Business Incubator Series: John Richards, BoomStartup, Provo, Utah (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: How do you feel about bootstrapping of a business?

John: Personally, I think you should bootstrap for as long as you possibly can, as long as it doesn’t hinder your growth opportunities.

The later you take the capital in, the more preservation of capital or equity you will maintain for the founders. Obviously, you don’t want to choke the golden goose, either.

I think bootstrapping’s fantastic, but if you find that it’s forcing you to make decisions that choke or curtail or throttle your growth needlessly, then that’s a mistake.

You know, one of our companies, Bazari, turned down a lot of money. There are certain smart people whom they took money from in order to just make sure that they were advocates and networkers for the company. That was a strategic reason. They took money, but I don’t think they spent much of it.

I think that the entire bootstrapping mentality does permeate these programs a little bit.

Irina: What are the core benefits of your program?

John: We provide massive amounts of mentoring. We have “investor-mentors” who put in the money and contractually agree to a minimum amount of time mentoring. Everyone overdelivers. We have 50 of the top mentors in Utah affiliated with our program.

I should have said before that, besides being an entrepreneur, when I got a little money, I started becoming an angel investor.

Both my partner, Robb Kuntz, and I won Mentor of the Year from the angel investment community just last year. So, we’re very active in angel investing as well.

One of the things I’ve seen is there’s a direct correlation between the amount of mentoring and the success of the venture. So, we believe in [mentoring] very much, and we provide a ton of mentoring.

We provide capital, $15,000 in exchange for 6% in common stock. We provide myriad networking opportunities at all levels and in sundry environments.

We provide peer interaction. We have a bunker environment where there is a large area of cubicles. Companies grab clusters and then interact all day with each other in this open environment. Peer interaction is a hidden gem of these programs.

We have landlord partners who love our program and provide free rent and services to all of our companies. We had one campus in 2010. We have two in 2011.

We provide IT services at little to no cost, helping the companies to build real infrastructure. We coach them in open source, crowdsourcing, lean startup principles and practices, and so on.

Irina: Would you talk a little more about the mentoring?

John: Of the core benefits, the mentoring is the most important. Mentoring makes all the difference. We do a significant amount of it.

As I mentioned, we have these investor mentors and then we also have our regular mentors. We have special guest mentors. We do overdoses. I liken it to this statement, when you feel like you’re coming down with a cold, some people will take 3,000 milligrams of vitamin C and beat the cold that way.

In entrepreneurship, I think it’s similar. You need just massive doses of mentoring in order to overcome the potential failure spots in starting up a new company. You’re going to get lots of different opinions from different mentors, some of them conflicting opinions. The job of the entrepreneurs is to assess all the data coming at them and then make their decisions and form their own opinions.

Irina: What’s the process?

John: The investor mentors are assigned one or two companies each, and they will be the primary mentor. They own that company for the program and are completely at their disposal and are right in the trenches with them.

They hold them accountable. They mentor them. They guide them. It’s a very close, deep relationship. The investor mentors are the ones who have put their capital into the program. They’ve signed the documents to be investors in BoomStartup.

That investment then goes in and forms the $15,000 given to the companies. They’re contractually obligated to a minimum amount of time, subject to confiscation of their equity if they don’t provide enough time. They’re really locked in.

This segment is part 4 in the series : Business Incubator Series: John Richards, BoomStartup, Provo, Utah
1 2 3 4 5 6 7 8 9