By now you might have seen the news of 500 Startups leveraging AngelList to open up their application process for the first time. But what Dave McClure did - with the intention of making his life easier - will probably change the entire incubator/accelerator application process for better. You’ll see in a bit.
When I was finishing my undergraduate degree in Biochemistry/Molecular Biology I decided to submit an undergraduate thesis. Dr. Bogomolni was kind enough to give me a desk space in his lab, regardless of the crazy ambitiousness of my project to isolate a cholesterol reducing enzyme with medicinal and financial potentials. Later, when it came time to apply to various medical schools and MD-PhD programs, I knew I couldn’t ask Dr. Bogomolni to write a recommendation letter for each one. Fortunately, my school had a centralized distribution system for this exact reason. Basically, one recommendation was sent to this hub and they would copy and send it to each school. This was a common practice as students only have limited referral capital.
Years later, as an entrepreneur, this referral capital is as precious as it has ever been. And what 500 Startup did was make AngelList the de facto hub for managing referral capital for incubators.
Our company, Selekt.com was recently formed. When the idea hit me I saw a useful product with such a big potential that I dropped all my projects. I wasn’t alone, others also wanted to join. Some SV veterans even wanted to be its CEO and a good friend was disappointed that I didn’t let him into the founding team. We gathered a small team (engineers only) of trusted people that I had worked with before. However everyone had bills to pay and we needed some funding to get started. Therein enters AngelPad.
Thomas Korte had me at “focus” when I watched his interview. Part of the reason you join an incubator is to get a lot of support, feedback and honest criticism. The smaller the program the more attention you get. Not to mention Thomas came across like the kind of guy you would want to work with for a few weeks and pick his brain. After we applied I used my network to find an AngelPad graduate.
Our advisor Erbil happened to know Gokul and was kind enough to give us a nice referral. In addition, one of my favorite VCs and people in the valley, Jay Jamison, of BlueRun Ventures was kind enough to write a referral to Thomas.
I also stalked everyone related to AngelPad via LinkedIn. I continued to hustle and asked our other main advisor, Chris as well as other prominent valley CEOs in my network but they didn’t know Thomas personally. However, I figured with continual persistence, our good team and a few referrals the odds should be very good. But was it?
When we submitted our application (almost near the original deadline) we got a confirmation email via wufoo along with a number which I’m guessing was the number of applications. Over 6000! I guess we weren’t the only ones won over by Thomas and the team. When we originally applied, AngelPad had indicated that if you don’t hear back within the first 10 days you should assume you were out. However, given the volume they must have soon realized they would not be able to meet that timeline and they were thoughtful enough to send the following email:
Due to an overwhelming amount of last minute applications, it will take us longer than originally planned to finalize the applicants selection for interviews. Please bear with us. If you have not heard back from us within 10 days of the submission of your application, it does not mean you are not selected. It will just take a little longer.
To ease the process on everybody, we will get back to you even if you are not selected. So until you get an e-mail status from us on your application, no decision has been made yet!
Now, that was really awesome of them! In the month and half since the above email, we have sent Gokul (always very responsive) and AngelPad a few updates. But the process has taken almost two months now and I have used up top referral capital in the process. In hindsight, I wish AngelPad had also used AngelList for their recruiting. Doing so would have let me use my referral capital judiciously and spend my time building one centralized application.
It can be argued that one the core values of an incubator is to increase the odds of success of founders and their companies. In that spirit, incubators should unify the application process and make it as reusable as possible. Why do we need to answer basically the same questions and use our referral capital for each one of these incubators separately. Wouldn’t it be better to use that time to build and test our products and find ways to increase traction instead?
The answer is yes, and depending on the initial success of 500 Startups with AngelList, we will see others using the same process and that’s a good thing. Most good entrepreneurs solve a problem they have and in the process they sometimes change something bigger than they had initially intended and that’s exactly what 500 Startups has done.