encourage entrepreneurship among the jobless, educated youth of Bangladesh,
one senior minister said "Raising capital for starting and propagating small scale
industry is not difficult in Bangladesh anymore. The government have plenty of
financing schemes for small sectors." Do you agree with the minister statement?
Justify your answer by explaining the financing schemes of various financial
institutions to help entrepreneur.

Answer

Supporting the Minister's Statement:

Increased government schemes: Bangladesh Bank and various agencies offer
loan programs specifically for small and medium enterprises (SMEs) with
favorable interest rates, collateral requirements, and repayment terms. Examples
include:
 SME Foundation: Provides soft loans at subsidized rates.
 Youth Entrepreneurship Development Fund: Supports young
entrepreneurs with innovative ideas.
Private sector initiatives: Numerous commercial banks and private financial
institutions have dedicated SME lending programs with flexible products and
services.
Microfinance institutions: Play a crucial role in providing smaller loans to
micro-entrepreneurs, typically targeting women and rural areas.
Considerations and Challenges:
While the government and financial institutions in Bangladesh may offer
financing schemes for entrepreneurs, accessing these funds might still pose
challenges. Some common challenges include:
 Information access and awareness: Many potential
entrepreneurs, especially in rural areas, might not be aware of available
schemes or lack the resources to navigate complex application processes.
 Bureaucracy and delays: Accessing funds can involve lengthy
procedures and paperwork, discouraging potential entrepreneurs.
 Limited loan amounts: While schemes exist, their loan amounts might
not be sufficient for capital-intensive businesses, hindering scalability.
 Sustainability focus: Many schemes prioritize existing businesses or
specific sectors, overlooking innovative ideas or entrepreneurial potential
outside their scope.
Therefore, while the minister's statement highlights improved access to financing
for small businesses, it's essential to acknowledge the ongoing challenges. Not all
aspiring entrepreneurs may find available schemes readily accessible or suitable
for their unique needs.

07

Book: Barringer Page: 42

Start-Up Incubators and Accelerators: A Smart Way of Gaining Access to
Mentors, Partners, Investors, and Other Critical Start-up Resources

The number of start-up incubator and accelerator programs in the Unites States
continues to grow. Incubators are organizations that provide start-ups with shared
operating space. They are sponsored by universities, city or county governments,
or nonprofit organizations. Incubators also provide start-up businesses access to
networking opportunities, mentors, and shared equipment. Incubators typically
do not ask for equity from their participants and do not provide seed funding.
They were very popular in the 1980s and remain an important part of the
entrepreneurial ecosystem in many areas. Accelerators are a newer concept. They
are mostly for-profit organizations that offer a small amount of seed funding in
exchange for small equity positions in the companies that participate in their
programs. Most accelerator programs admit start-ups in cohorts, and put the start-
ups through a 10- to 15-week intensive program. The accelerator typically offers
free office space, perks such as free WiFi and web hosting, weekly meetings with
mentors, and coaching on how to put together an effective investor pitch. The
programs normally cumulate with a “DemoDay” which provides the participants
the opportunity to pitch their business ideas to a group of investors, mentors, and
reporters. The better programs will have 200+ investors present at their Demo
Days. The greatest advantage of getting into either an incubator or accelerator
program is the mentorship opportunities they provide. They are also fertile places
for entrepreneurs to meet potential cofounders, business partners, and investors.
The two most well-known accelerator programs are Y Combinator and TechStars.
Y Combinator is located in the Silicon Valley. It provides $120,000 in funding for
7 percent equity in each start-up it admits. Its participants are admitted in two,
three-month sessions per year. It doesn’t offer office space. Instead, its program
includes “office hours” where its start-up founders meet individually and in
groups with Y Combinator partners for advice. Founders also participate in
weekly dinners where top-flight guests from the Silicon Valley ecosystem speak
to the founders. Y Combinator’s motto is “Make Something People Want.”
TechStars is similar to Y Combinator in that it is a three month program. It
provides $18,000 in funding for a 6 percent equity stake. Started in Boulder, CO,
it has expanded and now has 26 programs that are organized around cities and
themes. TechStars has offices in Atlanta, Chicago, Boulder, New York City,
London, Seattle, and several other cities. Examples of the themes on which it
focuses include Alexa (voice-powered technology), Internet of Things, music,
and retail. While admission to Y Combinator and TechStars is very competitive,
there are a growing number of start-up incubators and accelerators in American
cities. Most are accessible to hard-working start-up founders with promising
business ideas. Many focus on a particular industry or sector, such as food,
medical devices, software, mobile, or technology. To illustrate how prevalent
start-up incubators and accelerators have become, the following is a list of start-
up incubators and accelerators in five American cities. You can identify the start-
up incubators or accelerators in your area by speaking to local entrepreneurs or
investors or by conducting a simple Google search. Capital Innovators is a start-
up accelerator located in St. Louis. It provides tech start-ups $50,000 in seed
funding, office space, access to weekly networking events, and follow-on funding
opportunities. Excelerator Labs is an intensive summer accelerator in Chicago. It
selects 10 companies every spring to participate in a 13-week intensive summer
program. The program is unique in that it attracts mentors from across the country
who work with the participants on a one-on-one basis. Capital Factory is an
Austin, TX start-up incubator/ accelerator and coworking space. It also hosts
meet-ups and other events for aspiring entrepreneurs. Its accelerator program
offers mentorship opportunities and connects its entrepreneurs with investors. In
2015, more than 50,000 entrepreneurs, programs, and designers were involved in
Capital Factory programs and events. EnterpriseWorks is part of the University
of Illinois’ Research Park. It’s a start-up incubator that hosts earlystage tech firms
that are commercializing research emerging from the university’s labs. It is a hub
of activities and its clients include start-ups focused on fields such as chemical
sciences, biotechnology, software development, and material sciences. Food-X is
a New York City-based business accelerator that is focused on launching food-
related businesses. Its three-month program provides up to $50,000 in seed
funding, coworking space with other food entrepreneurs, and access to a world-
class network of food companies, investors, and press. Each week, participants
meet with 3–5 expert mentors to test, validate, and accelerate their food ventures.
Questions for Critical Thinking
1. If you were starting a new venture, do you think you would benefit from
participating in a business
incubator or accelerator program? If so, what do you think the primary benefits
would be?
2. Find an example of a start-up incubator or accelerator program at the college
or university you are attending,
in the town in which you live, or in a nearby city. Describe the program. Which
one of the programs mentioned in this feature does it resemble the most?
3. If you have a promising business idea, what can you do while you’re in college
to improve your chances of being admitted to a prestigious start-up incubator or
accelerator program when you graduate?
4. Make a list of the types of mentors that a participant in a start-up incubator or
accelerator program might encounter.

Solution

Yes, participating in a business incubator or accelerator program can provide

significant benefits for a new venture. The primary advantages include:
Mentorship: Experienced guidance from investors, entrepreneurs, and industry
experts.
Networking: Connecting with potential co-founders, customers, and investors.
Validation: Refining your business idea and gaining valuable feedback.
Funding: Access to seed funding or potential for future investment.
Resource and Infrastructure: Shared workspace, equipment, and other
resources.
Accelerated growth: Intensive focus and program structure can fast-track
progress.
 2

Finding a Local Program:

Research incubator and accelerator programs in your area. Look for:
Focus: Does their industry or sector align with your venture?
Investment/Mentorship: What kind of funding and guidance do they offer?
Track record: Do they have a good success rate with graduates?
Program structure: Does the format and duration suit your needs?
Compare your findings to programs mentioned in the article like Capital
Innovators, Excelerator Labs, Capital Factory, or Food-X. This can give you a
good benchmark for evaluating local options. (Creative Answer Required)

To enhance the chances of being admitted to a prestigious program:

1. Build a Strong Network: Connect with professors, alumni, and industry
professionals who can serve as potential references and advocates for your
application.
2. Participate in Entrepreneurial Activities: Join entrepreneurship clubs,
competitions, and events on campus to gain experience, showcase your
skills, and build a track record.
3. Develop a Solid Business Plan: Work on refining your business idea,
creating a comprehensive business plan.
4. Acquire Relevant Skills: Focus on acquiring skills relevant to your
business idea, whether in technology, marketing, finance, or other areas.
5. Highlight unique value: Clearly articulate what sets your venture apart.

Mentors in a start-up incubator or accelerator program can come from

various backgrounds and areas of expertise, including:
 Serial Entrepreneurs: Those who have successfully started and grown
multiple businesses.
 Industry Experts: Professionals with deep knowledge and experience in
the specific industry related to the start-up.
 Investors: Angel investors, venture capitalists, or corporate investors who
can provide insights into funding and investment strategies.
 Marketing and Branding Specialists: Professionals with expertise in
marketing, branding, and communication strategies.
 Technology Experts: Individuals well-versed in technological
advancements and can offer guidance on product development and
innovation.
 Sales and Distribution Professionals: Those with a background in sales
and distribution strategies, helping start-ups reach their target markets.