Tech accelerator Project Skyway’s founder said his tech firm will take a smaller equity stake in the program’s first class of participating companies.
“We are kind of learning as we go along in our first cycle,” said founder Cem Erdem. “… We just wanted to thank them for being patient with us as we better our program.”
Project Skyway launched in August, with plans to mentor and financially help eight promising tech firms. Project Skyway would give mentorship, space, services and $6,000 for each tech firm’s founder, in exchange for a 9 percent equity stake during the three-month program. Erdem said that 9 percent equity stake will now be reduced to 6 percent for the accelerator’s first class. The change only applies to the first class, Erdem said.
It has been a rough start to Project Skyway. Two participating companies, Qualtrx and Paypongo, quit before the program began.
“We just had to withdraw,” Tony Williamson, CEO of mobile payment business Paypongo, told the Star Tribune at the time. “Going into the deal, I got quite a bit of money already in 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,” Williamson said.
Later that month, fellow Project Skyway participant VanquishAP dropped out because of a disagreement with Project Skyway officials on its business plan. One of the former co-founders of that company, Alex Reilly, stayed on with Project Skyway and launched his own business, CribFrog.
This week, Project Skyway experienced another change. One of its companies, Uhungry, moved to New York instead of continuing in Minnesota. Erdem said the company is still part of Project Skyway and issues regarding future financial support are still being discussed.
So far, Uhungry, which has since changed its name to Picomize, has received $12,000 from Project Skyway, said co-founder Evan Freed.
The business morphed from a social networking site for college students placing group orders on food to one that lets web designers place photo requests on a site that allows commercial photographers to compete for them.
Erdem said he’s not concerned Picomize has moved to Long Island. Erdem said the changes to the equity structure was unrelated to Picomize’s decision.
“I like freedom of choice,” Erdem said. “If an entrepreneur believes that another place is a better place for them to build their company, then they should be free to move.”
What do you think about the new equity terms for Project Skyway’s first class?