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Reverse Incubator/accelerator

Hi FD'ers,

I've been approached by some people looking to grow a reverse incubator. The structure is essentially as follows;

I would further vet lightly vetted ideas pitched to me and discovered by founders.

They fund product development - est 40k

They fund pre-determined % of angel round.

They are proposing a long vesting structure and taking significant (majority) of equity. I have no issues with the model at present but is anyone familiar with this structure? Does anyone have key drivers are mutual value creation/accountability etc? Common pitfalls etc? I've heard of a few that operate on this model but I haven't yet found them. Any insights would be appreciated.


5 Replies

Kevin Burke
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Kevin Burke Entrepreneur • Advisor
Public Sector Management Consultant
I don't totally understand the model as described. Sounds a lot like a standard VC or angel investor model. The 'reverse incubator' name sounds like a bit of a misnomer. Kevin
Steve Owens
0
0
Steve Owens Entrepreneur • Advisor
Finish Line - A Better Way for Small Companies to Develop Products
Who is "They" in the "they fund product development"?
Kate Hiscox
0
0
Kate Hiscox Entrepreneur • Advisor
Boss at Venzee
I have never heard of this?
Ron Sheridan
0
0
Ron Sheridan Entrepreneur
co-founder at PREE
An "incubator" is typically an organization with some real estate that they open up to the "incubatees" as communal work space. The incubator also works to provide mentoring etc, in addition to some form of economic support.

My favorite examples arePIE in Portland or Runway.is here in San Francisco.

The unique piece I see in your post is that they see themselves participating in a subsequent Angel round.

Q: Do they have a space and the needed people, or are they just wanting to float some investment cash?
Rob Gropper
0
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
significant clarification would be helpful. perhaps its the title "reverse incubator" that's throwing me. The basic concept of an incubator is to take relatively inexperienced entrepreneurs and in exchange for nominal equity, provide them with space, mentoring and a little $$ to dress them up and make them presentable to professional investors in the hopes of improving their chances of professional funding. I can't wrap my head around what the reverse of that would be, but it's not pretty - input is professional $$ and experienced entrepreneurs and output is less inexperienced entrepreneurs with no $$. sounds like one giant pitfall to me... . remove tongue from cheek.
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