Paypongo explains why it dropped out of Project Skyway

Tony Williamson, CEO of mobile payment business Paypongo, said he just couldn't bring himself to sign local tech accelerator Project Skyway's contract last week.

His lawyer was out of the country and the amount of equity Project Skyway would get out of the company was concerning, Williamson said.

"We just had to withdraw," Williamson said. "Going into the deal, I got quite a bit of money already into this. For the equity they were asking, and the amount of value they were going to get, the numbers just didn't add up right."

Paypongo and Qualtrx, a social network that connects health care providers to their vendors were two of the eight selected companies to drop out of Project Skyway right before it launched this week. Project Skyway, a tech accelerator, aims to bring promising tech firms to the next level through mentorship and investment opportunities.

Williamson and chief technology officer Franklin Peña have already invested $150,000 into Paypongo in the last six months. Under Project Skyway's contract, Paypongo would give up 9 percent in founders shares during the course of the three-month program. Those founders shares would be owned by Augusoft, a tech firm run by Cem Erdem, Project Skyway's founder. In return, Project Skyway gives $6,000 per founder, space and additional services.

Williamson said Paypongo already has space and was looking for more financial support from Project Skyway. Paypongo is trying to raise $125,000 to hire an Internet security specialist, business analyst and developers. If Paypongo had gone through with Project Skyway, it would have received $12,000.

"I was willing to give up more equity for more money," Williamson said. "I probably should have read more deeper into it."

When Project Skyway launched, organizers said participating companies, called Skywalkers, would be required to give up 6-9 percent of founder's shares during the course of the three-month program.

Project Skyway clarified those terms in June at a semi-finalist event, saying it would require the amount of equity to be 9 percent. The accelerator also had an option in its contract that once a participating company raised $1.5 million, Augusoft would be able to sell back half of its equity stake to the company.

Erdem said Project Skyway plans to post the contract on its website.

"We want to be very transparent," Erdem said.

Other popular accelerators such as the Y-Combinator and TechStars, also require participating companies to give them an equity stake. Mountain View, Calif.-based Y-Combinator said on its website it makes investments, "rarely more than $20,000" and asks for 2-10 percent equity. TechStars, a three-month program in Boston, Boulder, New York City and Seattle, gives $6,000 per founder for up to three founders and asks for a 6 percent equity stake. These programs also offer mentorship and other services.