Founder Exchange Fund for Incubators?

by Sam on August 29, 2010

Last year, First Round Capital made an announcement that I thought was pure genius: FRC was the first venture fund to offer an exchange fund for entrepreneurs. Portfolio company founders were given the option to trade a small piece of stock in their personal venture in exchange for a piece of the action of the larger pool of all FRC companies that choose to participate. This is a great way for founders to help hedge personal risk, and it probably encourages more support/camaraderie across the portfolio. If I was an entrepreneur actively seeking a venture round, you can be sure I would go talk to First Round.

I believe this same approach can and should be applied to incubator programs.

I like the model at the incubator level because it provides a small hedge on what is perhaps an even riskier endeavor that raising a VC round (working for peanuts for three months with no guarantee of even an angel round). In fact, the exchange fund model has been used successfully by founders at later stage companies for years.

If you were participating in TechStars, or Y Combinator would you take advantage of such an offering?

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I wanted to share a quick hack I’m using this weekend.

My sister is in the process of moving from New York to Baltimore to start business school. I suggested that we get some movers to help us on each side of the trip, figuring we’d pay $40 an hour and provide some food and plenty of water. I used Craigslist to post a basic advertisement about 48 hours beforehand.

In the past I have used Craigslist to find handymen for a number of jobs such as moving furniture and brush. The response rate has always been high, but filtering to find the best/most trustworthy of the bunch is always a challenge.

However, this morning it occurred to me to run Rapportive and see if I could find Facebook or Linkedin profiles of some of the applicants (Rapportive is an awesome app for Gmail that surfaces that shows the social profiles for various email addresses). Sure enough, we had a total of about 40 responses and about 10 showed up in Rapportive. After scanning their profiles to eliminate anyone who looked like a serial killer I picked a jazz musician in New York (listened to his stuff on MySpace) and a student in Baltimore.

Filtering against public social network profiles is definitely not the be all end all, but it’s definitely better than nothing and provides me with a little bit more comfort when hiring strangers.

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What Non Profits Can Learn from Startups

July 22, 2010

I am republishing this Letter to the Editor I wrote for my B-School magazine. In summary, I believe non-profits can learn a great deal from the lean startup movement by focusing on actionable, quantitative metrics.

Data-centricity
As an entrepreneur who has worked closely managing expectations from venture capital investors, I thought Rise of the Philanthropreneurs by Mat Edelson [Fall [...]

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Is Offline the New Online?

July 11, 2010

Several years ago I worked on a project backed by a now prolific angel investor on the west coast. I found the idea extremely compelling, but the for a couple reasons the project failed to reach the next step. The most major reason was that our users were not totally comfortable with the new type [...]

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Great Summer Internship for NYC Startup Fanatic

June 28, 2010

I recently volunteered to help the NYCEDC with a forthcoming project called NYC Venture Connect. NYCEDC and Bloomberg are really doing some awesome stuff to promote entrepreneurship and startups in New York and I’m happy to be doing whatever I can to support the cause.
NYC Venture Connect needs a summer intern to gather great content [...]

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Slate Interview with Victor Niederhoffer

June 22, 2010

Slate Magazine has a great interview with Victor Niederhoffer based on an upcoming book by Kathryn Schultz, titled, Being Wrong: Adventures in the Margin of Error. I have referenced Niederhoffer and his blog, Daily Speculations, once before.
While the entire interview is fascinating, I particularly liked this passage:
…I think a much better view is that the stock [...]

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Startups and the Magic of Seven

June 15, 2010

An interesting thought from Keith Rabois on Quora:
To be truly successful on the Internet, you need to build something that becomes one of seven sites that a large swath of users will regularly use
I think this is a great way to evaluate companies one is thinking of joining, building or investing in.
Initially I wasn’t [...]

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Groupon’s Growth Made Possible by Facebook

May 5, 2010

Groupon.com now sports a lofty $1.5B valuation.
Techcrunch had a great analysis of Groupon last week, dissecting the site’s revenues, traffic and potential.
While there are several juicy nuggets in the post, what jumps out to me the most is:
“Groupon gets more of its traffic from Facebook than any other site, including Google”
Note that in the image above, Facebook [...]

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The Rise of the Social Gesture

May 4, 2010

An obvious pattern that is emerging on the social web is the rise of the public social gesture.
For a bit of explanation, the social gesture is really “social sharing” in the context of a brand, business or person. It began with the comment, and then moved to the status update and the shared link. Public [...]

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Will Likes be the New Currency of the Web?

May 2, 2010

A week ago I was in San Francisco for F8 and I’m glad I was.
Several months earlier I wrote about the impending “Facebook gold rush” and I believe it’s beginning to materialize. Facebook is a true force and I don’t think people realize the magnitude of what they have been accomplishing.
The move to create a [...]

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