Cisco is making a $1 million investment in startup incubator Alchemist Accelerator to support a track focused on enterprise collaboration, Alchemist Accelerator managing partner Ravi Belani told VentureBeat in a phone interview.
The money comes from the Cisco Spark Innovation Fund, a $150 million commitment to support collaboration around the messaging app, Cisco VP Jason Goecke told VentureBeat in a conversation on Cisco Spark. The app was built to interact with Cisco hardware, like the Spark board, and video endpoints in meetings.
“We chose this approach in the case of collaboration as we are seeking to accelerate early stage companies that are building applications relevant to collaboration and the Cisco Spark platform,” Goecke said.
Every four months, Alchemist Accelerator starts a 24-week program in the Financial District of San Francisco that focuses on scaling 20 early-stage business-to-business (B2B) enterprise companies. Since its founding in 2012, the accelerator has routinely been ranked among the most popular in the United States. The next accelerator class begins in April.
This is the fourth Alchemist startup accelerator track funded by Cisco, Belani said; previously the corporation funded two tracks for Internet of Things (IoT) companies and one focused on the enterprise. Cisco declined to state the size of its fourth investment in Alchemist.
In exchange for 5 percent of company equity, participants will receive $36,000, along with cloud credits, a coworking space, accounting and legal services, and other non-monetary perks.
“Over 55 percent of our companies will close institutional rounds within six months of graduating. I think the average raise is $2.6 million, and so the reason people do Alchemist is not for the $36,000,” Belani said.
The investment in Alchemist deepens Cisco’s experimentation with startup accelerators, Belani said.
“So Cisco has historically done series B investments into companies where there’s a main VC that leads the round and then Cisco supports the round and follows another round,” Belani told VentureBeat in a phone interview. “But now through this program Cisco is really being the first money into companies and sort of really ushering the next generation of startups and putting in risk capital before the VCs are even getting involved.”
The accelerator was made to support Cisco Spark services and use of Cisco’s collaboration APIs but is open to companies working in other spaces.
“If you are building on Spark there are obviously resources you can access, but it’s not a requirement and we’re looking at collaboration very broadly defined. That’s everything from messaging to video and voice to even things around discovery and search and next-gen natural language processing (NLP) and machine learning around thinking about how employees can be more productive,” Belani said.