As mentioned previously, I have been considering joining Founder’s Institute. I was accepted, but I will not be attending. Below the fold are the two primary reasons why, one old and one new.

Payment Required Up Front

As I commented before, someone requiring you to give them money before they will help your business — without specifying exactly how they will help you — is a red flag. I could not overcome this issue, and FI’s behavior in the next section did them no favors.

FI’s Response To Due Diligence

There are a number of VC’s who blog and I read religiously; of them, I highly recommend Fred Wilson and Mark Suster. Here’s Mark’s post about reference checking your VC:

I often tell people that raising venture capital is more difficult than getting married. In marriage if you’re unhappy you can at least get divorced (in most countries). Not so in venture capital. You’re tied at the hip to your VC.

Given that the FI arrangement is for FI to retain 3.5% of the company’s stock, I view that agreement as tantamount to being a variant of a VC, albeit one to which the company write a check, rather than the other way around.

Here’s the list of questions I emailed to the FI rep in DC.

  • How many companies have started FI (specific to DC with years/sessions would be ideal, but even an overall metric would be useful)?
  • It is my understanding that some companies are “asked to leave the program.” How many companies have been asked to leave?
    • What are the primary reasons for those companies being asked to leave?
  • It is also my understanding FI requires “sufficient progress in product development every week” — what is the definition and/or metric(s) used to determine what is or is not sufficient progress?
  • How many companies leave of their own volition?
  • How many companies received funding at the end of the FI program?
  • How many companies received funding within one year of the end of the FI program?
  • How many companies are still active after one year of the end of the FI program?
  • How many companies are still active after two years of the end of the FI program?
  • Of the companies who have been through FI, what levels of growth did they achieve after the program (measured through such metrics as increased gross revenue, increased net revenue, increased FTEs, increased valuation, et al)?

I am including the list of questions so you can judge for yourself as to whether or not my inquiries were over the line. Actually, if you think they were over the line, I’d love to hear from you as to which questions you believe to be out of bounds why you hold that opinion.

Here is the response from the DC rep:

All of the information that you need to make an informed decision is available on the site. It sounds like you are having some second thoughts. If that is the case, then the program is probably not a good fit. Best of luck with your decision.

Just in case you think that may be a local aberration, here’s the response from a very high up person at the national organization:

The Founder Institute program may not be a good fit. It’s quite hard and time consuming, and you seem further along than idea stage. You have great potential and did very well on the Admissions Test. We wish you the best of luck with your startup! Thank for applying.

If any rep from FI had attempted to answer any of the questions — even if some (but not all) of the answers had been something along the lines of “we’re not going to state why companies are asked to leave [for example] due to reasons of confidentiality and proprietary information regarding the FI process” — I may have continued into the program. As it stands now, my take away from both responses basically boils down to “You’re asking questions? Go away.”