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Accelerator Proponents Discuss New Startup Work Models

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Said Gilchrist, “The mentors for my educational accelerator are people who have started companies that have been acquired, people who have  made sales to the schools. We have education experts; we have technology people.”

At an accelerator, everyone’s incentives are aligned for a for-profit relationship or the promise of one. People are more focused on turning these companies into profitable entities. Entrepreneurs can build relationships with future investors, employees and service providers, Gilchrist said.

According to Gilchrist, the equity deals for accelerators vary. Investors receive 6 percent non-diluted (they own 6 percent of the company forever) or between 10 percent and 12 percent on a common-equity basis, whereas investors cash out with all the other common stockholders. Casabona said TechLaunch’s investor group provides $18,000 in cash in two tranches and takes 10 percent in common equity. Investors hope that by investing in 10 companies they will find one that will “hit a home run” and one or two that will give them their money back. The potential is to make three or four times their money.

Gilchrist said Socratic Labs will follow a slightly modified business model. It will run longer — 14 weeks — and the labs, because they are education-based, will have more of an educational component. There will be lessons provided by computer scientists, educational policy experts, UI/UX experts, brand management consultants and many others. Mentors will meet with participants to help them determine which elements they need to focus on. “There is no underestimating the relationship that can emerge between a great mentor and a great company when they are well matched,” she added.

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