Antler: The Global Startup Factory

“People will tell you that more than 90% of startups fail. That is true, but the majority fail for the wrong reasons. We root out the reasons that cause startups to fail.”

When it comes to building startups, no accelerator is as disciplined as Antler.

  1. Origins: Antler’s founding team is seemingly made up of a single archetype: the ambitious overachiever who wants to walk a less conventional route. This spills over into the type of founders they attract and has shaped the company’s DNA.
  2. Antler’s Program: startups can be awfully risky, especially at the earliest stages. Antler seems to have figured out how to reduce risk at every stage, from the people they recruit to the ideas that they fund.
  3. The Business of Incubation: Antler might spend most of its time helping founders, but people forget that they have to generate returns as a fund too. Fortunately, there is money to be made here, although the economics may sometimes be tricky.
  4. Future: Antler isn’t the only one who has noticed the early stage opportunity. Accelerators have existed since the early 2000s, and VC funds are now moving in. Can Antler win? It depends on whether they can keep innovating.

Magnus Grimeland

Early Life

Growing up on a farm in a small Norwegian town, Grimeland didn’t have the most exciting or unusual childhood. At 16, he left home for the first time and attended a boarding school called Atlantic College in Wales, a United World College institution.

Harvard

Harvard would be a life-changing experience for him. Although he didn’t know it yet, 2003 was a good time to be on campus.

Rocket Internet

That opportunity would come as Grimeland began searching for his next career move.

  1. Magnus Grimeland (CEO): 2 years with the Norwegian Navy SEALs > Harvard > 6 years at McKinsey > 4 years with Rocket/Zalora
  2. Fridtjof Berge (Chief Business Officer) — 3 years at McKinsey > Harvard MBA
  3. Dilan Mizrakli Landgraff (first CFO, now Chief Strategy/People Officer) — 4 years doing investment banking with JPMorgan > 6 years in private equity
  4. Vegard Medbo (first Chief Commercial Officer, now COO) — 2 years with the Norwegian Coastal Rangers > 5 years at McKinsey
  5. Jussi Salovaara (Managing Partner, Asia) — 5 years at McKinsey > 4 years at Nokia running a variety of business units

Program

Antler’s promise to founders is simple: if you get in, you’ll join a 3–6 month program that’s divided into two phases. In phase one, you get a stipend. And if your pitch is good, Antler will invest so you can continue building in phase two. Exact details vary from location to location, but they generally follow a similar structure.

Sourcing

For Antler, everything starts with ensuring that there’s a pipeline of individuals who could be formidable founders.

Selection

At the selection stage, Antler looks for individuals with a ‘spike ’– deep expertise in their fields of work or a specialised skill that sets them apart from the rest. This happens through several stages, although it varies based on location:

  1. General application: an indication of motivation in the candidate’s CV
  2. General aptitude test: a series of logical puzzles and common questions to establish baseline competence
  3. Competency interview: the same one used by HR teams to determine if an applicant has the traits the company is looking out for; here Antler looks for evidence of drive and creativity in problem solving
  4. Case study: an interview with a partner designed to tease out the candidate’s ‘spike’, from technical ability, business acumen, to domain expertise
  5. Final interview: a catch-all interview for local Antler program partners to determine if the candidate is a fit

Building

Once applicants are admitted, they go through a two-phase program that spans three months each. A small stipend is given during this period to relieve any existing financial pressures so that founders have the time to explore.

The Model

Markups and Returns

Antler might be a partner to founders, but it’s first and foremost a venture fund that needs to earn returns for LPs. Running cohorts at the pre-idea stage is merely a form of proprietary deal sourcing and a way for Antler to get a first look at a company (however little and thin that might be) before other investors.

  • Xanpool, a peer-to-peer payments infrastructure provider that was part of Antler’s SG2 cohort, raised US$27 million last year in its Series A round
  • Homebase (SG3), a Vietnam-based proptech startup that makes home ownership more accessible, raised a mix of US$30 million in debt and equity
  • Reebelo (SG3), a refurbished electronics marketplace, raised US$20 million in their Series A earlier this year
  • Volopay (SG4), a payments and card issuance provider, raised US$29 million in their Series A, taking their combined funding raised to US$31 million

Operating Structure

A key reason why Antler has been able to scale so quickly is because of its decentralised structure. The program in each Antler location moves independently of the others, which means that there are cohorts constantly running and portfolio companies emerging all the time.

Future of Antler

So far, the Antler experiment seems to be working. Indeed, it’s even the subject of a HBS case study. But will this model work at scale? Can it generate superior returns over the long term? These are the questions we must answer.

Founders

Any analysis must begin and end with the founders who join Antler. They are the company builders and ultimately the ones who determine how successful portfolio companies become. To generate superior returns for their LPs, Antler must be able to continuously attract the most talented individuals and partner them on their startup journey.

Terms

It’s not all a bed of roses. In an article last year that reported on Antler’s new fund raise, Mike Butcher wrote on TechCrunch that several have called Antler’s terms for startups “less than founder friendly”. Grimeland acknowledged that it might have been the case “in the early days”, but argued that they’ve now gotten “very good feedback” and they’re “very competitive in all the markets that [they’re] in”.

  1. Less companies succeed; in response,
  2. Antler gives more onerous terms to make the economics work; thus
  3. Attracting less talented founders; which in turn
  4. Causes less companies to succeed.

Culture

I once asked an Antler founder the best way to get selected. He replied that the best way was to first work at a startup and gain domain knowledge. “Otherwise, you’ll end up with a consultant leading your company”, he concluded.

Competition

Antler isn’t the first accelerator, and it most certainly won’t be the last. Many have tried and failed; of those who remain, each has a unique edge to them.

The Predecessor

Founded in 2011 by Matt Clifford and Alice Bentinck, Entrepreneur First (EF) is Antler’s true predecessor. It runs 3-month long cohorts and gives founders a stipend for attending. Precise terms vary based on location, but EF invests between $54,000 and $98,500 for 10% equity. Clifford summarised the firm’s thesis as follows:

Community for top talent

A newer challenger is On Deck. It has two main offerings for founders, namely, On Deck Founders (ODF) and On Deck Accelerator (ODX).

The OG

Then, there’s YC. A lot has been said about them, but what’s worth emphasising is that they’re not done evolving. Earlier this year, they started offering a new standard deal. Besides investing US$125,000 for 7% equity, YC now offers founders an optional $375,000 on an uncapped SAFE with a “Most Favoured Nation” (MFN) clause.

The Big Boys

Last but not least, there are the mega venture funds. As winning deals have become more difficult, certain firms have responded by moving upstream in search of deal flow.

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Louis Chew

I explore underappreciated ideas. Be the first to know about what I’m currently up to: https://constantrenewal.com