Meet Thomas Korte, the founder of AngelPad — a startup accelerator based in San Francisco.It’s kind of like Y Combinator, TechStars and other accelerators — they find interesting founders and startups and put them through a rigorous three-month program with mentorship, funding and office space to get an idea off the ground.
But unlike other programs, AngelPad focuses on founders that have technical ability and actual business plans.
It’s tough to get in. AngelPad only takes 15 companies twice a year. But if a company does get in, the payout is well worth it. It’ll get more than $100,000 in funding and connected to some of the top venture capitalists in the valley. AngelPad invests in the startups, which is how it makes money ultimately.
How is there room for another accelerator like AngelPad, amongst the sea of top venture capitalists hunting down talent?
We tracked down Korte to find out. Here’s what we learned:
- AngelPad is geared toward technical founders that know how to build products. If you can’t code and can’t design your product, you probably aren’t a good fit.
- It’s much more exclusive. Y Combinator and other accelerators are adding more and more companies each year. AngelPad, in comparison, limits its classes to 15.
- There are already plenty of success stories. MoPub, one of its first startups, has raised a big chunk of funding and Postmates has seen some crazy success.
- No startup has ever turned down the $100,000 in funding, but it is optional. It’s designed to help them have a little more leeway and grow more quickly.
We’ve included a full transcript of the conversation below.
BUSINESS INSIDER: So, how did this get off the ground? Start from the top.
THOMAS KORTE: I spent 7 years at Google, joined Google in 2002 and eventually I started doing quite a few angel investments of people who left Google and people around that ecosystem. In 2009 I did so much angel investing that I left Google because I was having conflicts. As an investor you meet founders and get excited about what they do, but the reality is you really don’t work with them. It’s not because no one wants to, it’s just because of the logistics of it. For me, it because very clear that I want to have impact with these companies and work alongside these founders for a short period very early. I always felt that’s kind of the pivotal moment when a company’s making those really big decisions really early on.
I talked to a bunch of people who did the same thing still at Google or left the same time I did and we decided we should do something more structured. everyone that gets in from mentor or founders side knows exactly what they get. We looked at different models, Y Combinator was great — I liked the model a lot, you got to work with companies in a very early stage and figure out what to go after.
We started AngelPad, conceived back in 2009, in 2010 we really got off the ground and had the first class in the late summer of 2010, when we recruited 8 companies. We basically handpicked people that we knew from our network — a lot of ex Google project engineers. The second time we did it was early 2011, the first time we had an open incubator with applications. We just wrapped up the third session back in October and we’re in the process of recruiting for the fourth session.
BI: Do you have any favourite companies that have come out of it so far?
TK: The one that’s been the most successful with funding was MoPub, they’re a mediation layer for ad serving. They were funded by Accel before demo day. They’ve since then raised over $7 million. Postmates is the other one that’s doing really well, Bastian (Lehmann, pictured below) and Sam (Street) are doing great.
SEE ALSO: Our exclusive interview with Postmates’ Bastian Lehmann.In the second class, half of the class was funded by Google Ventures. A lot of the companies are doing really well. I look at if they’re producing product that is worthwhile measured by how many people use it and are they doing well in recruiting and attracting top talent.
BI: So, why are you guys offering each startup $100,000 in funding? Is it a play against Y Combinator?
TK: We struggled a lot with trying to figure out if that’s the right thing to do. We, as AngelPad, went to a few venture capitalists that we know well. We decided to ask them if they wanted to offer companies in AngelPad an investment. Everyone that is accepted by AngelPad automatically has an offer on the table from these two VCs to get $100,000 in funding. All the companies that have gotten the offer so far have taken it.
When you look at accelerators and incubators, we’re so early on — it’s just a 3-month program. For people to build something meaningful in that period and then go out and fundraise, it helps if you have some leeway to make progress. That was our reason behind it, the companies have a longer runway and they can accelerate faster. Having some money early on, today it’s really helpful
Say you need to hire a UI designer if there isn’t one on the team, et cetera. We felt that having some money right away at the very beginning of a company is going to change the trajectory of those companies. Looking back, it has changed it — the companies are growing faster and they have more runway. They are de-risked to investors and already have some funding.
BI: Y Combinator keeps accepting more and more companies. Are you guys going to have a limit?
TK: We will not take more than 15 companies, we will not grow past that. We set ourselves the limit because we want to work with every single company in our offices. We spend every day with them in this period, we want to have a true impact. We are there for them 24/7 in this very early stage. It’s very hard to scale mentorship, you have to have very good mentors. We decided sometime back that we don’t want to scale it, we’d rather keep it small. We’re more discriminating of companies that want to come in.
BI: So why should an entrepreneur go with AngelPad over Y Combinator or TechStars?
TK: It’s a very small program. You get to know every single founder really well. We are physically in the same offices with them, they get to know the mentors really well and the companies around them. The companies and founders that have joined angel pad tend to have been founders that have some experience in other startups and tech companies. We have few people coming out of college. The companies coming out of AngelPad tend to solve a different set of problems — the people have different experiences and want to solve different problems.
If you’re right out of college, you don’t think about the optimization of mobile advertising. You have experiences there that make you start this company. We probably wouldn’t have a Facebook because it was something that came up in college. We tend to have more business-to-business focused companies. We have more companies that solve problems for businesses or for a different crowd than the right out of college crowd.
BI: What kind of entrepreneurs are you looking for?
TK: We’re looking for teams that have technical ability. If they can’t build it themselves, we’re not the right place. We’re looking for companies that solve large problems. We’re not as interested in someone that does an app for something, but rather the underlying infrastructure for all apps. We’re looking for very passionate founders that can take it from two people in a garage to 50 people — charismatic, passionate, super-smart and engaging founders.
We have a very straightforward application process — anyone can apply. We usually have the application period open for a month twice a year — May/June and November/December. We ask for three things: LinkedIn profiles for all founders, a short paragraph of what you do and a two-minute video introducing the team, your product and your business. We want to see the passion, so they should put emphasis on the video. The video really is by far the most important thing. We want to make it very easy for people in the first round. We ask them a lot more questions in the second interview. We reserve that for people that have a chance of getting in. That’s why we have this multi-step application process.