We are 4 tech guys that have almost a MVP for our project, would it be good to apply for an incubator?
We are working at our MVP (we can develop app, server & graphic ).
We got a business model but no business plan because we don't have a marketing specialist.
There's one incubator program that will start in 2 months, but we don't know if we have to apply. The problem is that we have a lot of opportunities to talk with VCs, even in other countries, in these months but we need time to refine our idea and MVP.
The incubator ( enl*REMOVETHIS*abs.it )seems to offer us a dynamic environment, mentoring, a starting seed and will help us building the business & marketing side of our project.
The seed could be used to speed up development and to build a small user base.
On the other side:
- It requires us to stay with them for six months
- We don't know how the seed will be handled, if they will be likely to give us money to do some of the things we want, like trips to other investors.
VCs opportunities are big:
- We have more than one strong contact with guys that worked with ventures before
- We can aim to a bigger seed due to our MVP and contacts (they're also marketer).
However, we have been warned that those VCs are very difficult to convince, and we fear that the work required to refine idea, develop MVP & maybe a beta, strong business plan, can be too much (talking about time ) for us.
What is the pro and con of an incubator? Do we need to stop for 6 months from june and take the choice of the incubator or work for the presentation to the VC? And if our idea become old in that time? Can we handle it by ourselves?
Getting Started Incubators Investors
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Which is the incubator? Without knowing that it's hard to give you an answer as to whether it's worth it. The very best incubators (Y Combinator, TechStars) are probably worth it. The worst incubators (won't name names) are certainly not. The vast middle are only worth it if you are sure that they have something that you need. – Joel Spolsky 11 years ago
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@JoelSpolsky It's an Italian incubator (sorry I didn't say we're all Italian.). It's going to offer us a 6 months plan, giving us facilities, about 30k cash, plus mentoring and business plan help from its internal team. Currently there are about 15 startups under its hood, and some of those is going really well, gaining international awards. It's based in Rome; on the website ( enlREMOVETHISabs.it )there is a resume of their activity. – Leonardo 11 years ago
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Do you really need funding? Why not launch your product and try to get customers, then reevaluate. If nothing else, you'll be in a better position to get funding once you have traction, and even better you may not need to. – Joel Friedlaender 11 years ago
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@JoelFriedlaender Our product is a social network app, so we need money to launch events and _gain users_, furthermore we'll need to hire someone to refine our MVP and bring it to the stores, cause now we think the app is too _rough_ for production. (Looking for advice here) – Leonardo 11 years ago
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@Leonardo if you can't build a MVP with 4 of you then I think your scope is too large and not really a MVP. As for money to get users, there are a lot of ways to get users, they don't all cost money. You might find launching and getting customers is a much better way to spend your time than an incubator or looking for funding. If it doesn't work out, well at least you launched, you had to do that anyway. – Joel Friedlaender 11 years ago
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Sounds to me though you are missing the point of a MVP. – Torsten 11 years ago
1 Answer
While not everything, the most important aspect in my mind is equity.
VCs: The general rule is the more risk they take the more equity they consume. If your idea is still pre-MVP I wouldn't even consider it. Even if you were able to get a VC to give you money the terms are going to be far from favorable. I would take this option off the table for now.
Incubator: They vary widely in the amount of equity they take and the capital/resources they offer. If this will be the difference between you guys being able to get to and test your MVP then you should do it. If you can finish and test your MVP on your own then maybe it's worth doing that for 6 months and skipping the incubator all together.
I would do my homework on any Incubator/VC you are considering. Contact startups which have gone through them before, look at the people involved (can they help your startup?), and most importantly look at your team. Decide whether you can build/test/learn on your own or if having an incubator or VC applying pressure/connections will help.
There are successful startups which have come out of bootstrapping, incubators, and VCs/angels. Which path is right for your idea and your team?
Angels, Incubators, Venture Capital and Crowdfunding… Incubators or Investors?
