Red Rover, part of the inaugural New York TechStars class, is a four-year old, revenue-generating start-up that provides Facebook-esque student and alumni directories for schools and employee social networks for corporations–the kind of later-stage company you might be surprised to find in an incubator program. CEO Kevin Prentiss was unsure if the TechStars experience would be worth the six percent stake he’d have to hand over.
“We’d bootstrapped to success. I was not convinced raising money was the right thing for us to do. This was my fourth company. It was easy for me to understand the present and probable future value of 6% of the company, but how could I measure the value of “mentorship”? Going into TechStars meant exchanging the known for the maybe,” Mr. Prentiss writes in a lengthy retrospective on his blog.
He was concerned about the cost, in money and time. He was concerned about the optics–how would it look for a four-time founder with a four-year old start-up to join an incubator full of saplings? He was also unconvinced of the value–TechStars Boulder had a great reputation, but the New York program had no track record.
The final minutes of a meeting with David Tisch, who didn’t impress him at first, were what pushed him over the edge. “I wasn’t really convinced,” Mr. Prentiss writes about the meeting. “It sounded like marketing and he couldn’t back it up with case studies yet–he was simply hoping that he could deliver in NYC.”
The turning point was when Mr. Tisch made a personal appeal, explaining why he’d decided to get involved with TechStars–“I could be doing anything – and there is nothing I can think of where I would learn more,” in Mr. Prentiss’s recollection. For some reason, that resonated with the meticulous, thrifty CEO.
“What I needed, and what I got from the TechStars process, was a huge shift in focus–from minimizing risk to maximizing the opportunity for Red Rover,” he wrote.