5 things you should consider before you apply to a Sandbox program
Updated: Oct 5, 2021
5 quick and convenient tips for startups to avoid wasting time and resources they don't have! Spoiler alert: there is a bonus tip.
Many startups and investors have reached out to me in the past months to learn about ARM’s experience participating in Sandbox programs. Their main concern is whether it is actually worth the time and effort?
First and foremost, Sandbox programs are a huge asset for entrepreneurs trying to fine-tune their ideas into successful startups because they provide resources that are critical to make their products or services a household name, secure funding, or build a sustainable business.
For instance, Boston’s Fintech Sandbox helps startups gain access to partnerships that provide fundamental data that would cost more than $200K otherwise.
That said, applying to a sandbox program requires time and resources. Entrepreneurs must analyze if the benefits are worth the time and cost.
The number of hours to complete the application process is only the beginning. Once you are part of the Sandbox you commit a lot of time and effort in events, meetings, or technical developments. If it is not the right program, you might end up wasting hours and losing product focus that you can’t spare.
Here are 5 things you should consider before applying to a Sandbox program.
1. What is a Sandbox Program and why do I want to be part of one?
Simply put, a Sandbox program provides mentorship, data, APIs and other resources that are expensive or difficult to get access to with the aim of fostering innovation. These programs are usually focused on specific technologies, like AI or Blockchain; or industries, like Fintech or Healthtech.
The first thing you need to have crystal clear is why you need the resources provided by the Sandbox program and what is the benefit that you expect to get from them. To that end, when I applied to Sandbox programs, I structured ARM’s needs in the following areas:
Improve your network.
If the benefit from one of them is worth the resources invested in it, we start the application.
2. What data set do you need? Will this Sandbox provide enough data?
I guess that if you got reading this far, it is because you are a tech entrepreneur or investor that uses data to… well to disrupt your industry. Then, you should have a very clear idea of what problem you are trying to solve and the data that you will use to make everyone go nuts about how they could have lived without your product or service.
First, let me tell you something, very few Sandbox programs or partners will provide you with the perfect set of the data you need (if any!). What I would recommend is to create a plan to identify the tests you want to complete and the data that you need for each. That way you will be able to measure how the data provided aligns with your goals.
When we applied to Boston’s Fintech Sandbox program, we looked at the vulnerability characteristics that we wanted to predict and mapped the data we needed for each. This exercise allowed us to set the number of tests we had to complete in order to compensate for the time invested in the Sandbox.
3. Development testing
Imagine you have a ML model to predict credit risk. It works incredibly well, and you close a trial with a large corporate client that might be your first successful testimonial. Everything will go smoothly from there. Then you sit with their IT team, and they ask you how you are going to connect to their API, transfer data or deploy your solution… and you haven’t done anything like that before. At that point, everything can go wrong because you haven’t tested your solution deployment or integration before!
A sandbox program also helps startups connect and test with a catalogue of existing environments and APIs. It will give you the opportunity to try different technical aspects that you need to test to be ready.
For instance, when we applied for the FCA and City of London Corporation Digital Sandbox pilot we wanted to test the performance of our data transfer API. We ingested huge data sets and tested transfer performance and speed. By the end of the sandbox, our platform was more than ready to work smoothly with huge databases, giving us the comfort that we could work with any type of firm regardless of their size.
4. What type of audience you want to reach? Will they be actively involved in the Sandbox?
One of the main goals of a Sandbox program is to create a bridge between startups and stakeholders. We divide these into three categories:
Subject matter experts
Depending on your startup stage, you might prioritize some over the others.
If you have a market-ready product/service, then your first, second, third… one-thousandth priority should be to find clients. Make sure the Sandbox program will give you access to the right clients. If you solve a problem for mortgage lenders, an InsurTech program is not the right place for you!
2. Subject matter experts:
If you are testing an idea but there is one specific gap in your team’s expertise, then you should evaluate if experts in that subject will be available. Since the Sandbox is a collaboration opportunity to foster innovation, you can get valuable advice for my favourite price point: FREE ninety-nine!
If you already have relevant traction with customers, and you are looking for funds to take your business to the next level… Yes, you got it right, check if the investors are adequate to your needs. Are they looking for startups at your stage (seed, series A, series B…), your market (Fintech, low carb-net-zero-emissions-pescatarian food), business model (B2B, B2C, C3-PO…)?
For example, when we applied to the FCA and City of London’s Digital Sandbox pilot, we had an MVP solution to help financial firms proactively identify early signs of vulnerability and we wanted to showcase it to firms that had a large base of vulnerable customers. The Sandbox was the perfect stage for us because the use case was to “improve the lives of vulnerable customers”.
5. Am I in a regulated market? Do I need regulatory advice? Do they provide the advice I need?
The answer to the first question is YES you are! Whether you want to sell sunflower seeds in California, 2000’s outdated ipods to geek collectors or software solutions to investment banks, chances are you need to comply with one or other regulation.
In fact, this section might be a subcategory of the above subject matter experts, but as it is so ubiquitous in all sectors I think it deserves a special category.
Therefore, you need to have an idea of the regulations that might impact your product or service to ensure the Sandbox will give you access to the right people.
When we applied to the ICO innovation hub, we wanted to discuss how GDPR (data privacy protection regulation) would impact the information we could use, how we could use it and how we would be regulated. This collaboration helped us save thousands of pounds in legal fees and hundreds of hours researching on the matter (thank you ICO innovation hub!).
Finally, make sure they are going to resolve your doubts about regulations. Most sandbox programs with a regulatory component are run by regulators. Regulators don’t act as your advisor or complete your compliance homework for you. They are there to provide advice on grey areas of regulation or, for disruptive innovations, how they would approach regulating them.
One mistake that I made early on in my entrepreneurial journey was to assume the regulator will provide me with a map of the regulations that will impact my business model. I spent two days completing the application to the FCA’s Advice Unit to no avail.
6. Bonus tip! You would do it anyway to get a badge on your website or pitch deck!
If you are only looking for another logo to give credibility to your brand, save the time. What I’ve seen that gives credibility to our brand is a big problem worthy of being solved and a great solution. If you want to gain clients by just getting a Sandbox batch on your website, then you must be a really good salesperson to make a sale out of it.
If you are that salesperson, you don’t need that badge anyway!