You know what I’m tired of? Rich guys launching ‘startup accelerators’ so they can rip off new startup founders.
Mark Hales and his Oxygen Accelerator concept are just another example. Here’s the deal: They offer you a £20,000 loan (not an investment – you have to pay the £20,000 loan back) in exchange for 6% of your company.
The reason why I know this is a terrible deal is because we just got a bank loan for £100,000 and we gave up exactly zero equity. The government in the UK is even incentivizing banks to loan by guaranteeing 70% of loans.
We boot-strapped the launch of Think Vitamin Membership with cash from our events and then used the bank loan to provide us with the working capital we needed to hit cash-flow break-even.
There are other options. Don’t believe all the hype you hear. Just because they have a decently designed site and a bunch of mentors, doesn’t mean you should take their money.
Not all accelerators are equal
The Oxygen Accelerator site compares their program with Y Combinator, TechStars and Seedcamp, but there’s a fundamental difference. YC, TechStars and Seedcamp invest in companies, not give them loans. The other difference is they offer mentors who have built successful web companies. The only well-known mentor for Oxygen Accelerator is Mike Butcher, and he’s a tech journalist.
I’m sure Mark has honest intentions, but that doesn’t change the facts. This is a rip off for startup founders who don’t know any better.