We are startup and have a hardware product. We are both business guys, with no industrial design or logistics experience. The product was designed by 3rd party and logistics is later expected to be outsourced via Shipwire. There is this accelerator in our country that won't fund us, unless we bring designer AND logistics/procurement expert on board. However, the design is 95% complete and the designer work left totals only few thousands. After we launch via Kickstarter, we'll naturally hire logistics/procurement expert, but giving them both equity right now seems unreasonable. We are also in talks with some interested angels from other countries, that currently do due diligence, but haven't yet expressed such concerns. Should we skip the accelerator and focus on angels or should we listen to them and bring the people on board as co-founders? If we don't sign with angels and we skip the accelerator also, it'll be pity. P.S. Investment possibilities are very limited in and around our country.
You should never bring anyone on the team unless you feel they are awesome and will add value. I believe the first 12 team members will dictate the success of the company.
That being said, you can bring in team members and give them equity that vest over 4 years, so that there is no risk to your company if they don't workout. So if you feel you need the accelerator to be successful, do what you go to do to make it work, without loosing control of the product, direction or major equity (as you'll need it for future rounds of funding).
So if you can negotiate the terms to be entrepreneurial friendly from the incubator, and get their money - then do what you need to to to be successful ... even if they aren't happy - you're the entrepreneur, not them - which concerns me a bit that they are mandating you get people on your team that you don't want/feel you need.
Hope that helps.
Answered 11 years ago
First and foremost, I believe that team and added value is everything for an early stage startup. Every founding member should be an indispensable asset to your business.
With regards to bringing in other experts as co-founders, ask yourself why this particular accelerator would make such a demand. Can you think of a reason why they would not reassured by your proposal to bring in these experts as hires rather than co-founders? Have you validated your initial approach with people other than angels (e.g. successful founders of hard-ware based startups)?
Lastly, ask yourself what your company has to gain by going forward with this particular accelerator. Do you feel they represent a unique opportunity that you could not find elsewhere? If so : see if there are ways to address their concerns in ways that that would be acceptable to you (e.g. appropriate vesting schemes that would protect your interests).
Answered 11 years ago
If design and logistics will be central to your business' long-term success, it will make an investor more comfortable to know that those key players have some skin in the game. But, finding a co-founder quickly just to satisfy investors doesn't mean you'll choose the right person, which is more important.
What about finding the employees you intend to hire after funding, and beginning to build a team now? If investment options are limited, work with the accelerator to craft a decision that satisfies you both. If you believe investors will be more abundant, pay to finish the design yourselves, launch on Kickstarter, and then weigh your options again later.
Answered 11 years ago
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