March 15, 2018 at 14:09How to get to the investor: a short way through retail
Any startup wants to attract investment. Investments can be obtained in those industries where there is money. The obvious target is fintech. But he is already spoiled by the attention of startups, and competition for funding is high. In the past couple of years, startups have become interested in another area - in offline retail. For example, accelerators such as the MEGA Accelerator began to be arranged. From entertainment for customers to logistics optimization, there are many areas where you can apply good ideas. Under the cut, we will talk more about the attitude of retail to start-ups and give tips on how to start working with this industry.
During the period of active development of online trading, traditional large offline retailers predicted a quick demise. However, this did not happen. This segment continues to attract a significant share of customers, despite the fact that offline does not have the same personalization and customer preferences tracking tools that are online. Moreover, large online platforms enter the offline trading market. Under these conditions, traditional retailers, such as MEGA, are looking for new technologies that can strengthen their position and return the market share that has been left to new players.
All this happens against the background of a decrease in venture capital investments in startups for online trading, where the market is not just filled with interesting ideas, but has reached the stage of their active competition among themselves. And now these ideas are beginning to gradually migrate to traditional trade and narrow the gap between online and offline purchases.
In our country, the high interest of retail in startups is quite explainable. Here, amid general economic instability, trade is doing well. Companies of all sizes are represented on the market; they are more or less stable. And the largest players have good budgets and a desire to inject them into new technologies.
Accelerator, as a form of interaction with startups, is very suitable for retailers. With it, you don’t need to inflate your development department and get distracted from current tasks to find new ideas. Retailers get a ready-made selection from which to take the most promising options, implement pilot projects - and all this for a limited time.
Conventional projects within the close framework of a large business can develop over the years, but within the accelerator they can take off very quickly. A large business is not ready for a quick change by default, and only accelerators can stir it up. This is another advantage of the accelerator - if you bring your project simply from the street, then it is unlikely to be put on fast rails.
In addition to this, there are many more reasons to participate in retail accelerators:
Each accelerator has its own ideas about what innovations from start-ups candidates should be. So, first of all, when searching for an idea, it is most reasonable to study the conditions of participation and analyze which niches in the designated market are already occupied.
By the way, one can look at the subject matter from the angle of technology. Which of them are most in demand in online trading or in related market segments? Big data analysis? Personalization of services? Somewhere at the intersection of technological interests and the needs of the retail itself, there is the very idea that will guide you and your team into the accelerator.
Selecting startups to any accelerator, a potential customer always wants an explicit business case. An idea that can produce results in 20 years is unlikely to interest anyone: you need forecasts on timelines and clearly noticeable advantages (improved KPI, savings, attracting an audience, etc.). True, too mundane improvements can be implemented without your team, so retail does not need them. It is necessary to find a balance between a "bright future" and "an ordinary present."
Another point: large customers usually rate ideas that can be scaled to the overseas market higher. However, as the illustration above demonstrates, in the global market competition is much tougher.
MEGA Accelerator became the first Russian accelerator in the offline retail segment. So far, it has been held twice - in 2016 and 2017. The first accelerator helped to promote several ideas for entertainment in shopping centers. The winner of 2016, the Surfancy project from the SensArt team, is deployed in MEGA Khimki. The second MEGA accelerator was supported by the well-known company Global Venture Alliance. The organizers focused on transforming MEGA shopping centers into a meeting and communication zone, organizing new channels for interacting with visitors, as well as automating the back office. Recently, the pilot launches of the winners have ended; their results can be found in one of the previous blog articles .
Why offline retail
During the period of active development of online trading, traditional large offline retailers predicted a quick demise. However, this did not happen. This segment continues to attract a significant share of customers, despite the fact that offline does not have the same personalization and customer preferences tracking tools that are online. Moreover, large online platforms enter the offline trading market. Under these conditions, traditional retailers, such as MEGA, are looking for new technologies that can strengthen their position and return the market share that has been left to new players.
All this happens against the background of a decrease in venture capital investments in startups for online trading, where the market is not just filled with interesting ideas, but has reached the stage of their active competition among themselves. And now these ideas are beginning to gradually migrate to traditional trade and narrow the gap between online and offline purchases.
In our country, the high interest of retail in startups is quite explainable. Here, amid general economic instability, trade is doing well. Companies of all sizes are represented on the market; they are more or less stable. And the largest players have good budgets and a desire to inject them into new technologies.
Why retail accelerator
Accelerator, as a form of interaction with startups, is very suitable for retailers. With it, you don’t need to inflate your development department and get distracted from current tasks to find new ideas. Retailers get a ready-made selection from which to take the most promising options, implement pilot projects - and all this for a limited time.
Conventional projects within the close framework of a large business can develop over the years, but within the accelerator they can take off very quickly. A large business is not ready for a quick change by default, and only accelerators can stir it up. This is another advantage of the accelerator - if you bring your project simply from the street, then it is unlikely to be put on fast rails.
In addition to this, there are many more reasons to participate in retail accelerators:
- With a successful set of circumstances, you will close the financial issue and be able to fully concentrate on the technical part of the startup.
- You will understand what is happening inside a large business. Often, young developers do not have such knowledge, and because of this, their solutions are not in demand "as is." Inside the accelerator, they will receive answers to the main question “Why haven’t we bought our great idea yet?”
- The accelerator gives business tips, including on management techniques and other non-technical aspects of the project. A sort of replacement for the missing MBI. For a team that did not have experience in launching a successful business, this is extremely important.
- Accelerator is a help in marketing a startup itself. Even if the organizer does not become a startup client, the whole world will hear about the idea approved by the jury through industry media.
- If a startup reaches the pilot stage, it can be tested in real conditions - on buyers and visitors. This is the best test of the models underlying the business plan.
- You will have the opportunity to exchange experiences, you can make useful contacts among colleagues. Sometimes you can even get your team of like-minded people right among the other accelerator teams. Sometimes the community formed by the accelerator around the project gives rise to new good ideas.
Search for ideas
Each accelerator has its own ideas about what innovations from start-ups candidates should be. So, first of all, when searching for an idea, it is most reasonable to study the conditions of participation and analyze which niches in the designated market are already occupied.
By the way, one can look at the subject matter from the angle of technology. Which of them are most in demand in online trading or in related market segments? Big data analysis? Personalization of services? Somewhere at the intersection of technological interests and the needs of the retail itself, there is the very idea that will guide you and your team into the accelerator.
Selecting startups to any accelerator, a potential customer always wants an explicit business case. An idea that can produce results in 20 years is unlikely to interest anyone: you need forecasts on timelines and clearly noticeable advantages (improved KPI, savings, attracting an audience, etc.). True, too mundane improvements can be implemented without your team, so retail does not need them. It is necessary to find a balance between a "bright future" and "an ordinary present."
Another point: large customers usually rate ideas that can be scaled to the overseas market higher. However, as the illustration above demonstrates, in the global market competition is much tougher.
A little bit about our accelerator
MEGA Accelerator became the first Russian accelerator in the offline retail segment. So far, it has been held twice - in 2016 and 2017. The first accelerator helped to promote several ideas for entertainment in shopping centers. The winner of 2016, the Surfancy project from the SensArt team, is deployed in MEGA Khimki. The second MEGA accelerator was supported by the well-known company Global Venture Alliance. The organizers focused on transforming MEGA shopping centers into a meeting and communication zone, organizing new channels for interacting with visitors, as well as automating the back office. Recently, the pilot launches of the winners have ended; their results can be found in one of the previous blog articles .