Incubators have been around since the wooly mammoth left without significantly impacting the angel investing environment. Then along came accelerators, including Techstars and Y-Combinator, eclipsing incubators by correctly providing the two things entrepreneurs most need, in order of importance,
1 Money, and
These are exactly the services that angels have traditionally provided, but the emphasis has changed. Now Angels are being asked for:
- More money at a higher valuation,
- Less advice or at least offered less control.
Some effects of this change are that it is now easier to find investments, so time spent seeking out deals and personal contact are less significant; valuations have increased, since more angels and VCs have simultaneous access to the same deals.
An advantage of the accelerator model is that, like an Angel Group, it can be readily adapted to local needs and conditions. One example would be Betaspring and how it has adapted itself to the need for economic development in Rhode Island.
Betaspring is a fund that runs an accelerator in Providence. Investors in the fund include the Cherrystone Angel Group, individual angels, VCs, and local government. The current fund is capped at $4 million.
Talking yesterday with Managing Partner Owen Johnson and Startup Operations Manager Jenn Schwall, we learned that Betaspring runs on a model very similar to Techstars, where companies chosen for the program will receive between $12,000 and $20,000 intended to support them through the 12 week residential program, in return for common stock. Upon completion, companies that choose to remain in Providence receive a $50,000 loan from the city. “Companies come from all over, and are free to leave, but in our spring session this year 15 out of 16 opted to stay right here in Providence,” says Johnson. Why do they stay? While acknowledging that RI taxes are high, Johnson feels that new companies are not highly impacted by taxes, but the real reason they stay is “because the quality of life is awesome.”
Many of the companies applying to Betaspring these days lie at the intersection of mobile and the internet, particularly in mobile interfaces to the internet. Click here to see the companies that will be presenting at Betaspring's Fall 2012 First Look Day. If you are an Angel, Jenn Schwall extends the following invitation: "If you would like to attend First Look on November 6th at 10AM, please RSVP directly to me at firstname.lastname@example.org ."
We note from the Betaspring web site that several well known Angels from Boston, including Bill Warner , David Balter, and John Landry are mentors in the program. Johnson tells us that members from Launchpad, Common Angels and Angel Investment Forum have attended the First Look Day in the past. And we learned from Executive Director Peter Dorsey that the Cherrystone Angel Group has grown to 68 members, with 60% attendance at their meetings.