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The Founder Institute starts in Boston in two weeks with the first of what is planned to be a twice yearly accelerator for startups. According to CEO Adeo Ressi, it almost didn’t happen.
A four-month program with a unique shared-equity structure, Founder Institute provides weekly meetings with mentor CEOs on topics designed to improve company-building. Founded just last year, the initiative has since run programs in Denver, Paris, San Diego, Silicon Valley, Singapore and five more cities.
Boston would have come sooner on that list, but for some reason, Ressi’s plans for the Hub were slow to get off the ground, he said. “I know that some mentors have been pressured not to do it from their investors in Boston, for example – which I think is short-sighted.”
The trouble came from Founder Institute’s association with TheFunded.com, a website that lets entrepreneurs candidly review their venture capital backers. Ressi, a serial entrepreneur, is the founder of both ventures. “A lot of the venture firms didn’t fare so well in the (funded.com) ratings, so they don’t necessarily like the site.”
Former Patientkeeper CEO Stephen Hau will be a mentor in the Founder Institute’s Boston program this summer; he said he wasn’t aware of any VC pressure to stay away. Hau is currently raising funds for Shareable Ink, a company that has been stealthily developing software to convert doctor’s scribbled notes into electronic documents. He left Patientkeeper last year to help found the company.
“Part of the reason for pairing entrepreneurs with mentors is to share some of the lessons from the school of hard knocks,” Hau said. In health-care markets, the startup game can be especially challenging, he added. “There’s a different set of sensitivities and initiatives within the marketplace,” Hau said. “The bias and decisions are very different depending on the segment you’re marketing toward.”
Unlike incubators such as TechStars or Y-Combinator, which take small equity stakes in companies that participate, Founder Institute divvies up equity among all its participants. Each company that participates in the Founder Institute will contribute 3.5 percent in stock warrants into an equity pool that is shared among all the participants and mentors. The Institute itself takes about 15 percent of that equity pool for itself, Ressi said.
“It creates this ecosystem where you have all these founders rooting for each others’ success – plus you have seasoned mentors doing the same,” he said. “That changes the ecosystem very significantly. I’m not a believer that startups are a zero sum game – that if I start winning in a segment that I’m defeating the competition.
The institute doesn’t provide office space.
Each company will also pay a fee to participate. The fee is variable, depending on the distance mentors have to travel. The Singapore program cost $2,500. Ressi said the Boston program will likely be closer to $500.
Like the Anything Goes Accelerator Lab, a startup incubator at Cambridge Innovation Center just announced by angel investor Bill Warner, Founder Institute will not vet companies based on their business plan. Rather, it will focus on attracting high-quality startup teams with ideas in a variety of industries, relevant to the mentors participating in the program, Ressi said.
The average age of a participant is 37, he said. About 20 percent of the participants have now raised money from outside sources, including federal grants and angel investors. No one has yet raised institutional capital, he said.
Ressi plans to run two Founder Institute programs each year in Boston, with the goal globally of working with 1,000 startups a year. “One nice thing about running programs simultaneously over the year is you are constantly able to iterate,” he said. “So Boston will be the best program yet.”
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