Friday, September 23, 2016

Artemisia: An Accelerator with a Truly Impressive Program

A recent consulting assignment of mine has been to prepare some incubator manager training. I took genuine pleasure in profiling a very successful Brazilian accelerator program named Artemisia. The organization is a spin-off of a San Paulo venture firm named Potencia Ventures, and it provides social impact acceleration and incubation to a select group of companies from the northern part of the country.

I conducted my research talking on Skype and e-mailing with Artemisia’s Acceleration Manager, Renan Costa Rego, whose job is to recruit, train, and monitor the progress of the companies. Renan explained that, among other duties, he’s responsible for recruiting companies in his territory of northeastern Brazil (near Recife) and this is a task the company takes very seriously. In a YouTube video interview (, a colleague of Renan stated that they don’t just advertise for recruits, they identify who they want, and then knock on the prospective client’s door and encourage that person to join their program. 

They have three things they look for when selecting participants in their accelerator program:
1. Scalability - will they be able to serve dozens, then hundreds, then thousands of customers with essentially the same (or improved) business model?
2. Profitability - can they sell enough at a price that will result in income to the shareholders?
3. Direct social impact - does their product or service have a direct impact in creation of employment, making society better in some way, or improving the lives of their customers?

They encourage companies meeting these criteria to apply to their program. This year they received about 1,300 applications and after review reduced the number to about 230. This was later whittled down through the due diligence process to about 30, and finally, they selected 12 to participate in the 2016 accelerator cohort. That's what I would call "highly selective".

Each selected company pays about $2,000 USD in fees for the services they receive. In addition, client companies pay 2% of the proceeds of investment funds they receive as a royalty to Artemisia.

During the accelerator period of five to six months, the companies are in Artemisia’s Sao Paulo offices a few days each month, engaging in training to become sustainable. A primary focus is financial readiness preparation and includes training in several areas, for example: financial modeling; how to prepare a pitch deck or make a financing presentation; understanding investment criteria; and other topics are covered. Artemisia also has a large mentor program with over a 100 mentors participating, so the companies receive a highly personalized experience.

A key element of the accelerator program is to help the companies find financing, and being an Artemisia client includes some real hand holding. Mr. Costa Rego explained that Artemisia helps the companies pursue all the available and appropriate sources of financing for their businesses. This includes helping them qualify for economic development agency support, apply for government grants, engage in crowdfunding, seek bank loans, present to angels, and meet with venture capitalists. The government grant programs are generous, and successful grant awards for businesses could range from $62,000 to $308,000 USD - Artemisia has had two grant award winners in the past two years of the 20 or so who applied. He also told me that their batting average is high in that 52% of their clients successfully obtain financing. In addition, the accelerator provides introductions to investors from venture and angel funds (even to the extent of accompanying the clients to appointments)

Here’s the most interesting aspect: When I asked Renan about investments by the parent Potencia Ventures, he said they don’t invest, but instead make investments in other funds that make social accelerator investments, and of course they make referrals to the funds they invest in. So, Artemisia creates deal flow for other investment programs in Brazil.

Discussing the post-acceleration life of a company in their portfolio, he told me they follow the companies for 18 months after graduation to track jobs created, changes in personnel, sales, and most important, the numbers of low-income people impacted by the portfolio company. So, they have a monitoring and evaluation process in place as well.

Artemisia is one of several such accelerators located in both emerging and established markets, and clearly one of the most successful in Brazil. I’ll definitely continue to follow them and observe their progress.