nReduce is pitched as a scalable, online startup that takes no equity and introduces startups to investors. Does anyone have informed, factual comparisons of this model relative to the more traditional models, like yCombinator?
This is Joe (Co-Founder CEO nReduce). I would say that our model is pretty significantly different from that of a traditional incubator. I outlined the difference here.
In regards to making the decision as to which type of support is best for your startup, only you can decide that. If you would like to chat more about nReduce please send me an email: Joe@nReduce.com
Rules of Physical Incubators
The traditional business model for physical incubators starts with having a large number startups apply to join. They then spend time and money to determine who gets admitted. Next, they contribute time and money to help the chosen startups. Once polished, they introduce those startups to investors. For that service, the incubator usually gets between 5 to 10% of the company in payment. For the incubator to be profitable, that equity has to become worth more than the costs incurred in screening and helping their startups. As this is how they make money, they have adopted these rules:
1) Everyone needs to incubated for 3 months.
The costs of a physical incubator mean that they can only put so much time into each company. If they allowed each startup to stay in the incubator indefinitely, it would increase their cost of helping a startup and hurt their model.
2) Everyone needs to start at the same time.
If they had let startups join at different times, they would have to repeat actions and orientations over and over again, it would increase their cost of helping a startup and hurt their model.
3) Everyone is ready to demo at the same time.
Physical incubators spend time and money to make demo days happen. To make it more efficient they only do it once per class. This means that startups need to demo when it is best for the incubator. If the startup could select a demo day that was best for them, it would increase the incubator’s cost of helping a startup and hurt their model.
The nReduce Model
We first off have some difference when compared to a physical incubator. The fact that we take in all startups and that we don’t take equity means that we do not give money to any of the startups we incubate. Also because we take in all startups, some of whom may or may not be appropriate for investment, only the best startups that are incubated in nReduce will be featured in one of our online demo days.
In creating this new model for a startup incubator, we realized that we could greatly improve the experience for startups. As of today we are launching the new nReduce model that is founded on these principles:
1) Teams stay in for as long as is right for them
Every startup has different needs. We want to have a flexible solution that a startup can tailor to their needs as entrepreneurs, as they work to make something that their customers love. So pivot all you want, it is okay. If for any reason your current startup dies, you can start again the next week on a new project and start building. If at some point you decide that your startup has outgrown nReduce, we completely understand and will be here for you the next time you start a company.
2) Demo days will happen monthly
Our first demo day will be on September 5th. As of August 1st any team in the nReduce global network can apply be get a spot in demo day. Based on an investor rating of the companies, the top 10 will be selected. If a company does not get selected, they can keep executing and apply for the next demo day. The first demo day will require that you have been active in nReduce for 2 months, so only teams that started nReduce in June will be eligible.
3) You can invite ANY startup to join your group
Because a great amount of your experience will be shaped by the feedback you get from your group, we want to make sure you have the best group possible. This could be teams that you meet through nReduce or those that you currently know. We want to give you the power to build the best group to support your startup. Starting today, we now allow you to invite other startups to join your group on nReduce.
4) Startups can join at any time
Startups change daily. We want to be able to have any startup that was founded last week to get the benefits of nReduce the next week. We do not have set times when you have to apply or join.
In determining what type of support is best for your startup, I would generally say more the merrier. We have people who are in traditional incubators who are also in nReduce and get a lot of value from both.
Being that we are free for founders, it really only can benefit you.
I'm not so sure that they introduce startups to investors. They do have a demo day - so there is some possible introductions there.
They do help startups "stay the course" with advice from mentors. If a startup has an investor, I believe they can add them to their groups so they can advise as well.
Can't comment on scalable - they haven't released any chargeable services yet. I think its a viable concept but your definition of "viable" may vary.