Accelerators Start Revving Up Industries Well Beyond Tech

May 29, 2013, 3:40 p.m. ET

Accelerators Start Revving Up Industries Well Beyond Tech

By LORA KOLODNY

Accelerators that provide seed funding and mentorship to technology startups produce some of the hottest companies in Silicon Valley. Now just about every industry is trying a “boot camp for business” model.

In Palo Alto, Local Food Lab Inc. started Food & Farm Startup Accelerator last year to boost chefs and farmers, more than engineers and MBAs. And in San Francisco, the nonprofit Code for America Accelerator, which started in July 2012, helps public-service providers score work with government agencies.

Meanwhile, the seed fund and accelerator Matter Ventures, which launched in December, enlists media entrepreneurs who want to make money while upholding the values of traditional journalism.Matter Ventures admits six media companies per batch, investing $50,000 and taking an equity stake in each one. Corey Ford, chief executive and managing partner at Matter Ventures, says he is betting that “vertically focused” accelerators will benefit early-stage startups more than generalized programs. “It’s frustratingly hard to build an ecosystem of mentors and organizational partners that help entrepreneurs [experiment] within a given industry,” he says.

Local Food Lab CEO Krysia Zajonc says she started her accelerator after struggling to run a cafe and chocolatier in Costa Rica. “Food companies may not generate high enough margins to get star investors and flashy exits,” she says. “But they are so critical to our health and the environment, I wanted to help them avoid mistakes that I made.”

Local Food Lab’s accelerator accepts up to a dozen entrepreneurs per six-week session, twice yearly. Instead of taking an equity stake for some small amount of funding, it charges the startups about $2,500.

Applicants must demonstrate a business idea that will “create a food system that’s healthy, just and resilient,” says Ms. Zajonc. Her accelerator’s goal is to strengthen food companies so they are self-sustaining, she says, not to raise “follow-on funding” in all cases.

Anea Botton, a former chef and insurance agent, says she had never heard of accelerators until a friend from a cooking club in San Francisco enlisted her to apply via Local Food Lab. She completed the program last November.

Ms. Botton’s company, Valley Girls Foodstuffs, sells items like grapefruit soda syrup, mustard pickles, and a variety of jams at farmers’ markets. To produce the goods, Ms. Botton teaches and hires at-risk teenage girls. They use “seconds,” or groceries donated by local stores that would otherwise go to waste.

Ms. Botton says she hopes to expand the business without outside funding to any city where food is wasted and teens need jobs and skills.

Entrepreneurs involved in civic projects can’t easily get into general accelerators, says Ron Bouganim, angel investor and program director at the Code for America Accelerator. “Historically, startups and venture capital don’t mix with government,” he says, because investors hear “government,” and worry about long sales cycles, or agencies’ hesitation to adopt new technology.

Now in its second year, the CFA Accelerator gives startups a $25,000 grant and runs classes for founders in San Francisco for one week a month, over four months.

CFA Accelerator connects startups with potential customers like mayors or local government administrators, from the parking authority to the fire department. It also helps startups pitch investors, showing them how their businesses can be profitable. CFA estimates that the market for state and local government services is $60 billion.

Five of seven graduates from CFA Accelerator have raised funding, Mr. Bouganim says. One of its graduates, Socialmentum LLC, known as MindMixer, is helping the city of San Francisco and hundreds of others run innovation challenges, and an online version of town-hall hearings.

MindMixer CEO Nick Bowden says CFA Accelerator connected him to new customers and taught his team better design and testing methods. MindMixer has since raised $4 million in venture capital, and redesigned its apps, adding features like “interactive budgeting” tools to help citizens tell government teams how to allocate spending.