TheFunded Founder Institute

Turning Founders into Entrepreneurs

NOTE: Related curriculum topics were consolidated on March 14th. Please click on the categories, such as The Idea and The Model, to vote on some of the newer topics as well.

TheFunded Founder Institute helps founders launch high tech companies through training, services, and company-building assignments, such as incorporating the business, filing provision patents, and setting up the books and records. The Institute will offer four month programs, called semesters, initially in the Bay Area and then expanding around the world. The program participants, the founders, will be put through extensive training in weekly sessions overseen by mentors, consisting of two seasoned CEOs and one domain expert per topic. Session information will be made available online, as possible, allowing remote founders to participate. The driving beliefs behind the Institute are that (1) great founders are often overlooked by the current entrepreneurial ecosystem and that (2) innovative startups have a dramatic positive effect on the global economy. Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. Helping smart people start new companies should, in fact, help the economy.

Upcoming Semester
Each semester consists of 14 to 18 sessions and will have a theme to help screen applications and influence the session content. The 2009 Summer Semester theme is ‘Overcoming the Downturn! Building Companies that Produce Revenue.’ The application process will begin in mid-April for the 2009 Summer Semester, running from May to August in the Bay Area of California. Applications will be taken online at www.founderinstitute.com.

Founder Selection Criteria
The Institute is looking for passionate people with a vision. Everyone is invited to apply, including both new and seasoned founders alike, as well as founding teams. The sessions are held in the evening and on weekends, allowing founders to maintain critical employment or freelance engagements if needed. The specific selection criteria for incoming founders includes: (1) having a reasonably well articulated idea and a passion to build something, (2) having no formal incorporated entity yet, (3) focusing on a high tech or innovative sector, including biotech, cleantech, and information technology, (4) having reasonable training or domain expertise, and (5) passing basic employment-style background and reference checks.

Mentor Selection Criteria
The Institute recruits as many as 25 CEOs of successful startups with relevant experience for the planned sessions. The mentor CEOs will use operating experiences, information from TheFunded.com, and assistance from domain experts to run sessions and to provide company building assignments. The Institute strives to establish long-term relationships between the founders and the mentors. In exchange, mentor CEOs will be provided with a share in the upside generated from all the companies started in the semester, and the size of this share will be based on a performance evaluation of their mentoring.

Program Economics
Participating founders that get to the point of incorporating a startup will contribute warrants in the new company to the Institute. The warrants will allow the Institute to purchase a soon to be announced percentage of equity at fair market value, as determined by the first seed, angel, or professional round. In order to encourage collaborative company building environment, the Institute will split the warrants from a semester between the mentors, the other founders, and the institute itself.

Investment
The Institute will introduce founders to prospective top-rated angel and venture investors throughout the program with coaching and assistance from experts. When the founders agree that a particular startup is ready, the company will have have multiple opportunities to meet with investors and raise the right amount of money at a fair market rate. The Institute will then co-invest with external investors if the situation is mutually agreeable. In order to keep the application and attendance fees as close to zero as possible, the Institute will recoup some nominal expenses once a qualified investment is closed.

Please contribute to the curriculum of the upcoming semester by voting and commenting on this Topicki. Thanks!

NEW TOPICS:

• 6M4Nlb rymrBR trp6nP NEW COMMENTS:
  • Revenue: How to get it. How...
    
  • Intellectual Property: Prac...
    Re: Cheap Patents
  • Intellectual Property: Prac...
    Cheap Patents

This answer relates to B2B product/solution:

Talking to an unknown company about an unknown product with unknown support or longevity is not going to get you anywhere.

You need to start with the people that already know and trust you. Ideas include:
– Former customers
– Former colleagues
– Former Professors (especially business school)
– Former classmates
– Former partners/resellers that you have worked with

The ideal situation is to get a first customer that is willing to invest in you, if you invest in them (not so much money, but time). Call it “co-habitation” if you want. There are many good examples where the start-up team basically camps themselves inside the first customer’s office and works collaborative for the first 6 months or so.

In this case, the customer provides:
– REFERENCES. This is the most important. They must agree to provide themselves for reference calls, reference emails, reference visits and allow you to write a detailed case study about what you did and what it accomplished
– Revenue (at least enough to pay the bills). Having a good reference is more important than getting 20% more revenue in the initial stages. You are in this for a big win for the long-term, not for the monthly “day job” salary.
– Advise. This is critical. The customer probably has more experience in that space than you do. Their insight and advise is critical to creating a product that others will want too
– Infrastructure/bandwidth/hardware/office space: Depending on how much funding you currently have, you can rely on your first customer for many things which will have no incremental cost to you, but will be of great value to you

The thing to balance, is the amount of customization that the product has. Always keep in mind that this product needs to be attractive to a broad range of other customers too. Therefore it should be easy to change the variables/assumptions/GUI/language support, etc.

Hope that helps,
Jeremy

Where do i sign up? With the apparent collapse of the MBA concept (see recession and who caused it) this is the type of institution or thought that should be replacing it.

Should trademarks also be included in this section. They are cheap and provide some protection.

I hae heard that the provisional patent route is the way to go because it gives you time to
get out there without having to spend a bundle on the full patent process.

If a patent attorney presents this topic, the conclusion may well be that patent filing is the way to go. It’s hard to find someone who has an unbiased position.
Alternatively, real entrepreneurs with experience on how patents affected their life could be good (actually, I can contribute to that, having been sued for infringment of one of my own patents…).

@Keith: It makes sense tol add trademarks and copyright issues. Excellent point. The goal is to keep costs down, too.

@Alain: Agreed that not every business needs patents, but all founders should understand them for better or for worse.

I’ve heard that a cheap way to get a valid patent is to file in New Zealand which is much less expensive than in the US, but there is reciprocity between New Zealand and Australia, which also has reciprocity with the US so that a valid NZ patent is enforceable in the US. Is that true?

from an IP consultant friend:
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“never heard it before. monitor almost every patent case in the US, never seen any patent other than a US patent try to be asserted. goes against the fundamentals of US patent law (must file in US before applying anywhere else or patent unenforseable). would violate department of commerce export controls as well as department of defense export control laws. even if one was to file in New Zealand first, they would still need to get a related US application which would cost just as much. I have never read of any process or rule or mechanism to grant anyone the ability to assert foreign patent rights in the US as if the US had indeed granted those rights – New Zealand or otherwise. "
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i trust him, so am not optimistic about the prospect of using the method you described.

Make sure you cover somewhere the advisors and the rainmakers of your industry. They are not part of the normal full-time hires, but they can be very important. An advisory board, or just informal contacts, when staffed with reputable people, will make a huge difference. How you manage this while you grow from unknown (no one will talk to you) to success is tough. How you kick out advisors that aren’t performing or aren’t growing with your company…

This is a great point. Thank you!

More than a “Business Plan,” how do you get from point A to point B? How do you adjust your plans on the fly. Debunking the “Business Plan” myth.

In the United States, the investing public is protected by the Securities and Exchange Commission. While the SEC seems to have been a bit asleep at the switch in several recent well publicized instances, the fact remains that if you’re raising equity capital from more than a small number of investors (35) you need to sell equity only to qualified investors, basically rich people. Many start ups run afoul of these rules and others in their initial quest to raise money. Following the rules is easy, just research a bit on the web and you should be fine.
Here’s a useful link for unfamiliar terms:
http://mba.tuck.dartmouth.edu/pecenter/resources/glossary.html

How does one’s team and background lengthen or short-circuit typical funding life cycle stages? How do factors like economic climate, competitive landscape, and non-market factors influence this?

What stage to talk to angels, if your product is going to take significant time & money to get to prototype stage? The time it will take to develop a product that is good enough to get companies/users to use it instead of their existing solution is LONG. That requires funding to sustain the company to that stage. But Angels are going to be reluctant to fund something without seeing a prototype. What to shoot towards before talking to Angels?

College needs a major like this.. Maybe Its because I don’t go to the right school, but Ive dreamed of taking this course list. I hope this project gets running soon, I want to apply so badly!!

This thing should have required reading, like “startup” or other classic entrepreneur story. There is a lot to be said about personality, leadership, etc. Great topic.

Startup founders will find themselves dealing with players who have much more experience in negotiation. What are the key things to keep in mind when dealing with those who are trying to get as much as they can from you and your business? How to play to your strengths, communicate effectively, evaluate the true value of a proposition and know how far to take your asks.