One of the largest decentralized accelerator programs in the world, SOSV, is headquartered in Princeton, a fact that many don’t know.
Its founder and managing general partner, Sean O’Sullivan, identifies as a Princeton resident, engineer, inventor and “now, a venture capitalist.” O’Sullivan spoke recently at Startup Grind Princeton about his entrepreneurship journey and his investment philosophy. The conversation was moderated by Startup Grind organizer David Stengle.
O’Sullivan is a well-known name in the tech community. For example, he is credited with inventing the term “cloud computing” with George Favoloro from Compaq. In 1985, he founded MapInfo, which delivered the first version of street mapping to personal computers.
Now, O’Sullivan devotes his time to SOSV, which, according to the company’s website, “provides intellectual and financial capital to accelerate founders’ big ideas for positive change. SOSV has funded over 700 startups to date. We currently fund over 150 startups per year through our programs: HAX (hardware and connected devices), IndieBio & RebelBio (life sciences), Chinaccelerator (cross-border internet and mobile in Asia) and Food-X (food innovation).”
O’Sullivan says the company is taking applications for a new blockchain accelerator that will be headquartered in New York City.
O’Sullivan grew up on welfare, in a family with nine kids and a “deadbeat dad” who left for good when Sean was 3. He made it to Rensselaer Polytechnic Institute, a technological research university in upstate New York, and eventually began his career as a serial entrepreneur.
“What enabled me to get ahead was education,” he said, which prompted him to combine his passion for learning and giving back by underwriting Kahn Academy in Mountain View, California, a free educational resource, in its first stages of development.
After selling his first company, O’Sullivan tried a variety of career paths, even taking a stab at being a musician and a filmmaker, before realizing that his best opportunity to have a true impact on the world “was to create lots of companies.” He invested as a “super angel” for many years, but he formalized his investments into a real venture capital firm. And, now, he said, “We have about 110 staff, which for a VC firm is huge.”
“Our focus is different from most venture firms. We do something unique.” While SOSV started by backing companies O’Sullivan liked and thought had a good chance of success, it now goes much deeper into tech. By starting accelerators, O’Sullivan’s team found that they could place “a lot of shots on goal and build ecosystems and work with founders at a stage that I find is most enjoyable,” which is very, very early on.
More than 5,000 companies apply each year to get into the SOSV accelerators, and the 150 who get accepted receive between $100,000 and $250,000 (depending on the accelerator) for the first commitment; in return, they give up about 7 percent of their equity.
“We take those companies; get them market validation; work with them to get the proper market fit working; and, depending on which accelerator, we work with them deeply on the technologies.” At the HAX location in Shenzhen, China (there’s another one in San Francisco), SOSV has a 50,000-square-foot space with various types of manufacturing equipment and 28 engineers on staff, O’Sullivan said. The engineers know radio-frequency engineering, industrial design, mechanical design, design for manufacturing and so on. “We can take a team of two, four or five people and make them look like a 50-person organization.”
The team is paramount, O’Sullivan explained. “You can’t just be a single person and get much done. You have to be able to work with a team. We won’t back a single founder. Not because a single founder can never make it, because they can, but it’s a slower way to try and make it. You also end up with a lot of psychopaths. If you’ve got a couple of people who are working together and trust each other, that’s a pretty good indicator.” There will be hard times, there may be times when founders need to go without paychecks; and the company won’t get through these lows unless the team has a high level of commitment. O’Sullivan said it’s even better when the team members love each other.
As a founder, you must build a team and recognize that you don’t want carbon copies of yourself on it, Sullivan said. You want a highly balanced team. “When we look at teams these days, we actually give all of our startups personality testing.”
There are multiple types of people: Some are more focused on relationships, some focus on innovation, some focus on synthesis and society, while others are more analytical. SOSV administers this testing before it makes a major investment, although not before it takes a company into the accelerator, because the team will change and get rounded out as the startup grows.
SOSV applicants apply for the vertical they are interested in and fill out a form. From eight to 15 teams are accepted into a cohort, funded by SOSV. Those companies physically take up residence in the SOSV space, generally for about four months; in a larger space like HAX, they can stay for a year. At the end of that period, they host a demo day. If all criteria are met, SOSV helps them find the best financing for the next stage of their development.
Then there are specialized services for the companies. At the IndiBio accelerator, for example, there are wet lab facilities and all the equipment needed for genetic engineering and synthetic biology.
“I think that community, that sense of community, is the most phenomenal benefit,” O’Sullivan told Stengle. “Actually, being able to go to others and share really bad deep problems and the dark moments of the soul that everyone has as a founder” is one of the major pluses of being in this environment.
Headquarters: 174 Nassau St., Suite 300, Princeton (offices in U.S., Ireland, China)
Public/private: Private, founded by Sean O’Sullivan in 1995
Employees: More than 110
Specialty: Funded more than 700 startups to date; presently funding more than 150 per year through HAX (hardware and connected devices), IndieBio & RebelBio (life sciences), Chinaccelerator (cross-border internet and mobile in Asia) and Food-X (food innovation).
Follow: sosv.com and @sosvvc