Financing Options: Contests/Prizes/Accelerator Programs

This is the second in a series of posts about financing options for startups. By "financing" I mean obtaining cash to fund your business. There are all sorts of strategies to avoid needing funding, but this series is not about them.

I did not have this option in my original list but it was suggested so many times in the comments that I added it. This is an option that has become a lot more available to entrepreneurs in recent years. There are so many programs out there that target entrepreneurs where the winner(s) is/are awarded cash prizes or small equity investments.

The accelerator programs are probably best known to this audience. TechStars, Seedcamp, DreamIT, Startl, SeedStart, ER Accelerator, and the Fintech program are all active in NYC. Y Combinator is the pioneer of this kind of program. And there are similar programs all over the country now. These programs will require you and your founding team to relocate to a set location for around three months and participate in a program. The equity investment varies but is generally in the range of $25,000 to $30,000. The equity you will give up for this cash is usually in the range of 5-6%.

I believe the accelerator programs are excellent for teams that are just getting started and that have not had a lot of startup experience. The money is usually sufficient to fund the founding team for the three month program and often can last a bit longer. But the biggest value comes from the mentoring and the opportunity to pitch to a large group of angel investors on the last day of the program.

Contests and prizes have been around for a lot longer but there has also been an explosion of them in recent years. One of my favorite is the NYC Big Apps contest where developers compete to build the best app that uses data from the NYC open data project. The winning team gets a prize of $10,000 with no equity dilution (total prizes are $40,000). The winners of NYC Big Apps the past two years have gone on to create real businesses with funding and user traction.

The company that coordinates NYC Big Apps is called ChallengePost. They coordinate many of these contest/prize programs. When I visited ChallengePost just now, I learned that Lollapalooza is running a contest to create apps for concerts. There are $5000 of prizes available.  There is stuff like this going on all the time.

I just participated in the judging of the Disrupt NYC contest. The winner Getaround recieved a check for $50,000. Again there is no equity dilution for that cash.

You are not likely to fund your business all the way to cash flow breakeven on the money you get from an accelerator program or winning a contest (although I'm sure someone has done it). Funding startups is like climbing the stairs. You have to go up the first stair to get to the second one. These kinds of events/programs can be a great first or second stair for an entrepreneur. It can give you the money (and connections) you need to get going and get somewhere and set yourself up for the next funding source. And we will continue next week with the next post in this series.

#MBA Mondays

Comments (Archived):

  1. awaldstein

    Worth mentioning the other pluses of accelerators like legal and accounting access and the mentorship network.I just took on a marketing mentorship role for a newco at startl.org. Really a terrific way to give back and get value for everyone involved.

    1. fredwilson

      i need to add startlsomehow i forgot about them

  2. William Mougayar

    “Funding startups is like climbing the stairs.”Great quote.

    1. fredwilson

      I’m desperately trying to get featured in Startup Quote

      1. reece

        sarcasm?¬†you’ve been featured before…

        1. fredwilson

          it’s not sarcasm. i love startupquote

          1. reece

            keep the master po lessons comingi’m sure they’ll feature you again soon****

          2. paramendra

            Do you have connections/contacts? ūüėČ

      2. Matt A. Myers

        I giggled.

      3. paramendra

        Ha ha!

      4. William Mougayar

        I gave you a plug (not that you need it):@wmougayar:twitter¬†:¬†Submit¬†@StartupQuote¬†“Funding startups is like climbing the stairs”. – Fred Wilson (cc:¬†@fredwilson)

  3. NYC Entrepreneur

    What are disadvantages to raising capital by participating in accelerator programs?

    1. Peter Sullivan

      I would say the valuations/terms of some. Seedcamp has some pretty strong terms. 

    2. fredwilson

      Relocation and time commitment to the programs are two I hear a lot

    3. falicon

      In addition to the relocation and time commitment that Fred mentions, I personally feel like it’s a fine line in terms of focus as well…I like that Fred includes accelerator programs in the same group as contests and prizes because in a lot of ways these days, getting into one is a lot like trying to win a contest…it often requires a lot of actions/thought/time that has nothing to do with focusing on your ‘real’ business or how you are attempting to fix the real problem you are starting the company for in the first place…and if you do all that work and then don’t end up getting in, you’ve now wasted that time/energy AND haven’t moved your actual project ahead as much as you could have.If you’ve only got $2 to your name, buying a $1 lottery ticket is a *BIG* risk…

      1. ShanaC

        Is it a good idea to put accelerators in with contests and prizes if the focus can be very different?  And should accelerators really work like contests, with that element of luck out there?

        1. falicon

          I don’t think that it’s so much about the element of luck that puts them in the same category as it is the fact that it’s a process of the masses…for the system to actually ‘work’, only a few can really benefit.In fact I would say that for accelerators, it’s not luck that gets a company accepted…I do believe most take the ‘best’ qualified for a given program…but this all happens at VERY early stages for a given team/company…and so determining who is the ‘best’ needs to be based on a bit of black-box magic and gut feelings…and often I think it comes down to “who put in the most effort in the application process, and who wants/needs this program the most”…which isn’t exactly “who’s executing the best on *their* business”…Fine line and all…I’m really just saying focusing on getting into an accelerator or winning a business plan competition (or other comp.) *is* a different beast than *actually* focusing on building a company…

          1. ShanaC

            100% which is why I asked

      2. Guest

        Thanks for making this comment¬†@falicon:disqus¬†. ¬†I did not get why Fred put the two¬†together at first because he had made the following comment: “There are all sorts of strategies to avoid needing funding, but this series is not about them.”I interpreted contests as a way to avoid some funding needs because they are a method to raise money without having to give any equity away (non-dilutive ‘funding’ event). But I definitely see how they relate now regarding the entry process, etc.Thanks again.

      3. reece

        i agree to some extent Kevin.i supported a few people in their application to TechStars NYC summer program and i’m hearing now which ones didn’t get in… i feel badly, in that they put in a lot of time to the application process etc….BUT, i also hear from many of them that the application process itself was worth it, as they 1. learned how to tell their story 2. got new ideas for their biz and 3. met lots of great people.¬†

        1. falicon

          Yes – they def. force you to think hard about your approach and your business plan…and so it’s not *all* wasted time if you don’t get in…If you are just starting out, and you don’t have any real connections or much experience in starting a business…going through the application process is probably a great way to do some deep thinking about the business and what you really want to do.The problem comes into play when people start focusing all their time and energy into getting into a program or winning a contest…and not so much time on just trying to build a business that solves a real problem…and unfort. with the boom of various programs and contests, I feel like there are a lot of people trying to take that path right now.

          1. reece

            totally fair points, Kev.always have to focus on building your company first.****

        2. Larson Laidlaw

          I’m one of the people Reece helped that didn’t make it. (Thanks again Reece. Everyone watch Shelby.tv!) The application for TechStars was definitely time consuming. However, each step of the application, the happy hours/meetups I attended, etc. helped frame the vision of my company. A few examples:1.) We put together a video (highly recommended)for the TechStars application. The video we created is what will help us raise our friends/family round now.2.) When I had 2 minutes to talk to David Tisch about my company, I had to make sure my 1 sentence pitch was perfect, so I had to spend HOURS working on it.

          1. reece

            prime example.Larson’s team is great and the application process pushed them to get shitdone.i know they even held their own hackathon over memorial day weekend to gettheir v1 shipped in time for review by TechStars. i saw the finishedproduct and am pretty impressed.**

          2. Mark Essel

            It’s not the one investor/big customer that says yes that startup founders need for confirmation or permission. They’re just a step on the road to becoming real.There’s ample motivation in proving the 100s of nos along the way just how wrong they were. Reading how they lament over missing a chance to partner with your company later can be something to look forward to.Some of my favorite VC posts are the big wins they missed out on because they turned the entrepreneurs down.entrepreneurs down.

      4. Mark Essel

        +1e9

    4. Scott Yates

      This post:http://www.sco.tt/scott_yat…Explains a lot, even though the dates are now old.It’s worth spending some time to really think about how devoted you are to your idea as compared to how devoted you are to the idea of building a meaningful business.¬†Also, most of the programs have some kind of one-evening event, it’s worth going to those to get a feel for what it would be like so you can really answer that question. If you are totally in love with your idea, it may be that it’s just a hobby and you should think of it that way so that it’s a positive and that way you don’t get sad that it’s not growing magically.

    5. Tereza

      The time suck in filling out forms and not spending it on your business, which can be substantial.

      1. Robert Thuston

        Tereza, thanks for all the wonderful posts. ¬†Definitely made my day, and broadened my perspectives and opinions on today’s topic. ¬†Robert

  4. Scott Yates

    Another one to add to your list is the Founder Showcase. Of course, I have a vested interest in this one as I’m presenting there next week. I’ve been to one other and watched video of all of them, it’s a great event.There’s some cash for the winners, but the big prize, really, is that the winner, and usually some of the runners up, announce funding within a few weeks of the Showcase.

    1. Charlie Crystle

      congrats. I made the top 15, but sucked on the phone calls (investor presentation is something I have to work very, very hard at with mediocre results). good luck next week

      1. Scott Yates

        Charlie,The good news is that if you keep working on it, Adeo will remember that you’ve improved and you’ll be able to get a second shot. Adeo is rough, but he doesn’t hold a grudge. My original idea sucked, and with the help of Adeo and others in the Founder Institute it’s gotten much better.

        1. Charlie Crystle

          good to hear. my idea’s fine (great!), presentation sucked ūüôā

  5. Peter Sullivan

    I am starting to feel as there are too many of these incubators popping up all over the place. I can only speak directly for¬†Scandinavia but it seems to be a “cool” trend to have an incubator program. The problem is a lot of these incubators don’t have a thriving ecosystem to support them. A lot of the founders of the incubators have only done that, started an incubator. I want mentors who have done the journey before. Thats what we have been looking for when selecting our advisory board. ¬†I think YCombinator and Techstars are the real ones that matter. We would have loved to have taken part in Techstars especially with it being in NYC, where everything is white hot right now.As a side note, everyone should look into Small Business Loans that are offered by their local government authorities. We were able to be granted an “innovation” loan which is risk free. Principal payments are due 24 months after the injection and if the company doesn’t succeed the loan is written off. It helped us (along with a poker player’s investment!) get to the point where we had a working product sufficient enough to secure angel capital.¬†

    1. Mark Essel

      +1 for leveraging poker money.

  6. TinyVox

    I like “sales” as a bootstrap funding method, personally … ūüėÄ

    1. Peter Sullivan

      Always the best if possible! with tech thats usually not the case though. Beauty of tech is the ability to grow huge quickly. Monetize the consumer base after creating it.

    2. fredwilson

      That’s coming in a few weeks

    3. Tom Labus

      You still need cash to attract and hire talent.¬†I’ve been down this road (not by choice) and it’s never an easy one.That said, every company needs to validate in the marketplace. ¬†The sooner the better.

  7. andyswan

    One word of caution on grants/prizes/etc. ¬†Beware of the paperwork load. ¬†Know the complete process prior. ¬†Are you going to have to present/defend/add paperwork through 12 rounds to get $5,000? ¬†ALSO—¬†know exactly what “winning” means and exactly how the money is distributed before you get yourself into a potential time-sink.¬†There are a lot of really great ways to get cash for 0% equity….but I’ve seen a lot of “free money” that ended up costing the founders A LOT because they had to submit a detailed reimbursement request for every dime — or they were 160 hours of prep work in by the time they figured out they’d lost.

    1. Charlie Crystle

      yeah, I agree with this. you end up dropping everything to chase a presentation with some potential prize money.In PA we have the Ben Franklin Technology Partners program, which is a state-backed initiative. Great people, program’s decent, but the overhead/documentation/application process is really heavy.¬†Pretty sure it’s profitable, though–not a bad use of public $ ūüôā

    2. fredwilson

      Great advice andy

    3. Tereza

      AMEN, Andy. ¬†When you read the fine print, many of these make no sense unless you’re very young and very early.If you’ve raised some F&F on convertible debt to get started then you’re in a screwy situation.On the other hand F&F can’t pull you into syndicates and create momentum like these programs can.So maybe you have to decide at the very beginning — which route — incubator or F&F?

    4. ErikSchwartz

      Been there, done that, have the t-shirt. Foneshow got a state grant that had so much reporting BS we basically had to hire somebody to manage the paperwork.

    5. reece

      it’s all about risk/reward. ¬†we applied to TechStars knowing it was a risk as a time-suck, but it was ultimately worth it – well beyond what we’d imagined.¬†

  8. Tereza

    There are lots of indications that the top programs do great things for the companies who are selected, including contacts, advice and PR. ¬†Wind to their sails.However, from the entrepreneur’s perspective, esp the more experienced one, I’m not a big fan of contests. ¬†You could spend all day every day filling out applications for these things. ¬†A good application is probably a 5-hour task or more. ¬†Every application is just different enough that you have to start from scratch. ¬†To raise your odds, you need to do up-front socializing with the organizers so they know and like you. ¬†If you have time to do that, then great. ¬†But¬†typically you’re talking <5% odds — not rational to a smart entrepreneur. ¬†So unless they have an inside path, probably best to spend that 5 hours on product or user testing with a customer and not filling out yet another set of forms.¬†When you jumped through the hoops, and don’t get in, which you probably won’t, it stings. ¬†And your job #1 as CEO is to keep your mojo up. ¬†So the vast majority of people get negative, non-market-derived value from it. ¬†So I wonder if there’s a way to spread a little more value to the ‘losers’, to¬†grow the ecosystem at scale. ¬†Throw a Loser Party with an open mic segment of 60-sec pitches and prodigious beer, as a thank you for spending the 5-10 hours on that application. ūüôā Or invite them to the final presentations too, so they learn something. ¬†I wrote a blog post about it here: ¬†http://terezan.tumblr.com/p….BUT — no question — the 6 or 10 companies that do get it, it seems derive tremendous value and in this case the VCs and other coaches are truly generous guides.

    1. ShanaC

      Basically, you make this sound like it is applying to college.  That system is already messed up, why make more of a mess and spread it to other places/industries

      1. Tereza

        LOL. ¬†Hadn’t thought about that but it’s an excellent comparison.The application processes are extremely NOT lean, NOT open source, not particularly helpful in growing the ecosystem.And thing about 1000 companies applying, 5 hours per application — 5000 hours of low-value work that benefits no one except that the VCs get to see the deal flow.Instead do 5000 hours of user testing or talking to a potential customer.Maybe the application should be a videotape of a random user trying out the product for the first time and commenting on it. ¬†Then everyone benefits, even the ‘losers’.I’m jaded, sorry.

        1. ShanaC

          It’s fine to be jaded, I’m just surprised no one picked up the similarities between college applications and this process.

      2. Guest

        I believe¬†@Techstars:twitter¬†received funding from the Kauffman Foundation to develop an entrance system [Update: system is a really bad word – more like a standardized entrance application, I believe]. I think this could create some efficiencies. However, I am concerned about a ‘one ring to rule them all’ unintended consequence. What happens if a universal application gets adopted by many programs? If a startup does not get into one and filled out the universal application what happens? Can they still apply to other programs using the universal application? Can they modify it after a ‘not accepted’ event? Etc.Hope¬†@techstars:twitter¬†¬†@bfeld:disqus¬†or maybe¬†@davidcohen:twitter (UPATED: correct TechStars & David Cohen acct reference) can participate in this discussion. /cc @tereza too this touches on her reply to you¬†@ShanaC:disqus

        1. Tereza

          On some level that’s exactly what Angelsoft is.But many investors and programs tailor the standard application.So as the entrepreneur your plan on it being a 15-min task and then go look and realize, once you’re playing with 150-word fields that are now 400-word fields and re-defined fields that now somewhat overlap.So you get neither the efficiency of a standard app nor the flexibility of your own thing.I can’t tell you how frequently you say to yourself, “Wow, that was supposed to take an hour, but I just blew the whole evening.”

          1. Guest

            Yikes! Well, that does stink from a time sink perspective. {Humorously: Angelsoft? As in the bath tissue? Totally kidding, of course.}P.S. Apologies to everyone for extremely poor grammar. Engaged in severe multi-tasking and cannot spell or use the correct punctuation at all today. This could get ugly!

        2. Tereza

          thx. ¬†on disqus i’m Tereza, on twitter,¬†@terezan:disqus¬†

          1. Guest

            LOL, sorry about that … check out my last reply to you. I am plagued by significant typos, misspellings, poor punctuation, and about everything else you can imagine today. Just one of those Mondays. Brush it off – keep on truckin’

      3. Gerald Buckley

        Shana (e Tereza, e Fred) – Not seeing many actual participants from the various awards/competitions here in the thread so if I may, I’ll give a BRIEF first hand account of this Old Hen’s experience:1) Applied for consideration in Tulsa Entrepreneurial Spirit Award in April 2008. 100+ applicants. Whittled down to 24 based on biz plans alone. We all pitched the panel of judges (7 minutes). Whittled down to 12. Pitched the judges again after coaching (5 minutes). Whittled down to 7. Next pitch was 2 minutes and winner was announced in November 2008. April – November for a $30,000 prize (which my startup won). But, wait… there’s one more thing.2) The State of Oklahoma has a GREAT tech/sci startup “award” called TBFP. Amounts to a ~$100K or so (non-equity) match for any equity funds invested in the startup. Fortunately, this matched the initial $30K right off the bat and some friends/family and we’re nicely seeded with VERY LITTLE equity out the door.3) Eventually, these things coupled with a business concept and team that has endured its share of twists, turns and adaptations landed a series A of $1.3M last year.It’s not a traditional path by any means. But, as Fred says, one step leads to another and another and eventually you have an adventure behind you AND ahead of you.

        1. Guest

          Great story Gerald. Congratulations on the win, the funding & the progress. Even more excited to hear about a story like this out on the Plains. I would be remiss if I did not ask for a great BBQ joint you could recommend down your way I can go to next time I see family down there. My family down there says there is no BBQ down there compared to KC but I just do not buy it. There has to be something somewhere. Even a hole in the wall.

          1. Gerald Buckley

            KC absolutely has FANTASTIC barbeque. No comparison really.However… Oklahoma Territory Barbeque on North Lewis is super. Don’t be scared by the run down neighborhoods around it… It’s THE place in Tulsa – Their ribs are better than anything you’ll buy anywhere else. Rib Crib has fantastic smoked bologna, chopped brisket too (if that’s your thing). . And Wilsons has some extremely good sauces, though their pitmasters are sometimes inconsistent across their stores.

          2. Guest

            Yeah we are blessed in terms of BBQ here. Thanks so much for the reply and information. I love to learn about and check out new BBQ places … for a number of reasons. I never worry about neighborhoods when it comes to BBQ (within reason of course). The more run down the better the BBQ and the nicer the people usually. ¬†Cut & paste your information & cannot wait to be able to offer a suggestion for dinner when I am down there is a few weeks. Thanks again.

        2. ShanaC

          Honestly, I don’t think there is a “right” way to get a company up and running (beyond the really basic stuff, like keeping good books, having a product or service, etc.)

    2. Brandon Kessler

      Good point, but when competitions are done right (e.g. the ones Fred mentioned), many or most entrants get traffic, awareness, status and recognition.

      1. Tereza

        totally. if you get it, that’s great. Just giving the other side of it. it’s not without cost.

    3. Matt A. Myers

      I’ve not been able to see myself giving up 6%-10% of my company for ~$10-$20k – especially not now as things have evolved so much.Any successful project primarily needs understanding of product, planning/prioritizing, and organization – which doesn’t really require money. I have 3 – 5 years worth of plans; I don’t know if I’m an exception, but I get bored and like to think ahead.I understand the value of networking potential, but if my product is good enough then I’ll attract relevant investors anyway.I’ll probably be out of money again from my last round of “finding” money – but during and after that then there’s a lot of time I can use to further my projects and plans even if I have no money.

      1. Tereza

        The more experienced you are, the higher the opportunity cost. I’m sure the great ones are worth it.I saw friends who were Techstars mentors seriously busting their humps and pouring passion into their companies, on a highly individualized basis. That was impressive.But when the meetings are more like Weight Watchers check-ins or you’re subjected to paperwork purgatory…..it’s worth a pass.

        1. fredwilson

          talk to reece about what i put into Shelby’s time at techstarstalk to joanne about what she put into nestio’s time at techstarsi think techstars is infectious. people get into it. i know we did.

          1. Tereza

            Yes — that came through clearly. ¬†There was a several week period when you couldn’t get meetings because everyone worth talking to was all-hands-on-deck with their Techstars companies. ūüôā

      2. Scott

        Personally, I love Start-Up Chile (www.startupchile.org) $40k seed funding, NO EQUITY given up!

    4. David Semeria

      You make lots of good points Tereza.Fundamentally, these program are focused on the youngsters. And that’s the way it should be.But there are a whole class of older¬†entrepreneurs who have been round the block and just need some funding to accelerate their business.I’m not¬†complaining¬†about the focus, it’s fine by me. I’ve eaten enough ramen thank you very much.Just don’t tell me that older ents don’t have the fire in their bellies.As the Italians say, an old hen makes a good broth.

      1. Mark Essel

        I understand, we should boil and eat old entrepreneurs ūüėÄ

        1. David Semeria

          In your case that would be cannibalism Mark!

          1. Mark Essel

            Precisely.Hey, I know you’re a big javascript fan. What’s your take on CoffeeScript. Trevor Burnham’s book is great and it’s helping me learn some nuances of JavaScript that I had issues with (context for this, etc).

          2. David Semeria

            I haven’t looked at CoffeeScript Mark. In fact I’m using Java a lot more than JavaScript these days.I know everyone else is going in the opposite direction, but hey-ho!This presentation might come in handy for getting to grips with scope in JS¬†http://www.slideshare.net/h…

          3. Mark Essel

            After 13 years of c++, jumping into Java coding would be like getting a divorce from one brainy no nonsense brunette just to date another.At first I went wild with the hot redheaded model (Ruby), then went out for sushi with the peculiar intellectual with short cropped hair and glasses (Python). But I’m finding the chaotic wild west bandit sisters of JavaScript and CoffeeScript to be just my style. These ladies know how to get down.

          4. David Semeria

            Very elegantly put Mark!I’m working more on backend stuff at the moment. JavaScript is great for highly decoupled frontend stuff, but it doesn’t cut the mustard on the backend.As I tell people, if I were ever to be attached to a life support machine, I would much rather it ran Java than JavaScript. Comprendez?

          5. Mark Essel

            I prefer my life support be hardware with embedded/battle tested native code. But yeah, I recognize the stability of different languages.As a counterpoint I’ve been running a simple CoffeeScript app at home for a few weeks without any issues or memory bloat. Of course it’s not getting the attention and love that live apps receive :).Flash and Adobe stuff is my least stable software. Sneeze hard enough and it freezes.

        2. Guest

          Errrrrr :-){Update: Doesn’t this community already have a humanoid eater in @fakegrimlock ?}

          1. FAKE GRIMLOCK

            YES. ME HAVE FORK READY, WHEN COOKING START?

      2. Tereza

        Ooooo — that’s a good one!! ¬†Please tell it to me in Italian so I can memorize it.It seems that so many of the AVC commenters I adore are geriatric like me. ¬†Maybe we should create an AVC-OHC (Old Hens Club)

        1. David Semeria

          “Gallina vecchia fa buon brodo”I wanted to call my latest startup gallina.com based on this but it was already taken. C’est la vie…

          1. Tereza

            How about buonbrodo.com

          2. David Semeria

            Clever! Thanks Tereza

        2. Guest

          You mind if I tell people the “H” in the OHC stands for Hippie?

          1. Tereza

            Hairy?

          2. Guest

            LOL, I have been teasing my wife that I might let my hair grow long again. That works.

        3. Parafly

          Yeah, I’m an oldie in the Entrepreneur world. I’m 30. Haha. Married with a house changes things a bit. You can’t work for $10 a month. You can make do with a little but you have to meet your obligations.¬†

      3. Guest

        I continue to eat Ramen to both live beneath means (frugally) & always stay hungry. I also happen to like noodles. ūüôā

        1. David Semeria

          Well said Geoff, good for you. I’ll alert the media ūüėČ

          1. Guest

            BTW I finally went to your web site and checked out what LM framework is all about. Interesting stuff concept … loved some of the Tech Pop Culture pics in the slideshow.

          2. David Semeria

            Thanks Geoffrey. That’s actually the old project, the new one doesn’t have a name / site yet.

    5. Ryan Frew

      Thanks Tereza. You, David, and Fred all make excellent points here. I’m 20 years old and have spent the majority of the day working on advancing to round three of the Xavier X-LAB competition. This is just a few months after not advancing to the final round of the Thiel Foundation’s “20 Under 20” competition. It’s true that rejection stings and it can be tough to maintain a positive attitude. Maybe I need to start being more serious about a different route! ¬†

      1. Tereza

        Keep at it, Ryan.There are many paths. Those are two.

    6. FAKE GRIMLOCK

      SO, YOU SAY SOMEONE NEED BUILD “CONTESTR.COM” SITE TO AGGREGATE STARTUP CONTEST SIGNUP?SOMEONE SEND GRIMLOCK CHECK, ME HAVE IT DONE BY NEXT WEEK.

      1. Tereza

        PROBLEM WHEN SMARTYPANTS HACKER BUILD AGGREGATOR, NEXT DAY NEW SMARTYPANTS PUT ON NEW CONTEST AND SAY “ME CONTEST WAAAAY DIFFERENT. ¬†USE ME SPECIAL SMARTYPANTS FORM INSTEAD.” ¬†BUT THEY ALL SAME SHIT, DIFFERENT COLOR.

        1. FAKE GRIMLOCK

          ALL CONTESTS ALREADY SAME SHIT, JUST DIFFERENT PAINT. SO WHAT PROBLEM?

  9. ErikSchwartz

    My understanding is getaround had already¬†received¬†a few hundred thousand of investment.I’m sure they appreciated the $50K, but will the 50K have any meaningful impact on the outcome?

    1. fredwilson

      none. and that’s what happens sometimes

  10. ErikSchwartz

    Incubators are only as good as the people running them. If you’re an API company and the people running the program do not understand what an API is then they’re not going to provide you much value.

    1. fredwilson

      that’s for sure.¬†

  11. JLM

    The real world feedback and exposure are a very important value. ¬†Just the ability to articulate your idea and get this kind of peer to peer and VC to entrepreneur dialog going is a worthy objective.It was not very long ago that the lament was the inability to get in front of “real” VCs.Sharpening and refining your pitch and getting feedback both directly and vicariously makes the effort worthwhile.I also think that the entrepreneur’s time spent organizing his thoughts and streamlining the pitch to the allotted time is a great exercise and can only make one better in the long run.Having said that — beauty contests are still beauty contests so don’t take things too seriously, Miss Congeniality!

    1. Tereza

      Being an insanely competitive person myself — and I believe you’ll relate to this — is that one of the most difficult things is to not let our own competitive juices go into overdrive and drive us absolutely nuts.That takes a different kind of discipline. ¬†Haven’t mastered it, but I’m trying. ¬†Need to pick your battles.

  12. mikenolan99

    I’ve had a great time helping a student led team prepare for the Clean Tech Open – deadlines are a great way of supplying the sense of urgency start ups need.¬†Then again, I am reminded of the Douglas Adams line – “I love deadlines. I like the whooshing sound they make as they fly by.”http://myminnesotabusiness….

    1. Dave W Baldwin

      Good job Michael.  From one who mentors in the FTC Robotics.It is easy to talk about it, another thing to do it!

  13. Farhan Lalji

    Funding isn’t done in isolation when it comes to accelerators and contests, like it can be for raising family/frends/angel/debt etc.Being present and noticeable through Contests and accelerators can lead to sales and other forms of funding. ¬†For us, as Seedcamp finalist, it lead to biz dev deals and numerous conversations with funds, not to mention having a PRable story / brand to attach ourselves to.

    1. Guest

      The PR piece can be HUGE I would think. It creates an event that is press worthy. The ‘winners’ get to be the beneficiaries of that spotlight I guess.

      1. Farhan Lalji

        Agreed on the PR piece but if we’re talking about these as funding strategies then PR doesn’t always translate into sales/funding, it’s about recognizing the potential value in terms of fundraising. ¬†Some events may get a lot of pub but not the right people in terms of¬†checkbooks, others may get a little pub but have a lot of people with¬†checkbooks¬†in attendance, it’s about knowing the value of the audience for further funds through sales/investment.¬†For example, Y combinator might not get as much press as Disrupt (for argument’s sake), but being in the YC class can lead to 150K check on a loan note from the SV Angels/Yuri M, so there’s value there beyond the actual prize.

        1. Guest

          Extremely good points. Thanks

      2. Tereza

        Depends.  None of my target audience reads TechCrunch or Mashable.  And none of my potential investors read People or watch Oprah.

        1. Guest

          #Awesome … thanks for calling this out. My interpretation of his comments had a bias. By press I did in fact mean startup focused press … which is absolutely NOT the only press in existence. Thanks.

        2. Farhan Lalji

          While none of your potential investors read People or watch Oprah having a media pack for investors that shows coverage by People and Oprah is bound to have some impact on their impression of the marketability of your company.

        3. RichardF

          I’m interested to know what your target audience is Tereza

          1. Tereza

            Women and men age 30+.Strong female skew, including but not limited to mothers. HN is a space to think about themselves, not just how they mother their kids. They are affluent and do not live in Manhattan but enjoy a high rolling shopping trip to Manhattan twice a year. She’s not too self-righteous to try Botox. But she has lots of other life burning questions, like her career, relationships, home. 50% chance she’s divorced and hitting the dating scene again. She’s probably 15lbs over her fighting weight.The men who we love and love us most are gay or married men. Married men are the sleepers. They love it! Great guys.The pros on our site who are most active are seeing real business benefit and are proactively telling us this.An interesting observation is that once they’ve tried it, hetero men really love asking for advice from a panel of women 30+ and gay men.It’s a trustworthy crowd, and so far largely jerk-free.Not that TC or Mashable readers are jerks but you can see this people inhabit very separate planets and their purchase decisions are diametrically opposed..Make sense? ūüôā

          2. RichardF

            Absolutely makes sense. A few thoughts came into my head.Is there then much cross over with the female demographic on Facebook? and is there an opportunity to reach them using the Facebook advertising platform (maybe you already are)?  Have you incorporated Facebook into your platform (other than log in) for virality?

          3. Tereza

            ūüôā

    2. Tereza

      If your product’s target market is the same group of people who attend these things, then yes. ¬†You have overlaps/economies of presenting and you walk out with new users too.If your target market is not them, then that’s a dud. ¬†None will have anything constructive to say and will fill the air with pablum. ¬†My emotional product is exactly not what this audience cares about. ¬†So outside of their money why should I seek their approval?But hey, you gotta rob the bank where the money is. ¬†I paid a lot to attend a high-end women’s event, they knew exactly what I was talking about and I walked out with excellent leads and good mojo (we will shortly launch a pilot w a top US bank). ¬†Spend time on ones who might say yes — not those who’ll definitely say No.

    3. BillMcNeely

      Great point “Being present and noticeable through Contests and accelerators can lead to sales and other forms of funding” Our pitch led to a meeting with an angel who was not at the Quick Pitch Day the next week. You gotta be in it to win it!

  14. PeterZakin

    I think accelerators can be incredibly valuable for young startups (Full disclosure: I was part of the YC S10 class), but it’s unclear how young is too young. I think what we’re seeing now is that generally the most successful startups to come out of accelerator programs have already built a v1 by the time they enter the program. ¬†There are obvious exceptions to this (Daniel Gross and the Greplin story come to mind) but it may be an interesting question to determine what stage of startup infancy is best fit for the accelerator experience.

  15. Janko M.

    IMHO, for a product oriented startup with clear monetization all these tree can be a deterrent towards their true financing option: customers. As they refocus the team to things that are not in sync with their real goal (pitching to investors/mentors vs. marketing to customers).For startups where investor will be needed, these three seem like a nice pre-step / training and validation program that helps on their path to bigger things.

  16. reece

    “I believe the accelerator programs are excellent for teams that are just getting started and that have not had a lot of startup experience. “probably true, but to be fair/clarify – there were many teams in my TechStars class that had great experience.¬†one team came in with $1.6M in revs. another had already raised $1M. ¬†many individuals had been involved in startups before… just sayin’.

    1. fredwilson

      could you see Yavo doing techstars?

      1. Mark Essel

        how about Mark Pincus?

    2. Mark Essel

      Wow, that’s so not the type of company that I thought would be vying for an incubator spot. I guess they’re after follow on rounds and publicity.

      1. reece

        it’s also just the mentorship that you get and the connections that can provide.and for the record, the co. with big revs hadn’t raised any cash yet.—————sent wirelessly

        1. Mark Essel

          Another surprise. Each startup has it’s own legend, thanks for the details.

  17. Yurivangeest

    There is the largest contest for mobile internet startups in the world with 225.000 euros prize fund. It is called Mobile Clicks and is supported by Vodafone Group. It is a cooperation between Mobile Monday chapters, TheNextWeb and PICNIC. It is not just about apps but also sites, services and infrastructure.Actually, this contest is running now. Registration deadline is June 12th, 2011 CET.More info: http://www.vodafonemobileclicks.com

    1. fredwilson

      thanks for sharing that information

  18. Brian Bauer

    Is there a good place to track deadlines for all the various incubator programs and contests? ¬†I consistently remember something about a week after the deadline to apply/participate has passed …

    1. fredwilson

      if not, there should be

    2. Tereza

      Agree.And the contestants should be allowed to vote on how useful/educational the application and process was, even if we didn’t get in. ¬†Or bonus points for just being damn quick.

  19. Tereza

    One other comment.Now I’m in the severe minority as a ‘suburban mom and tech entrepreneur’. ¬†But all indications are that there will be more people like me over time, not less.There’s a socializing element — events to go to, to get to know the people in a program. ¬†And that makes total sense. ¬†I get it. ¬†I’m also more into stuff when I’ve met real people. ¬†And anyone who’s met me knows I love going out and can strike up a conversation with a doorknob. ¬†So i’m not resistant to that.But there are real time restrictions. ¬†I have 2-3 nights a week I can go out at night on business ¬†(each night is $50-100 for a babysitter if my husband can’t make it home early, which is most of the time). ¬†And I’m splitting those events between sourcing users (e.g. women’s events in the sectors i’m serving), biz dev, tech learning events (e.g. lean startup, etc.) and VC pitch/exposure events. ¬†There is little crossover between them. ¬†The latter categories do nothing to build my business.When your time is cheap/free and you’re 15 minutes from home, you can hit 2-3 events in a single night. ¬†When your time and $ is constrained, if you show up at a low-value event, you are pissed! ¬†So you scrutinize them ahead of time.I’m not complaining — I’m happy to be who I am and I know I can do things other people can’t. ¬†But thought it would be useful for the community to understand the math that may explain why certain kinds of folks may not make it to certain kinds of events.

    1. Guest

      I understand and can relate somewhat. I think you are correct as well”Now I’m in the severe minority as a ‘suburban mom and tech entrepreneur’. ¬†But all indications are that there will be more people like me over time, not less.” ¬†¬†… I agree that there will be more suburbanites in the future (and moms too). I also respect the types of constraints you mention. While it makes things more difficult in some respects; they are not ‘deal-breakers’ to doing/making something. Your final comment can be easily brushed off by some as ‘well, she is not committed enough.’ That type of thinking would be unwise & uninformed.I admit I experience similar type constraints. For example, I could not attend Think Big KC because I would be traveling for charity work my wife & I do. Fred’s blog is probably a great way to ameliorate. ūüėČ

      1. Tereza

        I’ve no doubt people draw that conclusion about me. Their loss.And BTW — big yes — participating on AVC is for me a “hacking events” strategy. It’s a great way to ‘scale’ me and make me visible to folks who never met me before.

    2. SittingAround

      Tereza,¬† You might want to consider starting or joining a babysitting cooperative to make those 2-3 nights a week a bit easier.¬† Our site, http://www.sittingaround.com makes starting and running a babysitting coop easy, and we just opened to the publicI’m surprised nobody has mentioned MassChallenge (www.masschallenge.org) yet, Its an accelerator program that also gives out $1mn in non equity grants to the 10-20 most promising participants.

      1. Clarification

        That is $1mn total, split among 10-20

  20. Guest

    Appreciate this post and read your blog daily, but as a founding team member of Roadify – this year’s NYC Big Apps grand prize winner – some of your sources and facts are off.For that particular competition TOTAL prize money = $40,000 (not money to just the winning team, which is $10,000). More importantly though, 2+ months after the end of the competition we have yet to receive any compensation from the organizers. This lag can have huge effects in the world of a startup.¬†While I am absolutely passionate about the mission of ChallengePost and the goal of more open government data, I’ve been let down by this contest approach as a viable way of “financing a startup.”

    1. Dan

      This comment was drafted by myself, and in an attempt to delete it, has been marked as written by “Guest.”I’d like to clarify about waiting for the BigApps prize money and what is apparently a typical cycle for government payments‚ÄĒmaybe a bit of unnecessary venting.¬† We were thrilled to win the BigApps contest and the attention we‚Äôve received since then has been enormous and extremely helpful to the company. That‚Äôs the real benefit of these contests and programs. While every bit of prize money helps, whenever it comes in, the advice and publicity that comes from winning has proven most valuable. That starts immediately – even upon applying to contests such as these.¬† Companies like ChallengePost, through their involvement in contests like BigApps, and the New York City government are helping the entire bootstrapped development community through these programs and we‚Äôre all lucky to benefit from their support.

      1. Brandon Kessler

        Yeah the City generally takes 60 to 90 days, pretty normal and way quicker than a standard financing.

    2. fredwilson

      wow, sorry to hear that. i’ll fix the facts. wish i could fix the other issues.

  21. Eunice Apia

    I like the idea of there being a “Funding Ladder” that you¬†could go up to create your company. It makes it easier for me to process the whole idea of getting money. I’m going to apply it. Thank You.1. I¬†think I will use Friends and Family (myself) to fund Tools and Equipment. My friend agreed to¬†buy me the domains for my company, for my birthday. I don’t have to pay¬†her back since it’s a birthday present, but I’m using .CO instead of .COM¬†because it’s cheaper.2. Contests will be¬†used¬†to fund Prototype.¬†I will research all the ones you listed to see which is a fit for me.I will wait for next Monday to see what the next step¬†will be…after I have prototype and need to hire people and get the business running.

    1. fredwilson

      a state grant ūüôā

  22. paramendra

    This post smells like money. 

  23. krdennis

    Hmmm‚Ķ No mention of government programs like Start-Up Chilehere – sorry if I missed it in another post. Not an incubator really as theydon‚Äôt provide that level of structure and coaching, but being 1 of a group ofstart-ups, all in the same situation, the opportunities for collaboration and peer-coaching are limitless and will happen organically if you are open to it.The commitment is significant, as it involves relocating toa different country for 6-months. Out of the question for many I know, but awonderful opportunity and invaluable life experience if you can do it.The paperwork is not overwhelming, although I confess that theexpense reporting sucks! But this is a minor inconvenience for such an opportunity.The odds of being selected are very reasonable and for that effort you mightget $40K (can go a long way in Chile) and not give-up any equity. A pretty sweet deal!____________Just noticed Fred’s covering “Government Grants” in a future post.

    1. Nathan Lustig

      Yup, Startup Chile was great and we got $40,000 for our business.¬† They have about 200 more spots open for this year, check em out if you’re interested.

  24. Chris Halligan

    For those in North Carolina, NC IDEA is an excellent 2x per year competition.The application process is thorough but not overlong, the non dilutive grants are up to $50k and you get actual feedback from qualified advisors.I know several companies who participated in the most recent cycle and have heard nothing but good things about the process, independent of winning and losing.

  25. BillMcNeely

    My friend/business partner and I applied to an¬†accelerator program in Dallas called Tech Wildcatters. It was a great experience.¬†Hello I’m Logistics made it to the semi finals. We are both in our mid 30’s. We were not going up against “youngsters”. All the other participants had been a founder, co-founder or early employee of¬†several startups under thier belt. We were the babes. We had no startups on the resume. Just two vets chasing the American Dream. Hello I’m Logistics is looking to give it another shot in the fall. We have¬†increased our ¬†traffic each month since January. Over the last 30 days we are up 234% thanks to inbound marketing from Linkedin. Here are our posts on Tech Wildcatters. http://helloimlogistics.com…¬†and http://helloimlogistics.com

  26. Jean-Luc Neptune MD MBA

    Fred – thanks for highlighting prizes and contests as a mechanism for start-up funding. ¬†The organization that I’m working with, Health 2.0 (health2con.com), has been contracted by the federal government (through the ONC/HHS) to sponsor prizes to drive innovation in health IT (health2challenge.org). ¬†We’ll be organizing contests with prizes up to $100k (real money for a start-up) and no dilution (entrants maintain ownership of their IP). ¬†We’ll be launching a number of competitions this Thursday at the Health Data Initiative (HDI) meeting in DC (http://1.usa.gov/lapr1k).We’re also doing health IT challenges in the private sector and there we’re already seeing that in addition to the prize money the winners are also getting access to follow-on opportunities to further commercialize whatever they develop. ¬†Our goal is to use the challenges as a bridge to pilot programs and hopefully on to enduring client relationships down the road.Bottom line – If the dollar amounts are significant and the terms are right I think contests can be a great funding approach to get companies up those first few steps.

  27. darceneaux

    Fred & Everyone – I work for an integrated advertising, digital and PR shop. ¬† We are looking to reinvent the way we do pro bono work.¬† Perhaps we will make it into a call for entries /¬† contest and allow cool organizations/people/companies to submit to be our pro bono account for a year.¬† I’m wondering if any of you have recommendations on NYC-based organizations to partner with to make sure that the word gets out as wide as possible.¬† Thanks!

  28. Parafly

    I actually just wrote a blog post myself a few weeks ago – particularly from the viewpoint of an “older” founder (I’m 30) about startup¬†accelerators. I think they are really awesome, but are ideally geared towards no young people with literally no commitments. Even having a mortgage and a team of 2 makes it a lot harder to survive on $30k for three months. That’s only $5k per month per founder.¬†The article is here:¬†http://www.totaltab.com/201…In general, my feeling is if you can run with it; take it! But if you can’t take it, there are a lot of things you can do to get the same benefits (of mentoring, networking, etc.). It just takes dedication and creativity since YOU have to drive it – but you already have do drive it anyway as an entrepreneur, don’t you ūüėȬ†WRT to contests, we were semifinalists in the RI Biz Plan comp for¬†@totaltab:twitter¬† and while it was unfortunate we didn’t win, we did learn a lot and met a lot of great people in the process. Just wish we had been a bit sooner so we could have gotten involved with Mass Challenge, but them’s the breaks!

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