Deciding to Say No
After winning the educational services of America prize at the University of Pennsylvania's Graduate School of Education business plan competition earlier this year, Autism Expressed was invited to participate in the university's Education Design Studio, or EDSi. The program is designed to help educational startups develop their business acumen, provide programming, and facilitate networking with local investors in exchange for a portion of equity in the company.
While I recognized the value that a partnership with the university would have for the growth of my company, I ultimately decided that Autism Expressed would not participate. Here's why:
The first step in making this decision was to understand the details of the term sheet, which outlines what a partnership with EDSi would entail. It reads like Latin to me, but fortunately, I have smart, experienced people like my lawyer who can clearly translate these cryptic documents. Once I understood the upsides and downsides of this equity-stake partnership, I really had to do some soul searching.
Since the very beginning, I have been bootstrapping this company--meaning getting it off the ground with minimal resoruces. When I applied to compete for my first $10,000 grant from the Corzo Center at the University of the Arts, I remember thinking, "Whoa. What am I going to do with $10,000?" It was more money than I thought I would ever need. However, once I started actually building my product and understanding the cost of development, my thinking changed to, "What am I going to do with just $10,000?" I quickly learned that I would need a lot more money.
Since then, with less than $50,000 over the last two years, I have managed to build a market-ready product that generates revenue from subscriptions, and has achieved visibility in the autism and education communities. Autism Expressed is working with several large school districts and other service providers to generate contracts to serve their student populations.
The company is at a critical stage and on the brink of proving our future marketability and sustainability.
I want to make sure that Autism Expressed proves itself before we take on partners, and we are on the precipice of seeing this materialize to put us in position to raise capital with confidence.
The opportunity with the University of Pennsylvania's Graduate School of Education could have been a milestone for myself and the company. It would have been the first time I took on partners or gave away any equity in Autism Expressed. So this was a decision that I thought long and hard about. After all, I've poured blood, sweat, and tears into Autism Expressed. It's become my baby and it is the company's name on that term sheet.
When I told Bobbi Kurshan, the director of the EDSi program, that Autism Expressed would not participate at this point, she was very supportive. "There is no right or wrong decision here, Michele," she told me. That was comforting.
Deciding to participate in any incubator or accelerator program, some of which like EDSi require equity in the company participating, is a personal choice. Some entrepreneurs see a tremendous benefit in giving up a portion of their company early on, in exchange for the guidance, relationships, and the collaboration an incubator can provide. There are tremendous opportunities to being involved with a group of innovative individuals and seasoned industry experts.
But others have taken the same path I'm heading down with Autism Expressed. For example, Robert J. Moore from RJMetrics, which builds software that helps online companies use data they collect to improve their businesses, said he too declined to raise outside capital for his venture until the business was more established. Bob and I were both featured on the cover of this month's Philadelphia Magazine with our companies named as two of the area's hottest startups. "We wanted to do serious product work and make sure we really understood our market," Bob said. "I'm glad we waited because it ensured that we were pointed in the right direction when we finally lit the fuse."
Because we are living in an age where ideas flourish and motivate individuals to move on them, programming is increasingly available and investment laws are changing, making crowd funding, like the Kickstarter platform, a viable option for some startups. Entrepreneurs have many more choices these days.
Autism Expressed has participated in some of these, including the Good Company Group summer incubator in 2011, which provided my first introduction to the venture capital world. This program does not take any equity. Garrett Melby, director of the Good Company Group in Philadelphia describes his program by saying, "No equity: born free and determined to stay that way." The Good Company Group avoids up-front investments and instead works with young companies to refine their pitches to investors.
Autism Expressed has achieved many milestones and we intend on going further with what we've put in place. I look forward to maintaining a relationship with Bobbi and the other companies participating in the University of Pennsylvania design studio. However, my decision to decline the offer to participate in the program was based on both my company goals as well as my personal goals. I'm looking forward to seeing how it turns out.