Hi, just got an offer from accelator for our idea/project accelaration and Im quite dumb about how things work in financial side of things. Will we owe them 20k pre-seed capital if in case something bad happens and we fail? How its usually handled? Thanks! *its 15% equity deal I know it depends HUGELY on terms, but how does it generally happen among accelerators?
I haven't seen a deal structured this way. Usually they get 6-10% equity I exchange for some small amount of money ( ~ $25k ) and tons of mentorship. 15% for $20k seems high ( you are valuing your company at $133k ) but there might be more to it.
Accelerators are great specially for unknown founders. It gives them a fair chance of connecting to the people that well connected founders have access to and really get a shot at proving themselves.
The accelerator should have access to great mentors, investors and previous successful founders. It should also be vested in the success of the company ( thus the equity ).
If you sell them equity for the $20k, you don't owe any money if you fail. They get equity ( in very favorable terms ). If your equity turns out to be worth nothing ( I.e your company closes ) it's a loss for them and you but you should owe any money.
Best of luck!
Answered 9 years ago