Incubator · Accelerators

Reverse Incubator/accelerator

Daniel Eberhard CEO, Koho

April 30th, 2014

Hi FD'ers, 

I've been approached by some people looking to grow a reverse incubator. The structure is essentially as follows;

I would further vet lightly vetted ideas pitched to me and discovered by founders. 

They fund product development - est 40k 

They fund pre-determined % of angel round. 

They are proposing a long vesting structure and taking significant (majority) of equity. I have no issues with the model at present but is anyone familiar with this structure? Does anyone have key drivers are mutual value creation/accountability etc? Common pitfalls etc?  I've heard of a few that operate on this model but I haven't yet found them. Any insights would be appreciated. 


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Kevin Burke Public Sector Management Consultant

April 30th, 2014

I don't totally understand the model as described. Sounds a lot like a standard VC or angel investor model. The 'reverse incubator' name sounds like a bit of a misnomer. Kevin

Ron Sheridan

May 1st, 2014

An "incubator" is typically an organization with some real estate that they open up to the "incubatees" as communal work space. The incubator also works to provide mentoring etc, in addition to some form of economic support.

My favorite examples are PIE in Portland or Runway.is here in San Francisco.

The unique piece I see in your post is that they see themselves participating in a subsequent Angel round.

Q:  Do they have a space and the needed people, or are they just wanting to float some investment cash?

Steve Owens

May 1st, 2014

Who is "They" in the "they fund product development"?

Rob G

May 1st, 2014

significant clarification would be helpful. perhaps its the title "reverse incubator" that's throwing me.  The basic concept of an incubator is to take relatively inexperienced entrepreneurs and in exchange for nominal equity, provide them with space, mentoring and a little $$ to dress them up and make them presentable to professional investors in the hopes of improving their chances of professional funding.  I can't wrap my head around what the reverse of that would be, but it's not pretty - input is professional $$ and experienced entrepreneurs and output is less inexperienced entrepreneurs with no $$.  sounds like one giant pitfall to me... .  remove tongue from cheek. 

Kate Hiscox

May 1st, 2014

I have never heard of this?