I am toying with the idea of "startup as a service" meaning taking care of anything that is on a startup checklist. That is, taking care of things like incorporation, hosting, even tiny amounts of seed money (a few hundred dollars) so that in this case rather than hitting up family, a 19 year old founder can fail fast anywhere in the world by just building and trying to get traction on our "startup as a service" platform. In other words, making it absolutely, positively, free to start a startup and start getting customers. (With ourselves as investors if it starts getting traction, or, of course, they are free to move off of our platform if they want.)
The idea is that nothing should come between a founder and the idea/MVP. Nothing. my ideal cofounder would have considerable experience with legalities, experienced regarding terms (since it's our model), and potentially on board for this as a future source of dealflow (i.e. someone who wants a source of investments personally would be a match as well.). hit me up if you'd like to have this conversation.
Things that scale to 10,000 founders:
-> Incorporation process with standardized terms
-> Docker containers with hosting (that we host) that we can look into and judge actual traction (to keep founders from wasting any time whatsoever on a seed round, no matter how disconnected they might be - traction unlocks it automatically, they should just build, build, build)
-> collective service agreements on behalf of all our founders, so that we can take care of service integrations. For example giving all our founders stripe integration so they can start billing for whatever they put up.
-> Basically everything that can be taken off of a startup checklist, when someone is first starting out and doesn't want to be distracted for weeks with business and service arrangements that are not about building product!
-> Streamlining a PR process by having key contacts get a steady stream of stories of traction by our founders.
I have been mulling over a similar idea. I was thinking about including the creation of an MVP as part of the offering to encourage non-technical founders to get involved.
However, the financial model I had been thinking about was that I would charge the founders at cost for time and materials for all the initial set up. With scale you could do it much faster and cheaper than they could and would reduce their risk. Max implementation time frame of 2 months. Hard limits on scope creep/late changes. Use frameworks to make implementation as fast as possible. Probably cost the founders $20k - $30k. You want them to pay up front to make sure they are committed to the project and aren't just wasting your time. I would head towards having standard code bases for various types of start up models.
Retain 20% equity in the start up that you've helped create.
Worst case scenario, the start up goes nowhere and you've covered costs. Best case start up does well and you've got 20% equity.
It's a good deal for founders because they reduce their risks, they get speed to market and they have access to a development team for further development if they get traction.
I understand what you are saying and I agree that our visions are very different :)
What would be your financial model? Bear in mind that I'm in Australia, so $20k - $30k to me might be something completely different to you. From my perspective, if you can't find $20k, you aren't serious about your business. Also, in my model, $20k gets you to a point where you have a business that you can market, run and start taking orders.
AFAIK, YCombinator doesn't build you an MVP, or provide you hosting or do all the items on your start up checklist, so I don't think this is a fair comparison.
As for valuation, at the point that you walk in with an idea and nothing more, I think your idea is worth about $1. Valuation at this stage is fairly meaningless. They are paying $20K at cost for the services I'm providing. I forgo making a margin on these services in exchange for 20% equity. So, in effect we share the risk. I reduce my risks by making sure I at least cover my costs. They reduce their risks by knowing they'll get to MVP stage without any hassles caused by their inexperience or lack of technical prowess.
Maybe 20% is too much equity, I don't know. What I do know is that I want a potential piece of any large upside I might help create. That's my price for forgoing margin on the initial services I provide.
Yes, for the model you envision the marginal costs should be low. However, you are looking at requiring a very long runway. How long do you think it would take before you start making money? You've got to include the time not only to launch your own start up but launch the first customer's start up that makes money. Considering a potential 90% + failure rate, you might be waiting a while. This is why I think you need to at least try and cover your costs.
> The idea is that nothing should come between a founder and the idea/MVP. Nothing.
I think those barriers that come between founders and MVP are important obstacles to learn to overcome. IF you can't get an MVP off the ground, with all the distractions like incorporating, how the heck do you hope to survive the real challenges of a startup like figuring out how to make payroll when there is no money in the bank.
Maybe i'm wrong, but something about removing these barriers strikes me as self-defeating, and would likely lead you on a journey with lots of folks who never should be doing startups in the first place.
It's not like the barrier to entry is so big right now...but your belief that "nothing should come between a founder and an MVP" is fundamentally flawed. A better mantra would be, "A good founder wont let anything get in the way of launching an MVP."
The idea is that nothing should come between a founder and the idea/MVP. Nothing. my ideal cofounder would have considerable experience with legalities, experienced regarding terms (since it's our model), and potentially on board for this as a future source of dealflow (i.e. someone who wants a source of investments personally would be a match as well.). hit me up if you'd like to have this conversation.
Things that scale to 10,000 founders:
-> Incorporation process with standardized terms
-> Docker containers with hosting (that we host) that we can look into and judge actual traction (to keep founders from wasting any time whatsoever on a seed round, no matter how disconnected they might be - traction unlocks it automatically, they should just build, build, build)
-> collective service agreements on behalf of all our founders, so that we can take care of service integrations. For example giving all our founders stripe integration so they can start billing for whatever they put up.
-> Basically everything that can be taken off of a startup checklist, when someone is first starting out and doesn't want to be distracted for weeks with business and service arrangements that are not about building product!
-> Streamlining a PR process by having key contacts get a steady stream of stories of traction by our founders.