As angel investors flock to Istanbul for the World Business Angels Forum, there is one company they should not miss out on. UNIQORN is the world’s largest rural incubator and their delegation is heading to Istanbul to turn the startup world on its head. This accelerator-incubator goes against the grain by incubating and accelerating startups, from inception to finish.
The World Business Angels Forum is set to kick off in Istanbul on the 17th of February. This event attracts some of the world’s most influential angel investors and is a key opportunity for companies and investors alike. This year, a delegation from France’s breakout rural accelerator-incubator – UNIQORN – is looking to make waves with a pitch that’s already turning heads.
The status quo isn’t working for investors
The startup investment world is currently held hostage by two orthodoxies: you need to be based in a city to succeed (preferably a larger one), and growth at all cost is king. These beliefs have created systemic problems in the start-up world and are a major reason why 99% of all start-ups fail.
Let’s consider the first problem. Cities are expensive. In London, it can cost as much $90 a month per square foot to rent an office. In New York, average rents run between $80 to $110 for a class A building. This means that a 1,000 square foot (93m2) office would cost a startup between $80,000 and $110,000 a year in New York and more than $90,000 in London.
Residential real estate reflects the same trend l and further compound the high costs associated with city life. Employers are forced to pay higher wages to offset the higher cost of living. And this does not even take into account lost productivity due to stress or illness caused by environmental toxins, pollutants and allergens.
A second misconception is that growth is always king. While an element of growth is paramount to any startup’s success, growth is irrelevant and unsustainable if it cannot be converted into profit in due course. Unsustainable growth without a clearly defined breakeven point and long term profit planning are a leading cause to a startup’s ultimate demise. In short, long term, startups simply run out of cash if their burn rates exceed their income.
The fact is that the vast majority of companies are failing to follow the basic rules of business. Cut costs, grow sustainably, turn a profit. These bad habits have been tolerated for years now thanks to a growing bubble fueled by rock bottom interest rates. Once the economy turns – and it will at some point – many investors will find themselves left out to dry.
Investors deserve better
While the current system can make money for a few people, it is bad for business. Enough high profile failures will bring the house of cards crashing down. This will lead to lost investments, lost jobs, and a whole lot of suffering. Some European companies prove that it doesn’t have to be this way.
While many American companies seem to be able to attract “endless” amounts of fresh capital (sometimes at eye-popping paper valuations), many European companies are forced to improvise. It costs just $80 million, on average, for a European company to reach a $1 billion valuation. This is 50-100% less than in the US where the median amount of funding required to reach unicorn status was more than $125 million.
The main reason why? European companies have struggled to obtain mid-late stage funding. This forces them to focus on cutting costs and achieving profitability at a much earlier stage than their U.S. counterparts. Translated, this boils down to the fact that European companies are typically more sustainable. But this sustainability comes at a cost.
The absence of funding at the mid to late stage in Europe means many companies that should be unicorns are unable to access the funds they need. That’s where UNIQORN comes in.
American experience, European approach
For any business to be sustainable it needs to tackle both rising costs and access to capital. This is where UNIQORN comes in. Founded by French-American entrepreneurs Dom Einhorn and Jean Vignon, and based in the city of Sarlat in southwestern France, UNIQORN is set to become the world’s largest rural incubator-accelerator.
Rather than following the approach taken by traditional accelerator-incubators, UNIQORN’s mission is to solve three of the biggest problems facing entrepreneurs: access to capital, work life balance, and management of operating costs. The solution was simple. Leave the city.
By basing your business in a rural community, you eliminate many of the expenses associated with working in a major city. Lower rents, lower travel costs, and lower salaries all mean that you need to raise, on average, 3-5 times less capital than someone in a city.
This fact alone should be enough to attract investors, but UNIQORN is working to ensure that doing business in the countryside isn’t just cheaper, but better than working in a city.
Aggressive cost optimization generates strong returns
It’s not all about cutting costs either. A big part of the UNIQORN value proposition lies within the skilled network baked directly into the incubator’s DNA. UNIQORN employs world-class lawyers and accountants who manage key French and European incentives and grants (R&D and Young Innovative Enterprise credits…) that help accelerate a start-up’s growth while saving cash. The ability to claw-back development costs can help fill some of the gaps left by equity investors and empowers a startup to make calculated bets it would not otherwise be in a position to make.
Another key strategy consists in pairing investors with the right start-up. UNIQORN surrounds its portfolio companies with a dream team of accountants, attorneys and digital marketers. The incubator also works with a vetted network of value-added investors. This translates into a healthy, long term partnership where all parties are deeply invested in the success of the company.
UNIQORN’s strict selection criteria allow it to hand-pick the companies and investors it chooses to work with. The stated objective is to increase a company’s chance of reaching the coveted – and often elusive – $1 billion “unicorn” valuation.
Building a better model for growth
The key to everything the UNIQORN team is trying to build revolves around leverage and sustainability. By focusing on attracting high potential start-ups to the rural community of Sarlat, France, UNIQORN enables start-ups to build a sustainable future in a place where entrepreneurs and their staff are happy, healthy, and more productive. This, in turn, allows investors to reap bigger rewards at a lower risk profile than by investing in companies following a more traditional model.
To find out more or to book time with the UNIQORN team you can reach out to [email protected]
