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Comment by raheemm | Hacker News Reader

From the comments - "Did I read that well, "6,000$ per founder"? What is that for, for buying toilet paper ? And they take 6% of your company? Excuse me but this is laughable." - totally agree!

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Snarkiness aside, it's a fair point. I'm a solo founder considering applying, and was wondering if any TechStars alumni can speak to this.

Watch this video: http://vimeo.com/14286740, you'll see Emily Olson, a TechStars Alumni, discuss whether such programs are worth it (together with alumnis from other incubator programs).

I completely understand how scary it is for a first-time entrepreneur to consider such programs. The value is not obvious for beginners, so they tend to focus on the perceived low valuation (6% of your company for $6K is not valuing you much!).

But everyone who has been through such a program will tell you that the valuation (or lack thereof) is completely irrelevant. By becoming a Techstars alumni, you earn a label and a network.

Your average angel for instance is inundated with pitches from entrepreneurs. They need to apply a filter. Do you have paying customers? Come talk to me. Are you a Techstars alumni? Come talk to me.

You can spend 10 years of your life build your own network of connections. Or you can be selected by one of those incubators and jump ahead of the line. How much is that worth? Ask the guys at Udemy, they just raised $1M from top angels. Two years ago, no one would give them the time of day.

At the point that most of these companies are getting funded, valuing their 'idea' (and it isn't much more than an idea at that point generally) at 100K is rather generous even, so it isn't a horrid idea.

Techstars hosts a series of vlogs called "The founders", often compared to a reality show, where you can see more of how things go: http://www.techstars.org/thefounders/

The last season they showed Boulder team, which had their demo day last month.

Funny fact: about the videos being compared to a reality show, the idea actually came from Hollywood, even though they produce it all by themselves (well, they do have Rackspace backening them...). Brad Field tells more: http://www.feld.com/wp/archives/2009/06/the-techstars-story-...

As long as it's 6% of common stock, and therefore involves no special rights and therefore no loss of control, and as long as your startup will need to eventually raise more money, TechStars is giving you a bargain.

Raising is hard and quality advisors, warm introductions to investors, and simply being vetted and selected from a large pool of applicants will improve your chances of success (and therefore the valuation of the 94% of stock you retain) a lot more than the 6% of common you're giving up.

Pros and cons aside, it's what the market will bear. Seed programs like TS and YC are getting/building quality entrepreneurs that are building real companies and raising additional funds. Why would they pay more?

The initial momentum that these kinds of programs provide is huge...you're right 6% vs. 0% is a big difference but so is an actual company vs. one that might never have been.

These deals are structured to lock gullible startups into a funding structure that returns the most amount of money for the "angel" investors for the least amount of risk. Obviously $6000 isn't enough to run a startup for very long (it can take years to build a successful company), and pretty soon the founders will need to ask for more money, and give up more equity in return.

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