Virgin Media announced today that it is launching a new technology accelerator in London that will be "powered" by TechStars.
The Virgin Media Accelerator, opening early 2016, will put 10 startups through a 13-week crash course in return for an equity stake in their business.
Richard Branson’s telco, TV, and broadband business is the latest corporate to try and get close to London’s most promising digital companies through an accelerator.
Corporates do this in the hope that their equity stake will one day be worth tens of millions. They also do it so they can sign up fast-growing businesses in their early days.
Barclays, Santander, Telefonica, and John Lewis have all launched similar initiatives in previous years but they’ve had mixed success.
Startups that enroll in the connectivity-focused Virgin Media accelerator programme will be forced to sacrifice 6% of their equity in exchange for a £13,000 investment in their business. Each company will also have the option to take an additional £65,000 convertible loan note for up to an additional 4% equity stake.
During the programme the startups will receive mentoring and guidance from Virgin Media executives and the TechStars team, as well as an office to work in and free internet from Virgin Media.
Once the programme has finished, the 10 startups will take part in a ‘Demo Day’ where they will each pitch to investors for the chance to raise capital.
Virgin Media wants startups focusing on a diverse set of backgrounds to apply, particularly those companies developing products and services that fall under: the Internet of Things, telecom infrastructures, customer data and experience, social enterprise, connected homes, connected goods and services, interactive home experiences, connected business services, home health and wellness, and connectivity for social good.
Some accelerators over-promise
The best known accelerator is arguably Y-Combinator in Silicon Valley, which nurtured companies like Airbnb and Dropbox in their early days. But not all accelerators are achieving the same levels of success.
Alice Bentinck, the cofounder of a company building organisation called Entrepreneur First, claims that too many of today’s accelerators over-promise.
Without naming any names, she said there are accelerators across London that just throw hundreds of mentors at startups in an attempt to impress them/make the programme seem valuable.
Entrepreneur First prides itself on the calibre of its mentors, which includes Phil Blunsom of Oxford University and Google DeepMind, as well as Zoubin Gharamani, head of computer science at Cambridge University.
Interestingly, Virgin Media has said that it will return equity to startups that aren’t happy with the programme.