I recently caught up with an old friend who is now a venture capitalist in Chicago. We shared respective updates about his fund and FounderSensei.
When I asked my friend if he would be willing to refer entrepreneurs to FounderSensei, he said, "As a matter of policy, we don't refer entrepreneurs to any paid services."
I've heard this before.
I'm not trying to convince anyone of anything, but I think this is a stupid policy. Here's what I think about it.
Subject: Thoughts on fee-for-service
Just some thoughts on your comments regarding fee-for-service.
You're right in the sense that no one should take advantage of entrepreneurs, if that's what you were trying to say.
However, consider this...
- Should coworking spaces like 1871 and others give entrepreneurs office space for free?
- Should coding schools be gratis?
- Should Kellogg stop charging to obtain an MBA degree?
- Should Google Adwords allow startups to use their platform at no cost?
- Should Accelerators let startups in without any equity?
Of course not.
I understand your point on alignment for an investor and an accelerator, but FounderSensei is not an accelerator. We are something new. We don't own equity. We teach our Method for building successful startups. FounderSensei is a school more than anything else.
In my opinion, venture investors would be smart to sent "almost ready" startup teams to FounderSensei startup school. The nominal fees entrepreneurs pay ($99/month) normally increase valuations dramatically and improve capital efficiency by 100x versus traditional means. This would improve their odds of success and increase the quality of the startup pool that you have to choose from.
Would it not?
If what I'm saying is true about our program, then I don't understand your policy of not referring entrepreneurs simply because we have a fee-for-service model. That doesn't make any sense. An entrepreneur's commitment to FounderSensei is month-to-month. This is far less than their commitment to Techstars. Any increase in progress, traction, business model evidence strengthens the startup and makes them a more attractive investment opportunity for you.
It would be great if you could reconsider your policy, or at least make an exception for what we are doing, because it helps entrepreneurs and is awesome.
Founder & CEO