Innovation Works, the state-funded startup investment organization in Western Pennsylvania, recently announced that its AlphaLab and AlphaLab Gear software and hardware startup accelerators, respectively, will be increasing their investments into new cohort companies from $50,000 to $100,000 in the form of a convertible note plus 2% common equity, upon completion of milestone goals during the accelerator program.
We caught up with Jim Jenn, IW's chief operating officer, to learn more about the about the change.
Innovation Works just announced that it is increasing investment in its accelerator cohort companies. What is the impetus for this decision?
We are always looking to increase our level of support for startup technology companies—both through our programs and our investment amounts. Based on feedback from entrepreneurs and our insights into accelerator trends—both locally and nationally, we felt that increasing the investment amounts would help companies achieve the critical product and customer validation milestones needed to attract customers and investors.
How will the new investment process work?
The investment process works the same as before—companies apply via the respective website and we will review applications and invite a subset of companies for a presentation to learn more and answer questions with our team. Then companies advancing to the next step in the process will undergo legal and financial due diligence plus any additional follow-ups from the interview. Ultimately, we will extend an offer to a selected company. It's a very competitive process as on average, about 20-25% of applying companies receive an interview and less than 5% receive an offer. Having said that, IW has many programs and forms of assistance for founders at all stages of development.
Who is eligible to apply?
Everyone developing a unique technology is eligible to apply, whether that's a commercializable hardware or software solution. Typically, we look for companies that have identified a target market, have a working product or advanced prototype, and have demonstrated a level of customer validation including revenues. We have lots of ways to help entrepreneurs gain investment and resources from IW. We welcome entrepreneurs to sign up for office hours at the AlphaLab and AlphaLab Gear websites to discuss their company or concept as an informal way to assess potential readiness for applying. We also have a robust set of "startup recipes" and other information online for companies looking for no- and low-cost ways to get started. The best way to work with IW is to start engaging with us early - we're happy to help get the entrepreneur to their next stage of growth.
IW moved to an “always open" application process. What does that mean?
Our "always open" application process means that we will accept and review applications throughout the year for AlphaLab and AlphaLab Gear, rather than once a year in a fixed schedule model. It's one way we've tried to make the process as entrepreneur-friendly as possible.
