FounderFuel just announced today that accepted applicants to the FounderFuel program for the spring 2013 and forward will get $50,000 instead of the past $25,000. In exchange, the Montreal-based startup accelerator will ask for 9% equity instead of 6% equity. The $50,000 comes up with the existing advantages and offers that the program offers, such as its large network of mentors, as well as the additional $150k from the BDC for venture-ready startups at the end of the program.
Ian Jeffrey (@ianmtl), general manager of FounderFuel, shares with us a few details about the news.
@mtw: Hey Ian, can you share with us news about the latest cohort? We saw the news about the teams going to California, any other updates?
Ian Jeffrey: Yes. We just announced that FounderFuel teams will now receive a $50K investment on Day 1 of the program (vs. $25K in the past) in exchange for 9% of equity (vs. 6% in the past). Although the value of the mentorship provided by FounderFuel far outweighs the capital investment and the valuation, this places the company valuations north of $550K (vs. just over $400K in the past). That’s a giant leap!
In summary here’s a rundown of the total package we’re offering to our future teams:
- $50K for 9% equity on Day 1 of the program
- $150K in convertible debt at Demo Day
- $150K of exclusive discounts & perks
- 3 months of free office space in the Valley post Demo Day: RocketSpace or Plug And Play
- 120 startup veteran Mentors: Serial Entrepreneurs, VCs, Angels, & Senior Execs
- 800 people at Demo Day, the largest event of its kind in North America
@mtw : Going from $25k to $50k is a big step forward. That’s going to tempt a lot of startups. Did you have any comments from past teams that $25k was not enough for them?
Ian Jeffrey: No. Not at all. Our teams have always done great things with the $25K. Of course we asked our Alumni what kind of impact they thought our new offer would have and they all agreed it would be great news for future teams. We made the change because we think the additional capital will help teams do even more during the 12 weeks program. Previous Cohorts have proved they can move at lightning speeds, and this will stoke that even more. Going through an accelerator is about helping companies refine their visions and get to product market fit as fast as possible. Just imagine the impact of double the capital for teams that strike a chord in the market. Things can really start to happen and become huge, fast!
@mtw: Since it’s a larger investment, does that mean that startups that are in earliest stages should wait more before applying to FounderFuel? Obviously, startups that have more traction and a more solid team are going to have more chances to get accepted than teams that just started a few weeks or a few months ago.
Ian Jeffrey: You shouldn’t make that correlation. A solid team and more traction will help teams get in not matter how much money is on the table. Moreover, we encourage everyone to apply because that process itself is often a learning experience. We hear it all the time from companies that we turn down. Taking time to stop and think about their business through the application often brings things up they haven’t thought about before.
@mtw: Are you still targeting the same markets and applications? $50k begins to be interesting for hardware startups and other ventures that require more investment, compared to startups are purely a web play.
Ian Jeffrey: Our focus is still Web, Mobile and SaaS, but in reality we look for the best applicants no matter what the space. Proof of that is reelyActive from the Fall 2012 Cohort, which as you know was the first hardware company to take part in the FounderFuel program. We liked the team and what they wanted to do, and they proved to us during the recruiting phase that they were well suited for FounderFuel. In the end, we look for the cream of the crop. Period.
@mtw: Does that also mean there is going to be more resources in behind the scenes supporting the founderfuel teams? I remember FF announced originally a $2M fund for FounderFuel. That must have been increased?
Ian Jeffrey: No. We intended to continue innovating the program in as many ways as we can. Our motive is to differentiate ourselves and be the market leader. This means pushing the limits further with each new Cohort and keeping our creative juices flowing at all times to capitalize on great opportunities. A great example of the is our partnership with the Canadian Technology Accelerator (CTA) that allows us to send companies to Silicon Valley for three months at no cost, and we’re working on more partnerships and ideas like these. Stay tuned for more big announcements soon!