UK startup accelerators take matched service charges on top of invested capital? • Hacker News Board

Re: UK startup accelerators take matched service charges on top of invested capital?

#21

Post by thom » Thu, Mar 12, 2015, 4:50 PM UTC

This is commonplace. You may also find that you have to register for VAT and claim that back on the service charge to get the full amount you're expecting. It's pretty much a standard part of the Jon Bradford mentor-led accelerator startup kit, which has spread pretty far at this point.

Only you know if it's a deal you can stomach.

Re: UK startup accelerators take matched service charges on top of invested capital?

#22

Post by helen842000 » Thu, Mar 12, 2015, 5:20 PM UTC

Yes, I took part in a UK incubator programme. It was only seed stage investment but even still, a portion of the funding was taken by the operators for office space, mentors etc.

Re: UK startup accelerators take matched service charges on top of invested capital?

#23

Post by fsk » Thu, Mar 12, 2015, 11:25 PM UTC

pc86 wrote: post #18

fsk wrote: post #9

Earlier quoted context omitted.

If you invest $100k in exchange for $25k services purchased, you now have $25k revenue. If your business is valued at a price/sales ratio of 20, your business is now worth $500k.

> If your business is valued at a price/sales ratio of 20 How is that multiple even close to right? Everyone I've ever talked to says 5-10 is more realistic, and the push-back you get grows exponentially as you approach 10.

It depends on what kind of bubble you're in, and how negligent your investors are regarding due diligence. Obviously, if you invest $100k in a business in exchange for $25k services rendered, that isn't $25k of "real" revenue.

During the 1999 .com bubble, Yahoo (iirc) and some other companies invested in startups, in exchange for an agreement to purchase their services. That let the corporation pad its revenue, inflate its earnings, and with an already-high P/E ratio, gullible investors bought.

Re: UK startup accelerators take matched service charges on top of invested capital?

#24

Post by brudgers » Fri, Mar 13, 2015, 4:07 AM UTC

The only reason someone would take away potential runway from a startup that they are investing in is that they are running a lifestyle business rather than managing a portfolio of startups. One hit pays for all the overhead and then some. The experienced experts in startups play long not short.