Greenhouse - Framework for an Arkansas Incubator
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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.

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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  • Full Name Full Name Comment goes here.
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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 Greenhouse - Framework for an Arkansas Incubator Presentation Transcript

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