Considering The Founder’s Institute
Almost everyone has heard of the startup accelerators these days; the most famous of them are Y Combinator and TechStars. If you’re lucky enough to get into one of those programs, you’ll meet with some amazing mentors, learn from some of the best in the business and almost certainly get funded. Good things, you might think, so when will you be applying?
I’m not; both programs require founders to move to their location (Silly Valley for Y Combinator, lots of places for TechStars but not DC) for the several month duration of the program. It’s not fair for me to uproot my family (two small children, as some of you may remember) for a relatively short duration, nor is it fair for me to abandon with wife with those same children for several months. Even if I were so inclined, the other members of my team would not be so, as they also have children, mortgages and the like.
So that leaves startup accelerators in the vicinity of Washington DC. TechStars is doing something with the federal government, but, so far, there’s not much to it in the DC area other than press releases and promises for something not-so-defined sometime in the future. LaunchBox Digital were involved in DC at one time, but they no longer seem to be around.
The Founder’s Institute is still in DC, though. I have been considering FI, but I’m actually quite nonplussed over their affairs. FI differs from the other accelerators I’ve encountered in some notable ways:
- All accelerators take equity in the participating startups; I’m fine with that. The difference here is the other accelerators pay people for attending. Y Combinator goes in for about $15-$20k, TechStars for $18k. FI requires founders to pay for the learning experience ($900 for the DC session) and then takes $4.5k out of any funds subsequently raised.
In my experience, when someone tells you they want to help you start a business but first you have to give them money, that’s usually a big ol’ red flag for a scam.
- FI positions itself apart from other accelerators; that works both for and against FI
- FI includes in their agreement a pretty stringent confidentiality clause:
The fact that a person is participating or has participated in the FII program shall be considered Confidential Information hereunder.
page 3, section 4.A
Clauses like this have made it quite hard to do due diligence on FI. How many companies were involved with the last DC session? Were any of them funded? What’s the drop out rate? I couldn’t tell you. I might have been accepted into the program and could be going to the first sessions in March; according to the contract, I can’t tell you one way or the other. Contrast that with this public analysis of the companies that have been involved with TechStars.
And, while we’re talking about comparing TechStars and FI, here’s a good chart, if somewhat dated.
- Keeping the membership confidential also lets FI cherry pick their published results. One answer on Quora lists four successful graduates; FI’s website lists 72 launched companies and claims another 200 or so. That’s well and good, but 275 out of how many? And where are those companies now? Did they go public/get acquired/still in the running/crater/just fade away?
When it comes down to it, I believe it’s the FI asking me to pay money — hard earned money in which my startup is not exactly swimming — potentially to learn from their mentors and absolutely to sell some of hard earned equity in the company without providing lots of independently verifiable justification that the money will be worth the opportunity cost. Maybe it’s worth it, but that’s the sticking point, if I had to put my finger on it.
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