QUESTION: What is one major characteristic you have noticed in the startups you have worked with at Energy Excelerator?

ANSWER: Over the past three years, we have analyzed over 400 companies. Every startup is unique and there is no cookie-cutter approach. But there are definitely similarities between our most successful companies.

Q: What are those similarities?

A: The best companies have killer teams. Identify your starting five. This doesn’t mean get the top five players in the league on your roster or five of the world’s top CEOs on your team. It means building the strongest core possible and filling in the gaps around them.

The most successful startups typically build strong core teams, then hire role players to fill in the gaps. Team is one of the key things we look for at the Energy Excelerator because without a strong team, you don’t make it to the playoffs. 

The best companies identify a customer problem they are trying to solve and are willing to pivot. Flexibility is key in growing a startup into a commercial company. 

Q: What is an example of a startup successfully pivoting?

A: What do you do when your customer discovery results show that your market isn’t homeowners, as you thought it was, but rather building owners?

Ibis Networks, one of our portfolio companies and recently named Cleantech Entrepreneur of the Year by the Hawaii Venture Capital Association, made a big pivot a few years ago. Originally targeting homeowners, Ibis Networks tested their energy efficiency solution with 100 homes on Oahu. After speaking with homeowners about their experience and researching other customer types, they decided to pivot and target commercial buildings. 

Q: What about funding?

A: As capital-intensive startups travel through their life cycle, we’ve seen a common funding pattern that involves different forms of capital, both public and private. They typically go from angel to grant to early-stage venture capital to an accelerator program to later-stage venture capital, then to banks. Funding is what pushes these companies from idea to prototype, from prototype to demonstration, and from demonstration to commercialization. 

Q: Where do companies begin?

A: So when you have your idea, you need money to be able to develop a prototype and a business model around your idea. The money for the prototype usually comes from angels or from grants if you’re developing this within an institution such as the university. There are also early-stage accelerator and grant programs that provide funding for startups at the idea and prototype development stage. ARPA-E (the Advanced Research Projects Agency — Energy within the U.S. Department of Energy) is one example.