But industry veterans Joe Jacober and James Tonkin want to tip the scales in favor of entrepreneurs with concept-proven brands through its newly launched Innovative Brands Accelerator, which embeds in companies a team of experts who can provide guidance – without taking over the company – on all aspects of business building, including sales, marketing, operations, logistics, finance and more.
And they do this at a fraction of the cost of hiring a full-fledged management team by using a shared resource model, according to Jacober.
He explained to FoodNavigator-USA that the goal of Innovative Brands Accelerator is to give startups “the brain power that any larger consumer products company would get,” but then empower the entrepreneurs to execute on their own.
“We don’t run their companies for them. They still own their companies. They still run them. But what we do is provide the guidance and the leadership you would see in any other successful consumer products company, including everything from [enterprise resource planning] systems to their sales planning and prioritization to how to go to market,” he explained. “We even take care of the simple things, like logistics by explaining how entrepreneurs can get the trucks and order shipped to their consumers on time.”
Unlike other accelerators that accept a cohort of companies that go through their program together, Innovative Brands Accelerator ushers startups individually through an 18 month program so that they get the tailored attention that they need to succeed, Jacober added.
“We treat every company individually because everybody is going to have their own set of issues and problems,” explained Tonkin. “They are all competing in different categories. They all have different experiences. They all have different team members. And so, we don’t do as a cohort. We do it as individual companies and we treat them as individual companies.”
A three-prong approach to growth
The program is divided into three six month “stints” that build on each other so that entrepreneurs who are diligent will “graduate” with everything they need to secure private equity and grow more quickly and with better results than many of their counterparts, Tonkin said.
The first six-month stint will focus on the fundamentals and answer the questions “where they are, where they are going, and how they are going to get there,” Jacober said.
He explained that during this section entrepreneurs will build a strong foundation by working with experts to ensure their order processing and their financials are in order, and that they do even the little things, like payroll and qualifying for insurance, right.
“The second stint is really that growth stint, which is where we are really putting them on a path so that they are prepared to grow,” Jacober said. This includes setting up meetings with buyers and teaching entrepreneurs how to talk to their customers, how to fine-tune their logistics and warehouse operations, and the most efficient manufacturing operations possible, he added.
“The third sprint is when we turn them into a professional company by showing them how to have repeatable business practices and making sure that they are executing on the most important elements of customer service, warehousing and shipping. All the different types of things that take them to the next level so that when they come out they are operating like a big company,” Jacober said.
As companies move through each stint they will be evaluated according to the accelerator’s score card, which Jacober and Tonkin said is less of a report card and more of a status check to keep companies on track.
“It is a 50 point score card that is actually going to show them how well they are doing along the way, and it shows them what else they need to work on so they can get to the spot where they can bring in an equity infusion. If they are scoring in the 20-25 range, they are only half way there to building a successful consumer products company. When they score in the 40-45 range we start talking to them about getting ready for the investment pitch,” Jacober said.
The length of the program also should allow most companies to go through retailer reviews once or twice while under the guidance of the accelerator, Tonkin adds.
He explains that most retailers only review sets once a year and while the first review is important to getting on the shelf initially, that second review is “is the most strategic, opportunistic category review in the history of a company” because that is where companies can demonstrate that they are a strategic partner with a retailer and they can engage in the merchandising.
Finding a good fit
Given the rigor of the program, Jacober and Tonkin said they will closely evaluate applicants to ensure that they are in a position to help them, the entrepreneurs have a viable product and they are ready to grow.
“This is 18 months of really focused attention and energy. There is no magic to what we are going to do here. But we do have more experience than most and we will apply a lot of discipline and rigor and do it fast. So, companies need to be prepared to engage and grow,” Tonkin said of what criteria the duo considers when evaluating applicants.
The cost of participation
In exchange for one-on-one guidance, the accelerator charges “a small monthly fee,” and asks the company for warrants, which Tonkin said, “puts us on equal footing.”
He explained that the accelerator wants entrepreneurs to keep their business if they so choose, but the warrants incentivize the accelerator’s team because unless they are successful, those warrants won’t be worth much.
“That is how we get rewarded for adding value to their business and increasing the value of the company,” he added.
Ultimately, though, Tonkin said, “the key thing is that they don’t lose control of their company. They still own their company. They still manage their company. They are not giving away stocks or a percentage of their company, but they are getting access to a management team that they could not afford to hire on their own.”