When we first heard about a new incubator in Riga, Latvia we were really excited as Latvia definitely needs a few more. So, naturally, we looked into it and realised that its not really an incubator in its standard form. What the team behind Eegloo will do is take startups at the very earliest stage possible and build the product for you and/or with you.
This is great news for all of you out there that have the “next big idea”, but can not find a good technical co-founder or perhaps your team does not have the necessary skills to complete your first prototype. Sounds good, and we were excited.
But how much equity should you be prepared to give away for getting things done for you? According to Eegloo’s website – between 10% and 90%. This sounds like a lot, perhaps to some it sounds like theft, and we were very sceptical about this as well so we got in touch with Jean Mauris, the CEO of Eegloo to find out the reasoning behind the numbers.
Mauris told us that one important aspect is that they focus on very early stage companies that might have just an idea or a simple prototype/presentation and that every company they take in is unique and will receive a unique proposal. That being said, the lowest they will go is 10% in equity.
As Mauris commented “It is not that we want to take 90% of the company at an early stage and call it an ‘early exit’. Our concept is based on the fact that we are taking on companies with only an idea.
For example you are pitching at Garage48 and you have made some kind of a prototype that is somewhat working. We are looking at those ideas and to make them into a product.”
In regards to the higher equity splits, Mauris commented: ““We are not taking all this percentage for ourselves. We are planning that the equity that we will take will remain kind of frozen until the market fit. Then we will be able to unfreeze this equity to give it back to management or maybe to give it to the next financing round.
For example if we are taking 60% of the company and 40% goes to the co-founders, then we can agree on freezing about 30% that on the next stage will go to either the co-founders or to the next investors that will join the round. “
Eegloo comes from a team of developers behind TrueVision, a development and outsourcing company in Latvia. Mauris told us that they saw many entrepreneurs from non-it sectors with great ideas that were ready to pay developers to build it but that they did not want to keep on being an outsourcing house and wanted to be more involved with many of those projects.
In short, Eegloo is not an incubator but your technical co-founder, and when you look at it like that, 10-30% equity split becomes a much more reasonable figure. Especially when you know that a full team will be working on your idea to deliver the best possible product in a short period of time and help you with validation.
Still, they have a long journey ahead of them and they must prove with their first couple of companies that their concept works and that their terms are fair to the entrepreneurs. We are looking forward to seeing the results. If you are interested in the concept, you can apply to their Thursday pitching events here.