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August 19, 2022 in Abaca, ESO

Why We Created a Diagnostic for Incubators and Accelerators – And How You Can Use It

After a decade of sharing our VIRAL diagnostic for entrepreneurs, we built a new, open-source tool for accelerators and incubators to articulate their path to sustainability and impact.

Who supports the supporters?

It’s a question we’ve been thinking about for years at Village Capital. It’s commonly accepted that entrepreneur support organizations (incubators, accelerators and other tech hubs) play a critical role in building more equitable and impactful startup ecosystem – whether that’s in a geography (see: Macon Black Tech in the US or Invest2Innovate in Pakistan), in a sector (see: Food System 6 or e4Impact) or for a particular community (see: Black and Brown Founders).

I’ve seen this myself: I’ll never forget the words of Mimshach Obioha, Head of Ventures Platform when he introduced himself at our 2018  “accelerator for accelerators” in Africa. He said:

“I consider myself part of a bomb deactivation squad. The bomb is rising youth unemployment and no jobs. The solution is making Nigeria the home of digital innovation that creates jobs at scale in Africa.”

Since that time, Ventures Platform has continued to do great work building the tech ecosystem in Abuja. And there are thousands of organizations with big ambitions like Ventures Platform operating around the world – led by local founders who have lived experience in the local and regional context their organizations are operating them

But these organizations are often startups themselves - operating with small teams and competing for limited funding. Some of the biggest challenges for these organizations include raising capital to make internal strategic investments in their team; developing their products and services; and building the infrastructure to measure and communicate their impact. Not to mention they experience the same challenges of explicit and implicit bias as historically overlooked and underrepresented founders - trapped in a starvation cycle where they are asked to do more to prove they are “funding worthy” but yet not trusted with the resources to take the steps to get to what funders deem “good” looks like. 

Kelly Burton, our partner on Resource, summarized the problem well. Kelly has studied the ecosystem of Black-led ESOs in the US, creating the Black Innovation Census. She said:

“[Black-led incubators and accelerators] receive very little support and very little funding. It’s almost like they do all the heavy lifting, they plant seeds and do all the cultivation… but they don’t really get to benefit once that founder and that startup has really taken off.”

All of this is why we created our ESO Diagnostic, an open-source diagnostic tool for ESOs to map out their path to sustainability. If you’re running an ESO, I’d encourage you to check it out – or read on.

How the Diagnostic Works

Simply put, our ESO Diagnostic is a reflective tool for making good business decisions. We map the milestones necessary to raise money to grow a sustainable organization while maintaining quality services and impact.

The tool, which lives on our Abaca platform, helps ESOs get a realistic picture of where they are right now, prioritize what they need to do next and track their development on a number of milestones, from Team, to Programs & Services, to Business Model. This helps them gauge their strengths and weaknesses, and evaluate their organization like a funder does. It can also help them grow from the early days of “Establishing an Organization” to becoming a “Market Leader”. 

These challenges are familiar to any startup founder. Entrepreneurs need to constantly focus on the day-to-day while also thinking about the future; and there is usually no map or guidebook for how to get from idea to seed stage to scale. It’s why we created Abaca, based on our VIRAL diagnostic , to help startup founders map out their path to scale, and achievable milestones along the way. 

Our ESO tool does many of the same things. For instance, Noeline Kirabo runs an incubator for early-stage entrepreneurs in low-income communities in Kyusa, Uganda. They used the Diagnostic to track where they wanted to grow. Noeline told us: “After using the diagnostic, we are clear about how and who we are targeting. It was a real wake up call for us. We are certain that no matter the changing tides we can stay afloat with the new business model we are using.” 

The Bottom Line

We’d encourage all ESO leaders to take our diagnostic. We’ve taken it ourselves here at VilCap and it even 12+ years into our journey, it has been a useful tool for identifying gaps and areas of opportunity. We’ve had more than 200 ESOs complete the diagnostic already. The tool is also useful for funders of ESOs. It’s a way to challenge yourself and ask: are you being specific enough with your feedback to ESOs? For example, can you help them transition from a program based model to a holistic business model focused on value and outcomes?

In fact, we recently partnered with Small Foundation to develop a version of this tool specifically with the criteria they think about when evaluating potential partnerships. You can check it out here

A final note: This is an evolving tool. We are using the knowledge we gather over time by working with our partner ESOs – and other development partners – to evolve the tool and improve transparency in the fundraising process. If you have ideas on how to improve the tool, or want to connect about supporting our ESO work, we’d love to talk.

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