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Other Micro Seed Funding ProgramsDue to the success of Y Combinator’s micro seed funding model, a series of competing programs have emerged to provide entrepreneurs with similar benefits. Investors have realized that this model works well, and they want to take advantage. Y Combinator has been successful primarily because of the advice and connections it provides to young founders, and this is not easily reproduced. Since the alternatives to Y Combinator are so new, it’s yet not clear if they will provide the same level of benefit to startup founders. TechStars
In January 2007, TechStars started accepting applications for their summer program located in Boulder, Colorado. Much like Y Combinator, Techstars gives around $15,000 of seed capital for a 5% equity stake. The founders work for three months in office space provided by TechStars under the guidance of experienced entrepreneurs such as David Cohen and Brad Feld. TechStars has educational sessions for the founders three times per week, covering topics such as working with early adopters, scaling for growth, and how to give an elevator pitch, whereas Y Combinator has weekly speakers who focus more on their personal advice and experiences. Seedcamp
Seedcamp is replicating Y Combinator’s model in London in order to attract entrepreneurs from around Europe. Seedcamp has an evaluation process much different than the other micro seed funding programs. During September 2007, the first “Seedcamp Week” will take place with “a diverse mentor network of serial entrepreneurs, corporates, product designers, venture capitalists, recruiters, marketing specialists, lawyers and accountants that will help the selected teams put together the foundations of a viable business.” [2] At the end of the week, 5 of the 20 teams selected to attend will receive €50,000 for a 10% equity stake in the new startup. This would place the valuation of the company at €500,000, more than double the Y Combinator or Techstars valuations. The higher valuation is appealing, but the founders have to sacrifice a comparatively bigger portion of equity to receive it.
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