As venture incubators sprout up around the globe, pledging to nourish the next generation of startups in a period of global recession, they may now be creating a bubble. After Xconomy’s recent report, Guide to Venture Incubators, counted 64 venture incubators in the U.S., more than three times the number in 2009, fears are on the rise that tech incubators are indeed flooding too many early-stage startups with funding both in Europe and the U.S. Although the need to boost economic growth by empowering small businesses is widely acknowledged throughout the Middle East and around the globe, building too many incubators will backfire, especially if too many startups without a viable model receive seed funding, or investors chase immediate profit rather than building long-term profitability.

As someone who has watched Turkey’s entrepreneurship scene since 2000, having worked for five years at Turkey’s first incubation center, launched by Ericsson, I believe that these concerns are valid; there is a

bubble in Europe and the U.S. at least. Yet I also believe that what we are seeing is the natural evolution of the entrepreneurship market; increased competition and the real needs of the market will shape the players and create a balance.

And while there are a growing number of accelerators in the Arab World, beginning with Oasis500, which launched in August 2010, followed by several others including recently launched Flat6Labs in Egypt, the Arab World is not yet in danger of having too many.

Fortunately in the U.S. and Europe, the successful and strong accelerators that have pioneered sound business models have continued to succeed, including Y Combinator (US), TechStars (US), Kicklabs (US), Seedcamp (UK), Startupbootcamp (Spain), and Springboard (UK).

At the Europas (the European Startup Awards) last week, which honored promising startups and support organizations in Europe, Seedcamp in particular was singled out to receive the “Best Ongoing Startup Program of 2011” award.

This news was not surprising if you’ve met the company's Partner, Reshma Sohoni. I had the pleasure of talking to her about the program two weeks ago in Istanbul at the Webrazzi event. Ever since then, she has been answering my e-mails from China, Bangkok, UK and more countries than I can remember, as I chatted with her further. Her energy and enthusiasm are no doubt a crucial factor in Seedcamp’s success. For those companies in the Arab World looking to expand regionally or even eventually to Europe, Seedcamp is an accelerator to consider. They recently helped Jordanian comedy channel Talasim develop and successfully sell their platform to regional user-generated content and review site Jeeran.

Could you tell us about Seedcamp? How does your program work?

Seedcamp is an early-stage micro-seed investment fund and mentoring program. We’ve been running now for four years and are extremely proud of the progress we’ve made, with more than 55 investments to date. We have set out to help establish Europe as a great place to startup a world-beating business and we’ve come a long way.

What is your business model?

Our business model is to host 10 mini Seedcamp events a year across Europe, and we make our investment decisions after each of these events. The result is a high number of extremely international teams becoming part of the Seedcamp family. 

What startups do you target?

We don’t have any set criteria regarding the number of founders, location, stage or industry, etc. Capital efficiency is key, along with having some kind of product to show us. We like playing with things and understanding a product from the consumer or business user’s perspective.

What do you offer that other incubation or accelerator programs do not?

We each have our own focus and identity, though it’s sometimes hard to make clear differentiators. Our main focus is Europe, where we find talent that would otherwise not have access to an extensive investor network, mentors or other people who can help develop startups. Our model for finding such talent is event-based, which is completely unique. We host a mini Seedcamp event almost once a month across Europe and further afield. Many of our events attract applications from more than 30 countries.

Do you take equity and/or a portion of revenue from your portfolio companies?

Seedcamp’s standard terms are €50,000 (around $US 67,000) for an 8-10% equity investment. We’re very transparent about our process, mentors, structure and legal documents, which are all available to view on our website. 

Do you have any successful exits so far?

So far, we have had three exits: Silicon Valley-based mobile ad exchange network Mobclix, German text and chat solutions company Toksta, and Jordanian comedy channel Talasim. We are in the business of helping to build great companies. As such, success is also measured by our company’s growth. A significant proportion of our businesses from two or three years ago are now doing well more than €1 million in annual revenue, which is also an important metric.

Why should an entrepreneur choose Seedcamp instead of a local investment option or even options from the U.S. or Asia?

For a European startup, Seedcamp has a number of advantages over very local programs, specifically the size and international quality of our network. We have more than 2,000 mentors spread all over the world, with expertise ranging from investing to big corporations, as well as successful entrepreneurs and products, marketing and tech experts. We also have a fantastic set of investors ourselves, who play a major role in the Seedcamp companies’ successes. More than 80% of follow-on funding for our teams comes from our investors. If Europe is a part of a company's market or potential future market, then Seedcamp is a relevant option.

What are the common mistakes that entrepreneurs make when they meet you?

There’s so much information about Seedcamp on our website, Twitter, Facebook and blogs. So perhaps as a result of this, our teams tend to know what to expect from us. Those that don’t stand out. So one mistake would be not investing the time to read our website and know what we are about. In general, though, the biggest mistake I see entrepreneurs making is operating in “take” mode rather than understanding that “give-and-take” is really a more optimal strategy for dealing with people outside their organization. Another mistake would be thinking about investment as equivalent to winning the lottery, when actually it’s the beginning of a long-term partnership with an investor that will take hard work.

What are your recommendations for entrepreneurs looking for funding? What criteria should they use to choose the right investor?

There is plenty of information available to entrepreneurs these days, but there are a few key rules that we always encourage our teams to adhere to:

1. Give yourself sufficient time to fundraise.

2. Try and get personal introductions to angels and venture capitalists.

3. Keep the momentum up! Try and build interest until venture capitalists end up pitching to you!

4. Know your business, industry and competitors inside out.

5. Understand each investor's investment thesis and whether they are people that can actually be useful for your business.

Also, some common sense should be applied when choosing the right investor. Do you get along? Do you have the same vision for the business? If you’re looking for more than just finance from your investor, is this clear? Are they able to meet your expectations? The basic rule is to always keep each other updated, since nobody likes surprises. It’s important to know if you agree on both your market and your planned future expansion.

Last year, we hosted mini Seedcamp days in Mumbai, Singapore and Johannesburg, yet those events also exposed us to a diversity of entrepreneurs well outside of each of those locations. We learned a lot about each of those areas of the world and the way the markets are developing there. We’re also hoping to host a mini Seedcamp in Moscow next year.

What do you think about Middle East market? Is the region in your scope?
 
We’ve not hosted a Mini Seedcamp in the Arab World, but it’s certainly something we would love to do.  Seedcamp Istanbul is in our plans but that's not quite the Arab World. Hopefully though the event in Istanbul will attract companies from the entire region to apply.