“The genius of investing is recognizing the direction of a trend – not catching highs and lows” Anonymous
If you find yourself in a precarious situation where you haven’t been able to raise any money through the three methods outlined in the previous posts; incubators may be the route to take. Incubators are essentially centers or organizations where startup companies are provided seed funding and a office location to launch their business. An example which comes to mind immediately is Y Combinator. The website provides you with a basic idea of how incubators are run.
I was introduced to the concept of incubators very early on as the university I attended runs several of them. The way it worked was;
- Write a comprehensive business plan and send it in for review.
- If you get short listed you were called in to give a presentation about your concept or idea to a panel of seasoned entrepreneurs.
- Once you get through, you negotiate with the university on an equity swap for seed financing. Usually the sum would be below $15k and they would take anywhere between 5-10% of the company.
- You are allocated a small cubicle where you have access to shared services such as a receptionist and a business center.
- You are allocated a mentor to guide you along your startup route until you are ready to meet an angel investor or VC.
In theory this is a relatively easier route than the ones outlined earlier. However due to the severe shortage of incubators in most countries I left this source out earlier. I would appreciate if comments could be made regarding incubators in your country of residence to facilitate anyone who may be looking to use this source.