Just like humans, companies have life cycles and undergo distinct developmental phases.
While every company is unique, almost all go through certain stages that come with specific challenges and needs. As a result, organizations such as incubators, accelerators, and coworking 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 coworking space model has proven to be extremely effective. But for “tough tech” startups like those in 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.
A startup escalator addresses this critical market need by offering a combination of shared, specialized equipment and labs, coworking space, and an extensive virtual network of mentors, investors, and other specialized support structures.
At a high level, startup escalators have the following requirements:
- They should be industry-focused
- The programs should not have a fixed duration
- They should provide specialized equipment and infrastructure
- They should employ a rent or membership-based model
- They should attract a network of specialized investors, corporate partners, and service providers
Going up, up, up
Like literal escalators, these spaces are always active — you just “step on” whenever you are ready to move from one level to the next. These organizations escalate tough tech startups to move them beyond the product and market validation stage to commercialization, job creation, and revenue generation, helping them attract significant funding and realize 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 a substantial amount of 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. A startup escalator can help tough tech startups overcome these substantial barriers to entry, adding significant value that other startup support models fail to provide.
Tough technology startups, despite the challenges that accompany their development, are the foundation of some of the most important and impactful products on the market. Technological advances in the fields of robotics, biomedicine, and other key tough tech industries are turning out new products every day, and it is no exaggeration to say that many of them have the potential to improve lives on a global scale (and to provide substantial returns to their investors).
The startup escalator ecosystem
In recognition of this need, a handful of organizations have sprung up that target tough tech startups and help them reach the next level of development. One example of a successful startup escalator is Cambridge, MA-based Lab Central, an organization that focuses on biomedical startups and provides wet labs for experiments and testing, in addition to offering an all-inclusive coworking space. Another example is Greentown Labs in Somerville, MA, which focuses on clean energy companies and provides specialized machine shop and testing facilities. Recently announced MIT-backed organization, The Engine, is another great example of an escalator that realizes the challenges facing capital-intensive startups and addresses the need for a new model of support and investment for these startups.
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 positive elements of the existing incubator, accelerator, and coworking space ecosystems that are applicable to tough tech companies while at the same time ensuring that they add the value these startups are unable to get from more traditional organizations.
Fady Saad is the cofounder of MassRobotics, an innovation hub for robotics.