Founder Institute (FI) launched its office in Nigeria last week with a mission to help start-ups that are yet to receive funding but require guidance, invaluable feedback process and access to global investors network to scale.
More than 80 per cent of startups do not make the 5th birthdays. In recent times in Nigeria, quite a number of startups have exited because they could not cope with the pressure and harsh business environment.
Located in over 175 cities across more than 60 countries, Founder Institute has a long history of ensuring that startups under its four months program do not sink. To be sure, the company was launched in 2009 as a semester-based startup camp for very, very early-stage entrepreneurs who have basic ideas for potential startups or have already founded the startup but are yet to receive funding.
One notable example of companies that have passed through the program include world’s largest online courses platform, Udemy which has gone on to secure over $173 million in funding. Since it was founded, over 3,500 companies have been created by students of the program.
Chukwuemeka Fred Agbata (CFA), Founder Institute’s Lagos director said FI owes its success stories to the rigorous nature of the program and the commitment of the facilitators, mentors and students because failure means everyone loses.
The Founder Institute is a novel model somewhere between a crash-course in executive education and a proper incubator.
“We are not an accelerator or incubator,” says Ayowande Adelemo, another director at Lagos FI. FI does not fund its graduates rather it provides them with unlimited access to investors around the world. Prior to coming to Nigeria, six Nigerian startups had already gone through the FI program in New York.
The organisation is built on five principles. Its equity collective principle ensures that all participants in a program cohort (including graduates) receive financial upside in the companies formed.
How it works is that each Founder Institute graduate contributes 4 per cent of their company equity in warrants to a fifteen-year bonus pool, and when a liquidity event occurs the pool’s financial returns are then distributed equally across the cohort.
Startups in Nigeria that want to participate in the program will need to pay a $50 application fee. This allows the startups to sit for the test; once they pass they are expected to pay for course fee of $500.
“Founder Institute is hard,” Adelemo said referring to the enter program. Only 25 per cent of the candidates make it to graduation. The rating system is structured from 1-5 (1 being the ‘Very Bad’ and 5 ‘Excellent’) in such a way that the judges are not allowed to rate any one with 3.
Already 49 entrepreneurs from Nigeria have sat for the test out of which only 20 passed.
Agbata said the benefit of such an intense process is to ensure that those who make it to the finished line have everything they need to succeed with their idea.
“We need more entrepreneurs to solve real problems,” he said.
There are three Founder Institute centres spread across Lagos.
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