The Greenhouse<br />A different kind of incubator<br />
Goals<br />Establish a viable incubator in Central Arkansans where companies can focus on growth and competitive different...
Structure<br />Standardization is the key to providing a high service level while maintaining low overhead. Services are b...
Governance: Board<br />5 Member Board of Directors<br />1 Seat: Fund Manager (Permanent by Role)<br />2 Seats: Investors (...
Governance: Cohort<br />Cohort formation / Company inclusion:<br />Requires sponsorship from one GH board member<br />Requ...
Governance: Funding<br />Funding Events<br />Inclusion in program<br />At each graduation<br />Based on min/max range and ...
Community Development“Developing the Funnel”<br />Panels lead by Entrepreneurs<br />Partner with UCA & UALR<br />Develop m...
Incubator: Human “Resources”<br />Business Vertical Mentor<br />Expert in the business vertical the stat-up is targeting<b...
Incubator: Back-Office Services<br />Secretary for each company’s Board of Directors<br />Payroll: Leverage a standard ser...
Incubator: Legal Services<br />Standardized Legal Services<br />Corporate formation (Delaware C-Corp)<br />Board Action<br...
Incubator: Entrepreneur in Residence <br />A member of the junior/senior cohort<br /><ul><li>9 week semesters
Sits on Incubator board of directors</li></ul>Supports day to day operations:<br />Opens & Closes office space<br />Mentor...
Incubator: Physical Space<br />Open Concept<br />No Cubes<br />Shared Meeting Space<br />Open Desks and Work spaces<br />L...
Incubator: Open Technology<br />Wi-Fi Office (printers & resources)<br />Google Back Office <br />Email<br />Documents<br ...
Incubator: Cohorts<br />Cohorts are groupings of start-ups with the following characteristics:<br />Freshman/Sophomore/Jun...
Business Development<br />Mentors work to identify target customers early and develop relationships that foster early adop...
Appendix A: Cohort Structure<br />Level evaluated every quarter<br />Freshman (Year 1)<br />Working on prototype <br />Tea...
Appendix A: Cohort Structure<br />Junior (Year 1-2)<br />Growing customer base<br />Tweaking product and marketing materia...
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Greenhouse - Framework for an Arkansas Incubator

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This is a very rough outline for what a Central Arkansas Incubator might look like. There is a lot of missing detail, but it should help get the conversation started.

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  • Dustin,
    Amazing job putting this together.
    I think you were working a little to hard on your vacation.
    One thing that pops out at me is the Corporate Formation (Delaware)...
    This could put the incubator companies at a significant disadvantage when seeking investment in AR.

    Gravity Ventures for instance wouldn't invest in a Delaware C-Corp. I think FAF is probably the same way.

    Pretty much loved everything else though!

    I wasn't exactly sure how the cohorts share in each others' companies though??
    Do you basically just share with the cohort you are a part of?

    Until tomorrow.
    Ryan
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Greenhouse - Framework for an Arkansas Incubator

  1. 1. The Greenhouse<br />A different kind of incubator<br />
  2. 2. Goals<br />Establish a viable incubator in Central Arkansans where companies can focus on growth and competitive differentiators and avoid the resource sucking activities related back-office and fund raising. <br />Over the next 4 years fund:<br />10 Freshman Startups<br />5 Junior Startups<br />3 Sophomore Startups<br />2 Senior Startups<br />Establish a fund to support the above. <br />Delivery an above average IRR to all investors<br />
  3. 3. Structure<br />Standardization is the key to providing a high service level while maintaining low overhead. Services are broken into the following categories:<br />Governance<br />Community Development<br />Incubator<br />Cohort<br />Business Development<br />
  4. 4. Governance: Board<br />5 Member Board of Directors<br />1 Seat: Fund Manager (Permanent by Role)<br />2 Seats: Investors (rotating)<br />1 Seat: Entrepreneur in Residence (rotating)<br />1 Seat: Independent business advisor (rotating)<br />Board oversight:<br />Cohort composition (initial and ongoing)<br />Graduation from one cohort to next<br />Funding levels for each company in cohort<br />Ongoing fund formation and management<br />Approve profit distribution <br />Individual Company Management<br />Greenhouse (GH) board member occupies one seat on the board of each company <br />No more than 5 board seats per company<br />Companies must present quarterly performance summaries to board<br />
  5. 5. Governance: Cohort<br />Cohort formation / Company inclusion:<br />Requires sponsorship from one GH board member<br />Requires majority support from GH board<br />Cohort (Post-formation)<br />Company Transfers or late additions<br />Requires unanimous cohort approval <br />Requires sponsorship from one GH board member<br />Requires majority support from GH board<br />Graduation to next level (per company)<br />Milestone based<br />Requires recommendation from GH board sponsor<br />Requires majority GH board approval<br />Companies can commence individually (see above)<br />Companies not commencing to the next class can be held back (see above)<br />Ejection<br />Company does not commence with cohort to next class and…<br />Company is not accepted by another cohort<br />
  6. 6. Governance: Funding<br />Funding Events<br />Inclusion in program<br />At each graduation<br />Based on min/max range and company needs<br />Type of funding<br />Coverable Debt<br />Straight Equity<br />% Determined at beginning of program<br />Additional funding details (Appendix B)<br />
  7. 7. Community Development“Developing the Funnel”<br />Panels lead by Entrepreneurs<br />Partner with UCA & UALR<br />Develop media relationships<br />Classes & Seminars lead by members of the incubator’s junior and senior cohorts<br />Partner with the City of Little Rock<br />Host meet-ups & Tweet-ups<br />“Open” office hours (co-work space or just hang out)<br />Engage in social media <br />Twitter<br />Blog<br />Facebook<br />Comment on the blogs of others<br />
  8. 8. Incubator: Human “Resources”<br />Business Vertical Mentor<br />Expert in the business vertical the stat-up is targeting<br />Advises start up on features and functionality<br />Provides introductions to potential clients<br />Office Manager / Accountant (Paid Position)<br />Manages incubator resources <br />Manages the General Ledger for each business<br />Provides back-office services<br />
  9. 9. Incubator: Back-Office Services<br />Secretary for each company’s Board of Directors<br />Payroll: Leverage a standard service provider for all start ups<br />Banking<br />Use local bank who speaks “entrepreneur”<br />Provide a dedicated rep<br />Billing<br />GL<br />Healthcare: Partner with a provider to deliver a very basic healthcare plan (catastrophic coverage & not mandatory)<br />Taxes: Advice & Filings<br />
  10. 10. Incubator: Legal Services<br />Standardized Legal Services<br />Corporate formation (Delaware C-Corp)<br />Board Action<br />Standard forms <br />NDAs<br />Client Agreements<br />Employee Documents<br />Stocks & Stock Options<br />Notary Services<br />Lawyer in Residence (1 day a month) <br />
  11. 11. Incubator: Entrepreneur in Residence <br />A member of the junior/senior cohort<br /><ul><li>9 week semesters
  12. 12. Sits on Incubator board of directors</li></ul>Supports day to day operations:<br />Opens & Closes office space<br />Mentors Freshman Class<br />Coordinates community development<br />Acts as the “connection” to incubator services<br />Supports social media presence<br />Blogs & Tweets regularly<br />Reads & comments on the blogs of others <br />Photographs/Documents events<br />Engages local & national media (PR) <br />
  13. 13. Incubator: Physical Space<br />Open Concept<br />No Cubes<br />Shared Meeting Space<br />Open Desks and Work spaces<br />Lockers / Filing Cabinets for overnight storage<br />Conference Equipment<br />Games and Sodas<br />White boards (everywhere)<br />Centrally located Walking distance of: <br />Housing/Apartments<br />Restaurants<br />Parks<br />Pubs<br />Make the city a part of the story<br />
  14. 14. Incubator: Open Technology<br />Wi-Fi Office (printers & resources)<br />Google Back Office <br />Email<br />Documents<br />Calendars<br />Voice<br />Freshbooks Accounting & Billing<br />Available for check out:<br />Projectors and presentation tools <br />Booth / Trades show equipment<br />iPhones, Androids, Blackberries and iPads<br />
  15. 15. Incubator: Cohorts<br />Cohorts are groupings of start-ups with the following characteristics:<br />Freshman/Sophomore/Junior/Senior (Appendix A)<br />Fixed Size<br />Start at same time<br />Collectively share in 2-5% of each company<br />Meet regularly <br />Committed to mutual success of the cohort<br />Mentor underclassmen <br />
  16. 16. Business Development<br />Mentors work to identify target customers early and develop relationships that foster early adopters <br />Investors and partners commit to making introductions to local business partners<br />Local business invited to hosted events and mixers increasing exposure to start-ups<br />Investors and partners attend events on behalf of the incubator. <br />Where applicable: share sales and biz dev resources between cohort members<br />Lobby lawmakers to create incentives for engaging with local entrepreneurs and small business<br />Cohorts attend national events as a group. Examples include: TechCrunch 50, Launch, and SXSW<br />
  17. 17. Appendix A: Cohort Structure<br />Level evaluated every quarter<br />Freshman (Year 1)<br />Working on prototype <br />Team partially formed<br />Developing understanding of target customer<br />Pre-Funding / Pre-Revenue<br />Sophomore (Year 1)<br />Prototype Complete<br />Early Customer Adoption<br />Pivot?<br />Funding (Greenhouse)<br />Revenue (0 to 10% of CFP)<br />
  18. 18. Appendix A: Cohort Structure<br />Junior (Year 1-2)<br />Growing customer base<br />Tweaking product and marketing material <br />Approaching CFP (Cash Flow Positive)<br />Senior Class (Year 3-4)<br />Scaling product<br />CFP<br />Seeking additional investment<br />
  19. 19. Appendix B: Funding of Cohorts<br />Seed Stage (Freshman)<br />10 companies at 10K<br />5-10% of company<br />2-5% to cohort<br />Early Stage (Sophomore)<br />5 Companies at 10-50K<br />2-5% of company<br />Growth Stage (Junior)<br />3 Companies at 50-150K<br />2-5% of company<br />Scaling Stage (Senior)<br />2 companies at 100-500K<br />2-5% of company<br />At the conclusion of the program Greenhouse will own no more that 25% of any company<br />Company can take outside investment at any stage in the program<br />Incubator investors may invest in any start-up at any time<br />Additional funds can be allocated to a company based on GH board sponsor recommendation and GH board approval<br />
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