An interesting idea -- although this bit: "So every company in the class is co-owned by every other company." had me instantly picturing someone sputtering, "but, but, but, SOCIALISM!"
Seriously, though, with that setup, isn't there an incentive to only work as had as necessary to get into a class, and then hope one of the other entrants strikes it rich, so I can take my little cut? Is that going too negative?
We've all had projects that we were immensely interested in for a while, but then put had to put on the back burner, and ultimately dropped. How do you ensure you're not selecting 100 back burner-able projects? For an angel, is the draw of casting a wide net bigger than the risk of no one really being that committed to the work?
One other thought, while forming a company/s-corp/llc might not be that hard these days, since you're essentially making a call for 100 "side project startups", you might want to add tools to automate the forming-a-legal-company side of things.
Yes there will definitely be some duds, but why should the entrepreneur be expected to identify a product niche AND risk everything for it AND be able to fully validate the business concept enough to make big life decisions about it?
Dandelion is to remove the stasis that having a good day job creates. We provide vetting, validation, help with proof of concept, find out if the rubber meets the road, etc.
When you're ready to pitch to an angel your pitch will be 100x better, and you'll know what you're getting into, and if you met some people whose ideas didn't pan out, you now have a pool of potential co-founders or early hires who you know are looking for an early stage idea to get behind.
In today's market, having a talented team ready to start is the #1 thing any investor should look for before investing serious money. Dandelion helps exceptional people seriously consider doing a startup, and helps build the early teams that make the company a good angel investment.
And yes, you'll get a cheap/fast way to formalize the company when the time is right.
Is it wrong that the first thing I though when I saw that page was 'Twitter Bootstrap'? Think I need to get out more...
Seriously though, it's an interesting idea, I'd say the copy on the homepage is a little misleading as it lead me to believe this is something that is already happening.
My only query from a cursory glance is: what is my incentive to give a large steak in my company, seems giving more away benefits everyone but me
Well, true, but it's reciprocal. It benefits everybody else, who will presumably attempt to rally around you and/or share expertise when needed, maybe?
Similarly, there are 99 other companies you will be invested in as well, and you will naturally want them to succeed.
Everything has to start somewhere. You've correctly identified bootstrap :)
You may not have any incentive to give up any of your company. The idea is to allow for companies/ideas at various stages to participate in the same class without it being about negotiating percentages, b/c that is not what's important at this point. 100% of $0 is $0.
It's absolutely a side project for the founding team at this point. That's the secret sauce that lets us recruit from the best players in the industry to help advise the class.
With so much great opportunity out there, the most valuable thing we (creators) have is our time, and weekends belong to us. So let's do something amazing with that time that has tremendous upside.
I can't help but notice you side stepped most of his questions. OoTheNigerian asked about YOU and what YOU'VE done. You hardly said anything about yourself and keep alluding to this "founding team" which you also don't give any details about.
The problem is credibility. How are we supposed to share our ideas with you and do business with your organization if we know nothing about who is behind it. Where are your credentials? How does this being a side project for the "founding team" equal your "secret sauce" to recruiting the "best players in the industry" to advise your companies? If we know nothing about you, and neither do your great advisors, what is their incentive to even be involved, let alone companies applying to your class?
Not to mention that with Dandelion taking 50% equity and your being required to give at least 1% equity to your class, you automatically start out owning less than half of your own company—and if you have multiple co-founders you personally know (verses the ones in the class) and share equity between them, you start off owning a pretty dismal share in your own venture.
I know personally I'm not very incentivized to know that if I have an idea for a product and I start a company through your incubator I enter the game already having lost at minimum 51% stake in my own efforts. I understand that you receive equity in other companies in your class, which is great for investment and money purposes if somebody else makes it big, but for would-be founders such as myself (especially early stage) we're more focused on building our own companies. I would rather have a larger stake in my own efforts than a smaller stake plus small stakes in 99 other companies. I don't think that makes me a selfish entrepreneur, either.
Edit: I notice you added your "More detail about the team is coming." in between when I started writing and when I posted. I would suggest that your credibility would have been helped by having the detail available from the beginning. As the cliché goes, you never get a second chance for a first impression. Still, though, I would be interested to read about your team.
Maybe the wording isn't clear. But Dandelion only gets half of whatever percentage a founder agrees to give up, which may be as little as 1%.
Please don't submit the application if you are not comfortable (we'll make some improvements to the site in the near future which ought to help). I talked with a lot of people about Dandelion at startup school and the response was pretty overwhelmingly positive, so I decided to post a link to the home page to HN in its current state of completion and polish.
Obviously full trust and transparency is essential. So feel free to email me and I'll give you a call or something to fill in any details (this applies to anyone who is interested).
Obviously the page of the site relating to the founding team is crucial and so I am (appropriately) reluctant to post it in haste.
Ah, I see. Maybe I did read it wrong. Sorry about that.
Still I would think that credibility and trust is hampered by lack of information about the people behind it. I don't doubt there is more to the plan/idea than is represented on the site, but unfortunately when it's a flat website of "Coming Soon" you can't really find answers to your questions. I probably would have stated on the front page that more information is coming soon. Like someone else said I had the impression that it was already established and operational and I had only just heard about it. The copy is definitely written in this way. Like most people I clicked through the tabs for more information and was disappointed seven times in a row.
Anyway, </whine>. Good luck with it! I'll keep an eye on it to see the details that come out. :)
OK thanks for the constructive feedback. I consider the overall feedback from HN to have been extremely positive and will incorporate all of the suggestions.
The concept has a few chicken/egg issues with ramp up, but why let that get in the way :)
Just a basic comment. If you dont' have content for a page, don't put it in your navigation until it is ready. No one will be disappointed about a page they don't know exists. Coming Soon... is very 90's
It could have but the message didn't tie into spurring someone's imagination. Perhaps if you had something interesting such a picture, illustration, or even brief write up of what you expect this section to become it would have allowed for the user to imagine the potential. However, most of these pages just show "coming soon" or "tba". In many cases this leaves the user slightly annoyed by feeling tricked into clicking a link that had no content.
An initial round for the class is typically between $250K and $500K, so between $2500 and $5000 per company.
So there would be 100 teams in a class (a team can be single person). Calculating from validation, say a classmate is giving up 10% (ceiling value suggested by YC) for $5000, that is 50000 in valuation. I wonder what pg would think on this.
If we are doing things as intended, the value add by Dandelion will more than justify the overall valuation being close to PG's recommended ceiling. And a founder can always request slightly different terms. It's not about the terms at this phase, one just wants to avoid doing anything that will hinder future investment.
"Messy" cap tables certainly have the potential to scare off larger investors (VCs, super angels) in the future. Lots of very small stakeholders (not counting vested employees) add to legal costs at each round, and VCs sometimes refer to them as "ankle biters." IMHO $5K is not even close enough capital to consider adding 100 line items to a cap table.
Okay, so I filled out the apply form on a whim, and there's not response to tell me that it went through. No confirmation on the site itself, no email, nothing. And a lot of "Coming Soon" on pages, I feel this may have been a bit early of a submission.
Who is running this and how is it in any way a good idea? If you're willing to give up control of your company for a measly few thousand, why not just take on some credit card debt?
[EDIT: fixed.] The graph seems to imply that low-risk investment are the way to go: the blue line is comfortably over the red line in the "low risk" territory. Of course, the graph is useless anyway, but presumably it should be useless in a "give us your money" sense.
@grandalf: If so, just remove the links and keep the nav structure. That way nobody can click the links, but they can see how the nav looks like when it's done.
Then I'm worried about you...
Read Lean Startup and BUILD out an MVP on your own. That's all this guy is doing -- doing it yourself will mean you don't have to give up ANYTHING.
I'm more than willing to trade a portion of the potential income for a whole community interested in my project's success. And since I would also own a fraction of every other project, if my own idea fails down the road I can simply leave it on hold and help the more promissing ones; it reduces risk not only for the investors, but also for the small guys.
For some people that's the right choice, for others it's not. By that logic, someone should also ignore YC, etc. It's a choice every founder has.... different strokes, etc.
Looks like we may have had an issue with the form earlier. If you submitted an application and didn't get redirected to the thank you page, please resubmit it.
Don't really understand on how much potential money you can get from this? You're saying a max of 250 k per class and each group will just get 2500 - 5000 max?
It's designed to be a very small round. Much like with other incubator concepts, the money is a formality. The nice thing about Dandelion is that applicants typically have a great day job that is paying their bills and living expenses, so 100% of dandelion's investment can go directly into the product.
How is the money a formality? I don't understand what Dandelion plans to add beyond the money. The pitch suggests that this is for people looking for 2.5-5k for design, marketing, etc. It makes no mention of mentorship or any other benefits.
How long do you expect the process from application->funding to be? If its longer than 8 weeks I would rather raise my 5k elsewhere(like with a credit card). Maybe set a time limit on how long a class can exist before it is considered full(even if its less than 100 companies).
Why 100 companies? Is it just a nice, round number or is there thought behind it?
Those are excellent questions. The best way for us to address them is to update more of the copy on the site. The biggest thing we help with is validation, but we also help create winning teams, early hires, etc.
The number 100 is intended to be large enough to make the investment truly diverse, large enough to attract a wide variety of talent and experience in each class, but small enough to be filled relatively easily. There is also no harm in applying multiple times or in scrapping a project and joining someone else's or submitting another idea. From the standpoint of the investor, it's an investment in people, and the specifics of the structure address the realities of risk aversion, talent acquisition, etc.
If you're ready to go to an angel, then you're already sure that you're ready to drop everything to do your startup, so maybe you should.
Dandelion is for people who have a great job, an idea they think has potential, and would like to create the best possible pitch to angels and convince themselves it's worth doing full time (not always easy if you have a great job). We also offer a superb way to find co-founders, designers, etc.
Seriously, though, with that setup, isn't there an incentive to only work as had as necessary to get into a class, and then hope one of the other entrants strikes it rich, so I can take my little cut? Is that going too negative?
We've all had projects that we were immensely interested in for a while, but then put had to put on the back burner, and ultimately dropped. How do you ensure you're not selecting 100 back burner-able projects? For an angel, is the draw of casting a wide net bigger than the risk of no one really being that committed to the work?
One other thought, while forming a company/s-corp/llc might not be that hard these days, since you're essentially making a call for 100 "side project startups", you might want to add tools to automate the forming-a-legal-company side of things.