Frequently Asked Questions
What Makes the Preccelerator Different From Other Accelerators?
The Preccelerator is founded by the law firm of Stubbs Alderton & Markiles, LLP as a way to show our commitment to the Los Angeles startup ecosystem. SA&M aims to create a long-term relationship with each company to help them avoid pitfalls and strategically assist them on the road to success. The program is a 6-month term providing: initial capital; 24/7 use of co-working space in Santa Monica; a robust partner perks package worth over $500,000; over 100 mentors that provide value-first mentorship; a customized curriculum each term to meet the needs of the individual cohort companies; and tailored business advisement, fundraising strategy meetings, pitch practice and monthly accountability meetings to measure KPIs, development and fundraising goals. We continually strive to surround the companies with resources to help them succeed.
What Are the benefits?
- At the discretion of the SA&M Ventures Investment Committee, an initial unrestricted cash investment of $25,000 will be offered to selected portfolio companies
- $25,000 credit towards transactional legal services
- 24/7 coworking space with office resources like wifi, printer, copier, conference rooms, and guest reception
- $500,000 worth of available perks and credits from Preccelerator Partners such as AWS, Google, HubSpot, SendGrid, FbStart, ZenDesk, TriNet, LAVA, Early Growth Financial Services and others. Learn more.
- 100+ “Value-First” Mentors that provide regular office hours on topics such as finance, tech, marketing, leadership, and fundraising. Expand your network and create relationships. We couldn’t do it without them! Learn More.
- Customized Curriculum – each term has a different set of workshops that cater to the individual needs of the companies in the current cohort. There are also keystone topics such as equity compensation, term sheet negotiation, storytelling, and IP Basics.
- Fundraising Strategy and Potential Introductions to Investors – Each term, we meet regularly with each company individually to discuss their fundraising needs, status, readiness, and strategy. We utilize our network to make introductions to investors when the company is ready for fundraising.
- Access to many LA Startup Focused Educational and Networking Events. – We produce 75+ events in-house each year, but also have discounted and complimentary tickets to many Los Angeles tech events, including all events produced by the Los Angeles Venture Association (LAVA).
- We have monthly accountability meetings to discuss goals, fundraising status, development status, needs and successes of each company. We meet as a group to build comradery and accountability amongst the cohort companies. Every company is invested in each other’s success. We also meet with each company individually to hone in on specific areas of need.
- Startup life have you lonely working from home or a coffee shop? Your chances of success increase when working among other like-minded founders who are in the trenches with you, sharing resources, understanding your struggles and successes. Our cohort companies become like family by the end of the 6-month term.
- Life-time partnership. The Preccelerator ecosystem will be a life-long resource for your company for mentorship, use of conference rooms, educational and networking events and perks with partners.
What are the requirements?
Participation – Companies are required to be located in the co-working space a minimum of 3 days per week. There are required workshops, accountability meetings and pitch practice sessions. The more companies are in the space, the more we know what needs they have, and can plug in necessary resources. Participation builds comradery amongst the companies.
Engagement – Our goal with the Preccelerator Program is to build long-term relationships with the companies, to assist them throughout their evolutionary path. $25,000 in transactional legal credit through Stubbs Alderton & Markiles, LLP is issued to participating companies in the program. This credit has no expiration date or requirement as to what type of legal services that it can be utilized for. The legal services are rendered under the standard engagement terms of Stubbs Alderton & Markiles, LLP. Non-billable, non-substantive legal advice is also available when companies are in the Preccelerator space, as they meet with on-site attorneys.
Use Agreement – The Use Agreement is a standard code of conduct for use of the office space and participation of the Preccelerator Program. The Use Agreement also includes a required background check for each company team member that utilizes the co-working space. The Use Agreement is given to each accepted company prior to the start of the Program so that it can be reviewed and any questions or concerns can be addressed well in advance of the start of the term.
Stock Purchase Agreement – With the $25,000 cash investment, a stock purchase agreement outlining the terms of the deal is required to be signed prior to the start of the Program. Any questions or concerns can be addressed before submission.
Is there an equity component?
Yes, In exchange for the benefits of participating in the program we receive a Warrant to purchase common equity representing 2.5% of the company’s fully diluted capitalization, with a nominal strike price of $100 in the aggregate and a term of 5 years. Those benefits include a $25,000 credit for transactional legal services, use of co-working space, mentorship, strategic introductions and perks that we make available to program participants. The Warrant is non-dilutable through the earlier of the company’s capital raise of $1M and 2 years after issuance. We also provide the Warrant agreement to each accepted applicant well in advance for review so that we can address any questions that arise.
If the cash investment is going to be made, a participant must issue to SAM Venture Partners, the investment affiliate of the Preccelerator, that number of shares of common stock equal to 5% of the fully diluted capital stock of the participant, inclusive of an unallocated stock incentive pool equal to 15%. Our objective is to be fully aligned economically with the participant’s founders, and our interest after issuance is fully dilutable along with the founder’s equity for all future capital events. For accounting purposes, the equity interest is issued in consideration of the $25,000 cash portion of our contribution, implying a post-money valuation of $500,000. In certain instances where the participant may be further down its evolutionary path, including having raised investment at a significantly higher valuation, we will discuss a lower equity participation. The Stock Purchase Agreement is provided to each company that is accepted into the program, well in advance so that it can be reviewed and so that any questions can be addressed ahead of time.
Will you introduce me to Investors?
Yes. Utilizing the large network that Stubbs Alderton & Markiles and the Preccelerator has, introductions may be made when a company has reached readiness for fundraising. Companies will participate in fundraising strategy meetings where we will help them tailor a list of potential investors that are relevant for their stage and industry. We host a monthly Meet the VC lunch that is invitation-only where companies will get access to meet investors. We also teach companies how to do proper business development and utilize the events and vast network of the Preccelerator.
How much of a time commitment will the program be?
Each company is required to utilize the office space for a minimum of 3 days per week, but most successful companies in the Program are there almost every day. There are required once a week workshops, monthly accountability meetings and monthly pitch practice sessions. We also highly encourage companies to participate in most mentor office hours to make the most of the mentors’ expertise, but also to create relationships and expand their own network. There are different mentors attending office hours every day. The program is what you make of it. The more you participate, the greater the benefit!
Do I have to be in the Los Angeles area to participate?
Yes. We do not have a virtual program. Founders must be located in Los Angeles or relocate for the duration of the 6-month term. We’ve had companies join us from across the country. It is the company’s responsibility to find accommodations if they relocate.
What kind of companies are you looking for?
We are looking for early stage startups that have a prototype or beta product and are looking for fundraising, user acquisition and to create a strong foundation. More than idea – we are looking for fantastic founders who have the grit to succeed, while being coachable for us to help them build their business.
Do you specialize in specific industries?
We are digital media and technology focused. While that is very broad, we have specific experience in companies that are in SaaS, iOT hardware, VR, AR, Fintech, Fashiontech, Smart Content and Mobile. We do not accept Consumer Products – unless they are true iOT hardware.
The Proof is in the Pudding. What are your success rates?
As of October 2019, we have had:
48 cohort companies – 45 graduates, 3 current.
$16.8M raised amongst portfolio companies.
Companies have made partnerships with entities like JP Morgan Chase Bank, FAFSA, ZipLogix, Princess Cruises, ESPN, Reach, Wave Media, Intuit, MLS Associations in all 50 states, Virgin Media, Henry Schein, Citrix, and others.
Many companies that have graduated the Preccelerator move on to other accelerators such as TechStars Virgin Media, TechStars LA, BackStage Capital, Quake Capital, Alchemist, Matter Labs, Portland Incubator Experiment (PIE), Startup Chile and Angel Pad.
What does the application and selection process look like?
The application can be found here. Applications are accepted on a rolling basis. If companies pass the initial application round, they will be contacted to join us for an initial in-person or phone interview so that we can find out more about the company and how we can be a resource to you. If selected, companies will qualify to pitch before our investment committee for a final interview. Accepted participants will be contacted within a week of the final interview.
Online applications for the Preccelerator® Program are now open! To qualify for acceptance, please fill out our online application. Once submitted, someone from our review committee will contact you.