3 ms·

Commonplace, but what's the amount? Often they ask you to set aside 5% to 25% for them. The one we went through got most of their fees via "highly recommended"

by solve 12y ago

Commonplace, but what's the amount? Often they ask you to set aside 5% to 25% for them. The one we went through got most of their fees via "highly recommended" legal and accounting service kickbacks, which charged far higher than market rate monthly retainers, for doing absolutely nothing in some cases. Lawyers and accountants who stood to benefit were literally partners at the fund... We decided to stick with our own accountant, and the accelerator got extremely upset at us for doing so. Some shockingly unprofessional, threatening, vague emails and lots of criticism for not choosing their accountants. You are correct that the people running these funds will get paid no matter what, and will have absolutely no financial incentive to make you succeed. Quite the opposite. Ours in particular has done a lot to minimize their work, drag out anything they're required to do over months, and get rid of companies as quick as possible after their investment. These can still work out, just know that these aren't the tier #1 funds that we're used to hearing about. Founder beware.

wolfer 12y ago
This particular one was £50k investment for 9% equity, plus they send an additional £50k to the company, which is transferred immediately as a "service charge". Writes off £50k of your SEIS allowance as a business, which as I'm sure you know is like gold dust for the first £150k, as 50% of the investment can be written off against investors income tax, then a further 30% if the company fails. If the company succeeds, the investors pay no capital gains on sale of shares.
- wolfer 12y ago
  To further add to this, it's not necessarily the fact that they take a service charge that I take issue with. It's the complete lack of transparency up-front and only once you're close to getting on the program that it's ever disclosed.
  - solve 12y ago
    The transparency for accelerators is terrible now. Every founder presumes that the new accelerators are at least trying to follow the template of the best accelerators. Surprisingly often that's not the case whatsoever, down to the smallest meaningless details. A good start might be submitting those details to (http://accelerat.io/ http://accelerat.io/). They seem to be tracking this.
  - sjaakkkkk 12y ago
    Founder of http://Accelerat.io http://Accelerat.io here. This is exactly why we started our project, we hear a lot of these stories of second and third tier accelerators doing these kinds of shenanigans. Would love to put up the accelerator you're talking about with clear information so future entrepreneurs applying can know about this upfront. If you contact me at hello at accelerat.io I'll set it up for you. Rest assured, it will all be 100% anonymous.

by solve 12y ago

wolfer 12y ago

This particular one was £50k investment for 9% equity, plus they send an additional £50k to the company, which is transferred immediately as a "service charge". Writes off £50k of your SEIS allowance as a business, which as I'm sure you know is like gold dust for the first £150k, as 50% of the investment can be written off against investors income tax, then a further 30% if the company fails. If the company succeeds, the investors pay no capital gains on sale of shares.

wolfer 12y ago
To further add to this, it's not necessarily the fact that they take a service charge that I take issue with. It's the complete lack of transparency up-front and only once you're close to getting on the program that it's ever disclosed.
- solve 12y ago
  The transparency for accelerators is terrible now. Every founder presumes that the new accelerators are at least trying to follow the template of the best accelerators. Surprisingly often that's not the case whatsoever, down to the smallest meaningless details. A good start might be submitting those details to (http://accelerat.io/ http://accelerat.io/). They seem to be tracking this.
- sjaakkkkk 12y ago
  Founder of http://Accelerat.io http://Accelerat.io here. This is exactly why we started our project, we hear a lot of these stories of second and third tier accelerators doing these kinds of shenanigans. Would love to put up the accelerator you're talking about with clear information so future entrepreneurs applying can know about this upfront. If you contact me at hello at accelerat.io I'll set it up for you. Rest assured, it will all be 100% anonymous.