Greenstart is a San Francisco-based startup accelerator focused on helping entrepreneurs build successful companies at the intersection of cleantech and IT. So far its offer to entrepreneurs included mentorship, assistance with product design, legal help, introduction to investors and $25,000 in seed funding. Earlier this week this offer has been upgraded with an additional $100,000 convertible note that will be available to entrepreneurs upon joining the program. This offer makes Greenstart one of most generous accelerators in the Bay Area, which seems to have now not just a high number of entrepreneurs, but also a growing number of accelerators fighting over them.
Greenstart, as you could read in Phil Covington’s article on TriplePundit, not only specializes in the intersection of cleantech and IT, but also offers an in-house design practice (the first accelerator to offer one), led by David Merkoski, the former Executive Creative Director of frog design. Greenstart’s approach is a bit different as you can learn from its co-founder Mitch Lowe, who told TechCrunch that “we’re trying to make cleantech a little sexier in the investment community.” Now they’re also trying to make Greenstart a little sexier for entrepreneurs.
The convertible notes will be drawn from a $6 million fund, which according to Greenstart comes from a growing syndicate of leading angel investors, family offices and venture capital firms. This amount will cover the next 60 companies in the program, including the five current members. This additional funding, explains Lowe, “allows the startups in the program to stay focused on customer and product development instead of hitting the streets for investors. It should also help Greenstart attract interest from a much wider pool of innovative entrepreneurs for our upcoming programs.”
All together, Greenstart offers $115,000 to entrepreneurs who will join its 12-week program. In exchange for the program and the seed funding, Greenstart receives 5 percent common stock in the new start-ups. This is a pretty good deal compared to what other accelerators in the Bay Area offer. As I mentioned, the number of such places is growing, so now entrepreneurs can shop around before they decide which program they want to join. There are other factors to consider of course, like the specialization of each program and the people involved, but let’s put that aside for a second and focus on the cash.
Y Combinator for example usually invests $11,000 + $3000 per founder. So it’s $17,000 for two founders, $20,000 for three or more. This is in exchange to stock in the startup, from 2-10 percent of it, usually 6 or 7 percent. Another example is 500 Startups accelerator that invests from $25,000 to $100,000 in return for a 5 percent equity stake. And these are just two examples of a growing list including incubators, mentorship programs and accelerators that operate in the Bay Area such as I/O Ventures, Dogpatch Labs, KickLabs, AngelPad, RockHealth and Teens in Tech Incubator for the young entrepreneurs.
Just to give you a sense of how much this field of incubators/accelerators has developed in the last couple of years, even if you are an entrepreneur looking only for an accelerator specializing in the intersection of cleantech and IT you have options to choose from. One is Greenstart and the other one is Huston-based SURGE Accelerator, which also offers entrepreneurs a 12-week mentorship program. Their offer also includes $30,000 in cash. They don’t publicly mention what equity stake is requested in return.
Greenstart doesn’t count just on a generous initial funding to attract top entrepreneurs. It also offers an attractive comprehensive package that includes access to its network of 50 mentors, the Greenstart team and resource partners that promise to dramatically alter the start-up’s trajectory, like introductions to angels and VC investors to get more money.
The last item on the list is of course no less important as any entrepreneur will tell you, and to judge by the first start-ups that completed their program, these introductions eventually translate into further rounds of funding. According to TechCruch, of the initial four start-ups that completed the program, one is approaching the close of a Series A round and two are doing mid-six figure angel rounds closing this month (the last one is not yet in need of funding).
So if you are part of a start-up that works on expanding the use of clean energy or reducing the use of dirty energy and has software in some way, and you think Greenstart has an offer you can’t refuse, Mitch Lowe has one word for you – apply. He wants to hear for you. And actually the time to do it is right now – applications for Greenstart’s Fall 2012 program are open from until April 11th.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.