Awesome Inc: Y Combinator as a Reality TV Show?By Josh Catone
Emulating Y Combinator‘s small, seed-stage investments and focus on team building has been a popular route for early stage Web 2.0 investors over the past few years. It now takes at least two hands to count the number of “YC clones” in operation. There’s TechStars in
Denver Boulder, Colorado, there’s Seedcamp in London, UK, YEurope in Vienna, Austria, Summer@Highland in Lexington, Massachusetts, LaunchBox in Washington, DC, Founder’s Co-Op in Seattle, Washington, DreamIt Ventures in Philadelphia, Pennsylvania, Bootup Labs in Vancouver, BC, Canada, Bootphase in Atlanta, Georgia (though it seems still unlaunched), CIIE iAccelerator in Gujarat, India, and probably others.
Phew! The list seems to grow every couple of months. Earlier this month we even advised that Microsoft should attempt something similar and invest small amounts of money in, and provide guidance to, teams of young web entrepreneurs.
Today, I came across a link to a new YC-like investment out of Lexington, Kentucky called Awesome Inc that intends to launch at the beginning of next year and target the mobile web application space. Details are hazy, but there are a few things about Awesome that throw up some red flags.
First, the site’s contact us page is ominously devoid of any actual contact info (one of the reasons details are hazy — I had no way to contact the program’s founders for more information). The mid-90s-style DotNetNuke site design doesn’t inspire much confidence, either.
But what really makes Awesome Inc sound strange is a sentence on the Details page of the site explaining the program: “During the first week each participant will be oriented to their living space, office/work space, hosting services, administrative assistant, and reality TV crew and cameras.” (Emphasis added.)
Nothing else on the site mentions that participants will be filmed. The founders’ introductory blog post claims that their goal with Awesome is to “create a more tech-savvie [sic] Lexington, while connecting people so that entrepreneurs and people from the tech community can accomplish their dreams and really bring their ideas to the limelight.” Attempting to build a tech community around Lexington makes some sense — it’s a university town (University of Kentucky) with a lot of money due to its history as a center for thoroughbred horse racing — but does “limelight” mean “reality TV?”
The reality TV startup has actually been tried before. About a year ago, a web-only reality show called The Next Internet Millionaire (think “Survivor” for wannabe startup entrepreneurs) made its debut to a lukewarm reception. A year later, the first episode has just under 100,000 views, and the viewership appears to have steadily declined as the series progressed (the final episode has just 43,000 views and many have under 20,000).
Other than that, Awesome Inc seems fairly standard — entrepreneurs are apparently to be given housing, office space, and other support, as well as meals and a stipend of an unspecified amount. Guidance will come in the form of weekly talks from a “thought leader, industry expert, and/or founder of a successful mobile technology company.” There’s no mention of how much of a stake Awesome plans to take in companies it funds.
There’s also some rather sketchy sounding language on the page that explains how Awesome Inc will work for investors:
Option Investors fall into two categories: Option ‘A’ and Option ‘B’. Option ‘A’ investors can make investments in increments of $20,000 (with a maximum of $200,000), and will receive a small stake in the company of their choice. Option ‘B’ investors can make investments in increments of $10,000 (with a maximum of $100,000), and will not receive any initial ownership, but will receive a seat at the initial pitch day. The number of total option investors will be limited to 10-15 total.
Why anyone would want to drop $10,000 just to hear a few pitches is beyond me (and it doesn’t sound like investing more than ten grand gets you anything extra). Either way, the point here is that while seed-stage funds like Y Combinator, Seedcamp, and TechStars have a track record of successfully bringing companies through their program, there are more and more of these programs opening up and entrepreneurs should approach them with caution. I’d avoid Awesome Inc until a ton more details are posted about how it will operate and who is behind it.