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Filling the gap EntreprenYOURS hopes to aid growth of companies after accelerator programs

David Sorin, practice group chair, venture capital and early stage and emerging companies, McCarter & English.-(PHOTO BY AARON HOUSTON)

David Sorin has built his law practice on advising early stage and emerging startup companies, so he’s no stranger to the needs these companies have.

Particularly when it comes to finding the funding to grow an idea into a business — and the role that business accelerators play in helping startups bridge that gap.

“It’s an important element of supporting the ecosystem for early-stage companies,” Sorin said. “What we have discovered over the years of working with so many early-stage companies and accelerators is that the traditional accelerator model has a couple of weaknesses.”

With this in mind, Sorin and his son Jared Sorin have deconstructed the process and created entreprenYOURS, a new accelerator designed to address many issues that keep startups from succeeding after completing an accelerator program.

The first issue the team addressed was the length of the program.

“One of the weaknesses is that accelerators have this rather short period of time during which a startup company is expected to go from zero to 60 in 12 to 15 weeks, and it invariably takes longer than people hope and far too many companies that graduate from accelerators are really not ready for prime time,” Sorin said. “So, rather than having this artificial end date, we’re only going to admit one class a year and that is going to allow our advisers and mentors to partner with the companies for an extended period of time.

“That gives them the time and attention they need to develop.”

Another aspect of the accelerator process that entreprenYOURS hopes to address is fostering a true sense of camaraderie among its companies.

“It’s great that these accelerators provide co-working space and co-locations, but what they don’t provide is a true sense of a joint ecosystem, collaboration and spirit of really being in it together,” he said. “So, we decided that, in addition to the traditional economic model of the companies providing an equity stake to the accelerator in exchange for the networking, we reserve a portion of the equity of the accelerator itself to provide a varied economic interest to each of the companies admitted.”

The role of the accelerator
Dennis Bone, director of the Feliciano Center for Entrepreneurship at Montclair State University, said he was quick to offer his services to Jared Sorin and David Sorin with their new accelerator, entreprenYOURS, because of the important role those entities play in the startup community.
“In what I would call the journey of entrepreneurial venture, it’s a pretty precarious journey for many people, because they have good ideas and they believe in their ideas, but they have to demonstrate that idea in the marketplace, gain traction in the marketplace,” Bone said. “When they go to scale, they need money, and when you start to scale, unless you have financial backers that believe in what you’re doing, then you’re not going to be successful or you’ll end up giving away a bunch of your company.”
Now, as the chair of the Newark Alliance, Bone is also excited for another accelerator coming to the region: Newark Venture Partners, which has the support and funding of major businesses in the city.
“The new accelerator in Newark — I’m real excited about that because it’s received significant financial backing from Audible and Prudential,” he said. “I think this accelerator is going to be a magnet for many startups because they have terrific space to work in, have tremendous advisers and they have money.
“When I look at that, I look at the big picture of Newark’s economic future.”

Basically, if the companies in a group do well financially, the other companies in its team get a little financial reward for that success.

“Every year, we’ll form a new entreprenYOURS entity and reserve up to 30 percent of the equity interest in the entity for carried interests for the accelerator companies themselves,” Sorin said. “Our plan is to admit up to 10 companies in any cohort and each company admitted will be provided a 3 percent equity stake in the entreprenYOURS entity.”

By providing its companies with an equity stake of the entity, which represents all companies in that year’s class as a collective, entreprenYOURS hopes to economically incentivize its companies to collaborate on a much deeper level than typically seen in other accelerator programs.

“The idea is that these companies clearly have their own economic interest at stake, but by having indirectly an ownership interest in every other company in their cohort, we’re hoping to incent and motivate a closer level of collaboration among the companies,” he said. “Our hope is that these companies will be truly interested in each other’s success because now they have an economic stake in that as well.”

Sorin added that companies interested in applying must do so on the accelerator’s website before Aug. 1.

As entreprenYOURS prepares for its first class of companies to attend this fall, many of the marquee names in New Jersey, within and outside the tech community, have offered their services to the platform. The accelerator has more than 50 advisers and mentors, including Venture Capitalist Greg Olsen, CPA and CohnReznick Partner Alex Castelli and TelTech Systems co-founder and President Meir Cohen.

Dennis Bone, director of the Feliciano Center for Entrepreneurship at Montclair State University and former CEO and president of Verizon New Jersey, was also quick to become involved with the project because of the large role accelerators play in growing the economy of the region.

“When you take a step back and look at New Jersey, you see that this sector of the economy is gaining more importance,” Bone said. “And part of that is because technology enables smart people with smart ideas to launch things that would’ve been hard to do 10 to 20 years ago.

“The role of accelerators in that journey is quite important, critical, I would say, because, if that same person or company gets into an accelerator, they generally are given some seed money, but are put in an environment where they’re surrounded by advisers, experts and a rich ecosystem that coaches them, gives them ideas and introduction to people and investors.

“So when I talked to David about what he was doing, it was an easy ask for me.”

Sorin admits that, with providing its accepted companies with a $10,000 stipend, entreprenYOURS offers less money than most other accelerators. But he’s also quick to point out that that the accelerator takes a smaller chunk of the company’s ownership by taking a 5 percent equity stake in each company.

“We’re taking a much smaller equity stake than is normally the case with accelerators,” he said. “And each portfolio company will get 3 percent interest in entreprenYOURS.”

According to both Jared and David Sorin, the main goal driving the enterprise is to help foster the startup economy here in the state.

“We want to do good and do well at the same time,” David Sorin said.

E-mail to: andrews@njbiz.com
On Twitter: @sheldonandrewj

Andrew Sheldon
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