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How I raised $70k for 2% & how you can too by Sep 5

I'm currently going through an accelerator program called XX in San Francisco. In this post, I want to tell you about my experience so you can decide if you want to apply for their new cohort by September 5th.

About 3 months ago, I came across XX on Twitter. They were investing US$70,000 on a SAFE with valuation capped at US$3,500,000 (essentially getting 2% of your company) and giving you mentorship, workshops, and a ton of networking in SF. The investment deal was the best one I've ever seen (that was before Hyper!). For comparison, Y-Combinator invests $125,000 for 7% of your company, essentially valuing it at about $1,780,000 (they justify it by saying your valuation will skyrocket by the end of the program and the investments you get after make up for the equity you're handing over).

Side note: If you've been following me, you know I got to the interview stage with YC and got rejected last year. That was before I had any paying customers though.

I applied for XX because I had a great experience with a pre-accelerator before (I wrote about it here). I got invited for a 20-min interview. 6 people interviewed me including a few of their alumni. They asked a lot of great technical and business questions. The format was very similar to the YC interview, except they usually let me finish my answers and asked deeper follow up questions (probably because they had more time).

A week later I got the call: We would like to invite you to be part of our cohort 5 in San Francisco! I said YES! Because first of all the funding could help and 2% was pretty reasonable, and second of all, I couldn't find anything negative about them. A lot of their previous startups have been quite successful, a bunch of them got into YC right after XX, the mentors are all previous or current startup founders and have a ton of experience, ... it all sounds great. I was still A BIT skeptical though because I felt like it was too good to be true.

I found a private room with private bathroom in SF for $1,450/m in a good neighborhoud on Craigslist (apparently that's a great deal here!) and moved here in July for 3 months. The program started on July 4th and I got the investment in about 10 days.

After a week or two I wasn't skeptical anymore! It went away when I met their team in person and got the funding! It was exactly what it seemed to be. They do an amazing job of creating a small and intimate community of startup founders and then supporting them by connecting them with mentors and advisors that they need.

And the program doesn't take too much time either:

  • 1.5hr workshop on Tuesdays by experienced founders on topics like PMF, Enterprise sales, ...
  • 1.5hr Show & Tell on Thursdays where you talk about your startup for 6 minutes and the other startups ask questions and give feedback.
  • Dinners on Thursdays at their villa followed by an off-the-record conversation with successful founders and then networking with guests (founders, investors, ...).

I'm now in the 3rd month of the program. I've met tens of people I'm sure I'm going to keep in touch with (peers, mentors, potential investors, potential hires/cofounders). I'm preparing for a ProductHunt launch later this month and an XX Demo Day on September 23rd. I'm going to miss them a lot when I fly back to Canada after.

Hopefully this post gives you an idea of what XX is like. The only downsides I have noticed are:

  • In the new cohort, they invest $50k for 2%. They reduced the investment and valuation a bit ($2,500,000).
  • They're going back to all in-person in the new cohort. There will be no remote option. So you need to be able to travel to the US.
  • Cost of living in SF is crazy. So expect over $6k to go for that. Mine is more around $8k because I'm not cooking at all.
  • Some of their plannings happen last minute and they aren't as organized as I think they should be. But that's no big deal except when you try to find a rental in SF in like 2-3 weeks!

If you decide to apply and are invited for an interview, I'd be happy to do a mock interview. Just email me or send me a message on Twitter.

They just published this video too which they recorded during our cohort. It captures the vibe quite well:

https://www.youtube.com/watch?v=GhlFzXN8uLo&ab_channel=XX

  1. 4

    This is interesting!
    I'm not gonna apply now, but I think later, it could make sense. I actually have a friend in SF, so I could definitely stay at his place.

    1. 2

      Yeah a few others in our cohort did this for a while. That would reduce your costs a lot as long as they're not too far from the location (currently they're near Palace of Fine Arts but that can change later).

  2. 4

    Dope dude! Just applied! This is an amazing plug thanks so much!

    1. 1

      Sweet! Hope you get invited!

  3. 2

    I’m becoming more supportive of a small/micro funding round to kick things off. You can support some salaries and investments and make the business more round instead of having really scrappy processes from scratch. Will definitely have a look, thanks for sharing!

    1. 1

      Totally. The CA$50k we got from the government and this $70k have been great for me. I was able to hire a few offshore contractors and delegate a bit. I would've been much more stressed out and overworked without them.

      1. 1

        Absolutely. This creates a much better foundation to ensure that great business don't die as they are created for issues that could be solved with a little bit more of sophistication on the team and processes.
        Are they active in the management too? Other types of services they provide that you could benefit from?

        1. 1

          A little bit. But most of their value comes out of hands on work like software development. That could be because my budget was fairly limited.

          1. 1

            That's great. Wishing you best of luck on your new journey as a VC-backed startup. Following you on twitter to see more of your work there

  4. 2

    If you decide to apply and are invited for an interview, I'd be happy to do a mock interview. Just email me or send me a message on Twitter.

    Very kind!
    Hope someone takes you up on this.

  5. 2

    I'm no VC expert but isn't a high valuation at an early stage a bad thing? You only raise 50k-70k and it's gonna be so much harder to raise another round.

    1. 1

      I'm no expert either but I don't believe this is a high valuation in the current market for startups our stage. I don't think there is a chance we would raise further funding with a valuation below this.

  6. 2

    This is awesome Ardy, thanks for posting it!!

    1. 1

      Thank YOU Gadi! You're a big reason I love XX!

  7. 1

    Do you have to be working full time?

    1. 1

      Everyone in our cohort is working full time on their startup, so probably.

  8. 1

    There are too many get rich or get money quick sounding headlines on IH.

    These phrases are not representative of how money from startups happen. Trying or expecting for easy money is setting yourself up for disappointment.

    Beware of eye popping marketing about X dollars in just Y months.

    1. 1

      I know...I had doubts about writing that headline. Too clickbait-y for my taste! But I did it because the deadline was in two days and I wanted ppl to see this post right away, not a week later.

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