How much does it cost to build an awesome tech startup now? That is a key question for StartFast as we increase our investment amount in our chosen companies for 2014 to up to $100,000.* A recent blog estimates the price tag to design and develop exact replicas of some of the hottest products out there today (e.g. Instagram, Uber, Facebook, Pinterest, Shopify) as low as $50,000. Startup founders earning “sweat equity” can bootstrap their ideas into reality for much less. StartFast’s increased investment gives the startup the additional money needed to build an audience of thousands of users, not just the application itself. Using the lean startup approach, each company builds a prototype of their product, inexpensively and quickly tests the market response to it and experiments until they get a clearly positive response from the market. This approach gives the startup and its investors evidence of success before making larger bets.
Increasing the amount of StartFast’s initial investment accomplishes three things:
- We attract the best companies. We have a world-class program, world-class mentors (many in common with TechStars including Brad Feld), and a hands-on managing team with more success and experience than almost any other accelerator in the world. We believe that offering more money will further increase our success rate.
- Startups get a meaningful capital infusion. Even if a startup already has a product, revenues and has raised some capital, $75,000 might enable a key hire, fund an online advertising campaign or enable a pivot. Combined with the mentor connections, coaching, and access to follow-on capital, StartFast is now even more of a win.
- StartFast companies have more chances to succeed. With more cash, each startup can test a greater number of iterations of product, market and business model to find a successful combination before running out of money. $75,000 might fund 10-15 or more product/market experiments, greatly
increasing the chances of a startup finding a way to win.
Is our investment enough by itself to build a startup from idea to awesome? No. It certainly takes more than that. StartFast is prepared to lead follow-on financing rounds for some of our companies. Our initial investment is enough to prove that your team has what it takes and that there is a large market that cares enough about what you’re doing. Follow-on investment is not guaranteed, but if you do prove that you have something meaningful, we’ll put more money behind you and invite our investor friends and extended network to join us in providing the next round of capital (as we’re doing for SwipeToSpin).
We love startups and entrepreneurs and we are truly grateful to be able to devote ourselves to helping them succeed in the grandest scale possible thanks to the steadfast support of our sponsors and investors. Thanks to them, the deal just got a little sweeter and the chances of getting to awesome have improved.
* StartFast provides teams with up to $100,000 in capital on entrepreneur-friendly investment terms. $25,000 is in the form of a Common Stock investment, while additional amounts are made available on a convertible note basis. We guide, teach, coach, cheer-lead and lead by example. Program participants are surrounded by world-class mentors and gain significant introductions to prospective customers and investors.