Hi, just got an offer from accelator for our idea/project accelaration and Im quite dumb about how things work in financial side of things. Will we owe them 20k pre-seed capital if in case something bad happens and we fail? How its usually handled? Thanks! *its 15% equity deal I know it depends HUGELY on terms, but how does it generally happen among accelerators?
Hi, well this is extremely uncommon, or at least very uncommon in the realm of legitimate investors of any kind. The whole point of venture investing, which includes accelerators and incubators, is that it's high risk, and that it's totally unsecured investment. That's why we get a lot of equity for our money.
Now, there may be exceptions depending on the deal terms and structure, but it's something you would only do if there was a really big incentive to do so, like super low equity. But if I read this correctly, and you get 20K for 15% of the company, that's not nearly sweet enough to also be on the hook for returning the capital if you fail, which sadly is likely.
If you want to talk and go through the term sheet/docs, I'd be happy to setup a call to discuss more.