Tuesday, February 5, 2013

No money for development? Try reverse incubation!

The Most Interesting Man In The World - i dont always create startups but when i do i have someone else code it
Development is not cheap. Correction: quality development is not cheap. If you believe you have a startup idea that's really worth funding or building, but you don't have the funds, there may be an answer for you.

If you've been in the startup space for a bit, I'm sure you've come across the term "incubator." If you're not familiar with this model, you should look into how it works. In a nutshell, an organization will seed a bunch of fledgling ideas and developers to offer them assistance with building the business and help them get off the ground. I once heard it described as an MBA program for startups; it's expensive, you learn a little bit, but the most important thing are the connections that you make while there. I'm not saying that they are all evil. I'm sure they're very helpful to a small margin of startups. After all, it doesn't hurt to know the people who could eventually find your startup one day, right?

These big incubators, or even the small ones, make money by getting that home run start up to be funded perhaps 2% of the time. That means that 49 out of 50 startups collapse, but the VCs of the incubator are able to get in on the ground floor for an idea that will turn out to be extremely lucrative.

The thing about many of these incubators is that they give you a small amount of money to develop your startup, literally coding yourself while eating ramen noodles out of your apartment or their loaner office. If you saw the movie The Social Network, Zuckerberg and team did this out of their rental California home. (PS, it was a lot more work than they make it seem on TV.)

Problems arise with this type of model. What if you don't know how to code? What if you don't want to eat Ramen noodles? What if you have a day job, bills, and live in the real world? There is still a way to get your software built.

Enter Reverse Incubation. Instead of you maintaining your own software and sharing a large portion of initial equity with the incubator for a ridiculous sum, we can build it for you. You can have your software built while maintaining ownership of the platform and control the company. The best part is we can do it for little to no start up revenue, depending on the size of the effort.

Make no mistake, this is an equity sharing model just like regular incubation.  Based on the initial valuation or perceived valuation in the short term, we can provide you with CTO-level services and project management for an extended period of time.

Something especially interesting happens with this model. There is extra incentive for us to do the best job possible since we are financially obligated to you, instead of the other way around. We have a  literal vested interest in ensuring that your startup succeeds. It's not just a small amount of seed funding that is on the line, it is our time, effort and reputation.

Curious? You can contact me through this blog, leave a comment, or contact me through iScripts.com.

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