Accelerator Schemes - mentoring for a stake in your business
I was intrigued by the development in mentoring reported in today’s Sunday Times Business section. A recent trend is for mentoring to be offered in exchange for a stake in your business, typically up to 10%, plus an injection of capital. These schemes are sometimes called ‘boot camps’ for entrepreneurs and are becoming an established feature of the start up funding landscape. There are advantages for both parties: the start up business gains contacts as well as mentoring and capital, and the investors gain access to companies that have been filtered by the 'boot camp’ as having the potential for a good return on investment - everybody wins. Boot camp participants can expect a rough ride as their plans are scrutinised (or 'torn apart’) by business experts in law, finance, marketing etc as well as by the investors. Angel investors are more likely to be interested in a start up with which they have an emotional connection, while venture capitalists may typically offer a higher cash injection although they are less likely to invest in very early stage businesses.
Apparently the original boot camp was in Silicon valley and the idea has now spread to UK with several schemes launching in UK in the past 2 years. This sounds like a great idea to me, bringing together start ups, funding, contacts and intensive mentoring that should save years of wasted effort and money, and get rapid backing for those businesses with the potential to succeed.