Hamilton’s SODA Inc is a founder incubator that works ‘on the side of the entrepreneur’
The value of different incubators and accelerators has been heavily debated around the world over the last few years as international markets look to adapt and update models developed in Silicon Valley.
The debate is particularly interesting in New Zealand, where the incubator space is largely divided into two: the founder and the technology incubators. The founder incubators provide business support and development services to help founders validate their ideas, while technology incubators help identify opportunities for the development of ideas or tech that comes from publicly-funded research, and build a business around this research.
Many of these incubators are funded in part by Callaghan Innovation, a government agency supporting the national tech and business landscape through grants, collaborations, and tech and product development, and corporate backers or investment firms that provide participating startups with funding in exchange for equity.
SODA Inc is a Hamilton-based founder incubator that positions itself ‘on the side of the entrepreneur.’ First etablished seven years ago, the organisation flipped its model at the start of 2015 to run as lean as possible and in turn devote more time and funding solely to its startups. In the words of Rachel Adams, head of operations, it is “applying common sense to the incubation space.”
“We try to build as much value for the founder as possible by really getting down to what they want out of the program. Are they actually wanting to build an intergenerational long-term company that’s in the family for years and years, are they wanting to build it quickly and sell it, or are they wanting to build themselves a job but not really be the leader or CEO? We really try to focus on that and how we can not only support the founder to grow and learn, but how we build the company around their goals,” Adams explained.
SODA Inc does this by seeking out and appointing business growth advisors for its participants on a case by case basis rather than having them sitting in-house on a retainer.
“If there’s no company coming in, there’s no expense going out, so we’re very lean,” Adams said.
Knowing that the best mentors may not necessarily be living in Hamilton, or even New Zealand, the organisation is happy to have advisors and companies work remotely, with neither needing to be based in Hamilton. Just three of 12 companies working with SODA since January 2015 have been based in Hamilton.
The SODA Inc team looks at what incoming companies need and are asking for, and then goes out to find the best possible business growth advisor to match them with. The incubator looks world-wide for advisors, tapping into its own networks and those of the startups themselves.
“We ask them for their ideal advisor because they know the industry so well, they may already know the top person in their industry but would never dream of having them as an advisor because they wouldn’t be able to afford them,” Adams said.
SODA Inc will work to put together and present at least two or three potential advisors to companies, with at least one located nearby, with the companies then able to interview them and decide who to work with. The advisors and businesses then work together through Skype and other online tools, with SODA Inc managing all the admin.
The incubator has a number of programs for companies to go into. The first is Lift, a 12 session customised program that looks to connect founders with a team of experts to help them build a solid plan and define a growth path. The second is Boost, following on from Lift and running for up to 12 months or 2 years. It looks to help founders execute the plans defined in Lift and either launch into the market or grow their market share.
SODA Inc is able to work towards these different outcomes, Adams said, because it is not backed by or tied to an investment fund or corporate.
“When you have a fund behind you waiting, then they become your customer and you start picking ideas or people that adhere to what those investors are looking for. Being on the side of the founder, not having that means you can actually look at all the options, unbiased, and say, if you get your fundamentals right, the money will chase you.”
The incubator is owned by Wintec, the Waikato Institute of Technology, and is housed in Wintec House, where it also operates a coworking space separate to the incubation programs whose revenue helps fund its programs. Half its funding also comes from Callaghan Innovation.
SODA Inc takes a five percent equity stake when companies enter the Lift program, which carries through the Boost program.
Looking ahead, Adams said SODA will be looking exploring new funding options as it grows and the New Zealand tech and business landscapes shift.
She said, “We’ve modulised all our programs and we’re a lean team, so we can easily scale the number of programs up.”
Image: Dr Claire McGowan, CEO of SODA Inc.