> The program charges a $30/week to cover costs and participants must be located in the San Francisco Bay Area. Sidepact takes a 1% equity stake in companies from companies formed during program upon incorporation.
I would have thought that paying the fee would have been enough. A one percent stake seems a bit ... I don't know. They aren't investing or anything, right?
If they can make connections better than I can on my own... if they can, say, evaluate and help negotiate a partnership with a business person better than I could and/or provide good ongoing advice and connections... or if they provide a prestigious credential, it's cheap.
Of course, I don't know if they can provide any of those things not worse than I could provide them myself.
I do think the fee alone would be too low, unless it's just a social club. And... if the founders fail to convince people of the above, that sounds like it could be a good way to take it.
The equity is also there to ensure that the organization has aligned incentives. From our conversations with people that have just a desire to start a company, but may lack the experience, team, or social capital to do so, we believe the equity stake asked for is reasonable.