notes-business-makingBusinessesEasierToStart

Angel incubator concept

You apply to this group with a business idea.

The application is 4 pages (actually, character limit), plaintext, suggested 3 about the product and 1 about the business model, plus up to 6 pages of figures, mockups, etc, which won't be read if they have lots of text; demos are welcome too. In addition, there is an optional 1 page letter of support from someone else (potential customers, strategic partners, investors). Applications are rolling all year long. The incubator promises to try to get back to you within 3 weeks with a "interview" (a "yes"), "maybe later", or "probably not" (or "haven't got a chance to read it yet").

They take equity but don't require voting equity; they want profits, not control (except for some agreement on a limit for the salaries, benefits, and expense accounts of the founders and their family and associates). Or, better, they give secured (only by the assets of the company, not by the assets of the founders, except in case of fraud; incubator has the right to audit, personally or professionally, at any time) loans at 80% interest, compounded annually (actually, want to compound daily; find equiv to 80%). Discount up to 60% for competitive companies (usually only objective factors like "have the founders been in a startup before near the beginning?"). Mb even post a list of factors (been in a startup before? 10% founded successful startup? 15% do you have a demo? 2%. Tech founder? 5%. Sales founder? 5%. Do you have a support letter? 1-5%. Deal with a customer? 10% Are you cash flow positive? 10%. Profitable? 10%) Usually (but with exceptions) they must be changing the world, and must be open companies or open source or both. Mb even just give discounts for these (open source? 10%, on top of the 60% limit. Mb start at 100% so that it takes two of (a) open source (b) change the world (c) open company, each at 10%, just to get to 60%). guy warns them: "my job is to say 'no'". it's a line of credit; they don't have to take it all. they can repay the loan at any time. incubator guy available at least 5 hrs/week to work for them, on avg, no rollover.

If accepted, they provide on the order of $30,000 and cheap dorms, with an noncompetitive option to apply for another $80,000 after at least 3 months (basically you just have to show that you've been working hard), and a competitive option to apply for another ~$300,000 three months after that (they get more equity each time, for a total of mb 44%? 27% is what HackFwd? takes, but I dunno how much money they give; Y combinator takes 2-10% but only gives you <$20,000).

The idea is a self-funding private analog of the SBIR grant process, but more agile/lightweight. The amounts of money are smaller to enable the process to be more lightweight. The money is given as a cash lump sum, not like an SBIR grant for which we must be billed for individual expenses.

What government can do

Government regulations that are confusing/burdensome: