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- Phone:
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- 400 W 7th St #200
- Bloomington, IN 47404
- 888.417.9341
- 877.350.6175
We want to make sure you know as much as possible about SproutBox. We also want to know as much as possible about you, so be sure to set aside a block of time to complete the application before you get started. Before filling out the online application, make sure you've read through all the information on this site, including the FAQs below.
This round of applications has been extended and will end on March 28th, 2010. If you are selected as a finalist, you will be asked to present to our Selection Committee in Bloomington, IN on April 8th, 2010.
We look forward to reviewing your app!
We're big fans of simple, focused, web based applications that operate on subscription revenue models. That's not to say we aren't interested in other ideas— It's just that these types of businesses tend to line up well with our investment criteria.
We look for applicants that have the following characteristics:
Our level of investment and resulting equity stake tends to be higher than a lot of other seed stage funds. We make 4 investments a year, each of which costs us about $200-250K. During an intense 8 month period, we finance your company from as early as idea stage all the way to revenue stage.
We take founders’ stock and aren’t really triggering a valuation event. However, if we thought your team/idea mix was worth $1 million, we’d be looking to take an equity stake in the neighborhood of 25%. Our usual equity range is 20-40%. We also typically sign an agreement for a 2-5 year term that allows your company access to ongoing HR, accounting and administrative support in exchange for 5-10% of the company’s top line revenue.
One thing we don't do is take a majority stake; we want your company to remain your company. We just want to help you get to a point where you can either operate on your own, or have a great deal of leverage with venture capitalists in your next round.
We employ a full-time team of around 10 software developers, creatives and business experts. Along with our network of partners, and your direction, we provide the services needed to take your company from an idea to a revenue-generating reality. In many cases, we utilize pre-built tools (like our billing tool CheddarGetter, or our stock legal documents) to speed up the process. Here is just a short list of the services we offer:
Not much. Essentially, we give founders just enough cash so they can live and stay focused on creating and marketing their product. We also help with a budget for initial marketing and travel. All in, this cash component is usually less than $10K-20K.
Yes, at least for a while. Around six Months in Bloomington is typical. Being here for at least our 3 month long intensive development phase is an absolute must. We have a very collaborative workspace and style. If you're as dedicated to the success of your company as we are, you'll want to be here.
No. We value building companies wherever your family and friends are. Obviously, we love the Bloomington tech scene. Most of us came here for school and loved it so much that we never left. But, once the first version of your product is up and running, the company is yours and you should make decisions about your next steps. We may offer some equity driven incentives to encourage sticking around Bloomington, but the decision will ultimately be yours.
Absolutely. Bloomington has some incredible advantages for startups: Low rent and living expenses, great developers exiting the university, creative and cultural diversity, and a thriving tech scene. As a cultural mecca in the Midwest, it's the perfect place to find focus, fun and tranquility as you build something great. While other companies dropped like flies during the dot-com bust, the SproutBox founders built their previous company here and would tell you that Bloomington was a critical component of their success.
90%+ of incubators are non-profit landlords leasing subsidized office space. Incubation leasing agents are pretty good at their job: keeping their space full. Graduation rates are low and the average incubation period is 2-3+ years. We think this sounds more like assisted living than incubation.
We approach the opportunity in a radically different way. We are for-profit and quickly align our interests in startups by taking equity. We have no incentive to keep you around, in fact exactly the opposite: we kick you out of our space after 6 months. But during that time we've provided all the services and support needed to ensure your success— not just fax and copy machines.
Our focus isn't centered exclusively around mentoring and advice. SproutBox is more about tangible product development and business services. We provide a dedicated mentor for each company, as well as one on one lunches with successful business minds, but that is just a portion of the value we provide.
Many seed stage companies employ the ‘spray and pray' method— investing in 20-60 different companies and hoping a handful are successful. While our projections include a failure rate, our operations don't. We are more selective and more invested in each company's success.
We tend to have a much stronger focus on revenue than other seed stage firms. Many such firms advise entrepreneurs startups not to worry too much about making money. In their model companies are often expected to find additional funding or fail. SproutBox focuses on getting companies 'Revenue Ready'. A clear revenue model is both a selection criteria and goal. If a Sprout seeks additional funding for marketing or product enhancement, it will be to grow, not simply to survive.
SproutBox is the first company of its type in the Midwest. While we welcome entrepreneurs from all over the country, the Midwest is in desperate need of ways to cultivate emerging talent. We also think that the Midwest is a great place to start a web-based company. Its pragmatic sensibilities can shelter companies from the many pitfalls of a struggling economy.
SproutBox is an idea-stage investment company. That being said, the more clearly planned out and developed the idea, the more likely it is to get chosen. Our application includes many questions regarding revenue model, financial projections, entrepreneur background and market research. So a business plan document isn't required, but a plan for your business is. The application also allows you to optionally upload initial screenshots/mockups of your idea to help us gain a better understanding of it. A link to a live site or marketing site never hurts either, but isn't required.
SproutBox is in the unique position of being able to provide a great deal of value to a non-technical entrepreneur. If you have a remarkable marketing mind and great connections, but just need help getting something built, we may be a good fit for you. However, our ideal applicants would be a 2 person team: 1 'business' person and 1 'technical' person who realizes it would take forever to build their idea by themselves. A technical founder is also ideal to help direct our development team and be in good position to continue development after launch.
Maybe. The services we provide are definitelygeared toward software products. If you have a great idea for a medical device, there are probably better options for you. We are interested in areas where we can create value. This could include devices with an online component, mobile and desktop software, and likely other ideas we haven't thought of yet.
Absolutely. Established companies often struggle with rounding out their team with quality developers and business experts— just like startups. A number of companies have approached us with a secondary product they have developed internally, but can't shift focus entirely to launch it. It may be a well developed system that just needs customer self service and signup along with an initial marketing push. Apply and we'll take a look at it.
We don't share applications outside SproutBox and our selection committee. Because we see stacks of often similar ideas, there is no way we could handle the legal overhead of signing NDAs. Obviously, the more clear you are about your idea, the more likely it is to be chosen. But if you don't feel comfortable including something in your application, don't. More than likely, what you think of as secret isn't going to be the secret to your success. It will be your teams tireless focus on execution. That's why we've always believed ideas are less important than the entrepreneurs that have them.
We believe in constraints. If you have to get to market in a fixed amount of time, you'll have to cut something— usually features. Being forced to focus on high margin, core product functionality is a good thing at this stage. We realize that in our time frame we may not be able to fully develop every idea. We will however build a useful product in your market that can serve as a platform for growth.
Not every great idea fits the SproutBox model. That's one of the reasons we are intentionally very selective. In the future, we may expand, but that would mean putting together another world-class team, not just giving individual companies less attention.
We do. We've assembled a group of follow-on investors interested in companies that come out of SproutBox. As much as we like these angels and VCs, our goal is to give you as much leverage as possible in a potential next round. We turn the paradigm upside down. Instead of ramping up expenses and de-emphasizing revenue with your initial funding, companies leaving SproutBox have very little recurring expense and a clear revenue stream. The goal is to get you to the point where fundraising isn't required to keep the doors open. You can raise additional capital to speed growth, or grow just organically. We put your fate in your hands.
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