A minor detail in the new deal we offer participating teams at Mobility was picked up by Arctic Startup before the weekend and was quickly copied by The Next Web which led people to a lot of questions like “What is this about?”, “Is it really true?” and “How can you do that?”?!
So as a general answer about the (sweet) deal and the background in short: The deal with Startupbootcamp Mobility is the standard one where we pay €15K for 8% Equity and engage the teams with top mentors in a tough 3-months acceleration program ending with Investor Demo Day.
BUT in addition to this all teams participating in the Mobility program in Copenhagen will be offered to stay for an additional 6-9 months, at the end of the normal Startupbootcamp program, with support from us and our strategic partner, Accelerace, who will offer a personal coach for the startups CEO, development seminars and a, significant, loan of up to $1 million. The loan is paid out over a maximum of two years in tranches fitting each team’s individual planned burn-rate and agreed milestones. The loan will then have to be paid back over the following 5 years with a 10% interest rate per year and a 2% upside bonus in case of a big exit within the full 7 years.
So how did the deal come to life?
When my job as Head of Nokia Smartphones in Copenhagen was coming to an end, it was my responsibility to create the best possible foundation for laid off employees to start their own business. I then invited Alex Farcet and Startupbootcamp to live at the Nokia premises so we could have access to their mentor network, attract the entrepreneurial vibe and at the same time engage with Accelerace coaches to ensure best possible hands-on coaching for the Nokia employees re-inventing themselves as entrepreneurs. In this period we gained a lot of respect from the ex-VCs and ex-serial entrepreneurs now working for Accelerace and counseling people on their development journey. They were specifically well trained in identifying missing key team members and they could discard a bad idea at first sight. All in all 65 new Companies were formed over one year and more than 90% of them are still alive.
During this period I discovered the how great a fit these two organisations could be. Startupbootcamp as the worlds best talent scouts who bring the best of the best to one physical location, get the team consolidated, give access to seed funding and get a real product ready to sell in record-breaking time and Accelerace who work with teams with real revenue, a plan for international expansion and with a disruptive business model in the form of a loan instead of the traditional cash for equity model. A perfect fit for a strategic growth partnership.
Why did we cut a deal like that?
I have visited quite a lot of cities the last couple of months with our Pitch Day events and almost everywhere I see a similar situation, that despite the crisis (in some cases even because of…) there is relatively easy access to early seed capital, of course only if you have a cool team around a great idea. In some cases government funded, some private and in the best cases, both. BUT there is the famous gap to “real money” where investors are willing to lay down more than €1m in the initial phase to allow the successful team to grow fast and keep feeding the expansion curve. With burn-rates usually higher than expected even high-potential teams find themselves out of cash and with severe trouble raising additional Investments at least without giving away a big chunk of the equity, not a great situation. These days where everybody gives their product away for free to increase number of users hoping for that one big exit, I notice myself developing a strong passion for teams who actually develop a plan on how to make revenues early. It is these kind of teams we plan to help here. With Accelerace as a strategic partner, hooked into the big cooperates within the mobile domain, we provide teams with the sufficient runway to build their product, sell it to real customers and get real revenue, and then consider to take in additional investments for expansion and world dominance.
See you at Startupbootcamp Mobility 🙂