[scriptman]

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.

[logicallee]

I'm afraid we have radically different visions here, mine is an incubator/accelerator model, yours is a consultancy model. I've deleted the rest.

[scriptman]

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.

[scriptman]

It's a shame you deleted what you wrote. It was an interesting perspective and it challenged some of my assumptions.

I wish you the best of luck with your start up.

I am genuinely curious as to how an incubator/accelerator model makes money. Maybe somebody else can answer?