How relevant are traditional retailers to scaleup plans?
Data from the U.S. Department of Commerce indicates that 93% of consumer products are sold through physical retail, versus 7% sold online. Sales for consumer electronics through physical retail reach 77% plus, nearly half of the remaining 23% of sales online go through Amazon. So in CE, traditional retailers still represent 85-90% of all product sales.
Why is there a market need for a startup program like RX?
While there are innumerable accelerators, there are very few that are structurally focused on the scaleup stage of a startup company’s growth. The RX program fills this need, preparing a startup for the retail scaleup stage of their journey, and connecting them directly with major retailers that have expressed interest in the startup’s product category.
Is RX like Techstars, Y Combinator, or HAX? How does it compare to other accelerators?
We have immense respect for the other accelerator programs, but RX is quite different. Most founder accelerators support the earliest stages of startup growth. A typical stage-1 accelerator will provide some level of funding in exchange for equity. It also provides physical space, mentors, and resources to help founders get their company built and in motion. RX is a stage-2 program, with a virtual curriculum and a clear purpose: scaleup. We help startups go from first product and incremental sales, to unit sales growth at scale through major retail channels – national and beyond, and in their respective product categories.
What does RX provide that a startup can’t find anywhere else?
First, we put the startups through the rigor of working at major retail scale - and then we provide the direct retail connections. RX works with major retailers to bring the products and startups in RX to market. In our main RX program, we provide a virtual 10-week class that prepares a startup company for the demands of working with major retailers. The startups in each RX class are carefully selected to participate; these are the best in their categories, because retailers have asked us to find them the startups that are ready for scale. We also build custom accelerator programs for certain retailers.
What kind of startups can participate in RX ?
Each RX class has a different focus, as suggested by our retail partners. We have completed three RX programs in the first year, with nearly 30 startups in the portfolio. We are currently recruiting for two more custom accelerator programs, and expect to host a sixth main RX program by end of 2017.
What makes a startup a scaleup?
A scaleup is officially defined as a company with more than 10 employees, and growing greater than 20% per year in revenue or employee count over three years. In short, it’s a business that is experiencing compound, if not exponential, growth.
Do startups in RX need to be technology product companies?
No. That said, we are clear in terms of which products are out of scope for each class.
What about specialty retail – are there plans to expand RX and provide regional stores, boutique retail, specialty retail, etc.?
There are more than 30 major and specialty retailers in the RX Retail Network, and we expect to continue adding retailers to the program as it makes sense.
What is the cost for a startup to participate in RX?
An RX program can take several different forms and in turn, the terms are unique from one program to the next. We will share detailed terms if your startup is recruited for a specific RX program.
RX is not a venture capital firm, and therefore we do not provide funding for startups that come through our programs.
It should be a leader in the class category we’re building, with viable product, incremental sales, and good with the terms of RX engagement. The founders must be ready for the scaleup stage.
What are the requirements for a startup to participate in RX?
The RX team - all experienced in both startup growth, product development and retail merchandising - rigorously evaluates all startups that apply to the program to ensure they meet the requirements stated above.
How rigorous is the vetting process to participate in RX?
What do retailers contribute to participate in RX?
Our retail partners contribute time and resources to engage with the RX startups on Retail Pitch Day, at the conclusion of the RX class, and ensure that each startup is given the best internal audience. If selected, the retailer will support the startup product through its broad channel assets.
Behind the scenes, each retailer is also working to become more startup friendly, so they benefit from applying RX principles to their own internal processes and approaches, making it easier to onboard and scale a startup, via RX or otherwise.
Are retailers required to work with any of the scaleups in RX?
Having been major retail merchant executives ourselves, the RX team knows that a retailer/buyer can never commit to work with a startup company “yet to be named.” More practically, each retailer has committed to consider each startup coming through the RX program for assortment; in other words, they start with a bias to support each startup in RX. A final relationship still must be earned by the startup with each company.
Is there a promise for startups who participate in RX that they will have retail contracts?
Yes. We promise to put each startup in front of our named retailer partners on Retail Pitch Day. Afterward, we also commit to introducing RX startups to additional retailers in the RX Retail Network, as they match with that startup’s channel strategy. We have direct relationships with decision makers at more than 30 major retailers worldwide.
What does success look like for the RX team?
0The startups in the program provide only a relatively small amount of cash to help fund RX operations. As such, the RX team is deeply vested in the retail success of the startups in the program. If they don’t succeed, we don’t, either. We are motivated to find the right products that, after participating in the 10-week RX course, can be retail market makers in their categories.
Why would a startup choose to apply for RX over a different accelerator program?
This is a program for founders who are ready for the rigor of operating at mass retail scale – it’s a rapid pace with high demands. We are confident the RX program will be a follow-on accelerator for startups after they’ve graduated from stage 1 programs like Techstars or Y Combinator.
How many startups have gone to scale working with RX?
To date, nearly 30 startups have completed the program and are actively moving to scale. The relationship with RX doesn't end after Retail Pitch Day: We actively work with each startup on an individual channel management plan to ensure the product lands at the right time, in the right retail channels.
How many RX classes run at the same time?
We’ll see what demand looks like before determining class frequency.
How are the capability partners selected?
We’ve selected strong capability partners - companies with decades of experience working with startups and later-stage product companies. From supply chain and distribution partners, to finance, to marketing insights, we have assembled a stellar collection of complementary companies that help teach, educate, and assist startups through our 10-week program.
Are startups in RX required to work with any of the retailers?
No. But if they are not interested in working with major retailers, then RX is not the program for them.
Are startups in RX required to work with any of the capability partners following the course?
No, they are not, but we do expect commercial relationships to form based on the specific needs of each startup. We’re simplifying and facilitating the connection.
What happens at the end of the RX course to the startups?
We expect that each startup will begin to work with one or more retailers in the program. We commit to continuing to work with the startups to make these retail relationships work as smoothly as possible. The startups move to scaleup, and do so while minimizing the risk of said growth thanks to what they learn in the RX program. We also expect a number of the capabilities involved in the 10-week program will develop relationships with each startup, as each startup needs.
Are startups considered official “scaleups” at the end of RX?
We think the companies entering the RX program are ready for the scaleup stage, or just about there already: growing and ready, with the right support, to leap ahead of competition and become national category leaders.
What are future RX classes – how will you decide on focus areas?
While we’re early in the formative thinking for the RX program over time, we believe the classes will be focused on specific topics, determined by retailer interest.
What is Sprosty Network?
Sprosty Network is a global business strategy and innovation firm with unmatched experience in both bringing technology products to scale with major consumer retailers, and in bringing new retail concept to market. We are focused on turning strategic growth planning into tangible initiatives and results for retail, and the companies that are driving the retail transformation – both in terms of product and consumer experience.
Why is Sprosty Network qualified to OFFER RX?
Members of the Sprosty Network have deep experience leading innovation practices within major retail, at a national and global scale. We understand, and have addressed, the challenges that both retailers and startups have in working together. We’ve added to that experience the day to day requests from our retail partners to help them more effectively reach out to the startup community. The RX program was borne from this experience.
DOES Sprosty pay retailers to participate in RX?
The Sprosty Network, and the RX program, do not pay retailers to participate.