This is where SproutBox comes into play. Instead of offering cash in return for an equity stake in a startup, SproutBox is offering programming, business development, accounting, and HR services equivalent to $250,000. Is Sproutbox the future of venture capital? We can't say yet, but it's an interesting twist on a long-standing model.
The SproutBox Process
SproutBox is a 3-month program for Web entrepreneurs. It picks four startups per cycle and brings them to their offices (called "The Box") in Bloomington, Indiana. Once there, the startup and its entrepreneurs work with several SproutBox teams in order to build the product, promote, add users, and foster a community.
The startups SproutBox is most interested in are Web companies with subscription-based models, although they are listening to pitches from any company with a web, mobile, or desktop focus. Startups have several months to get their applications together - they're not due until August 8th.
SproutBox, understanding that some entrepreneurs may be skeptical of the model, already has two projects out of the pipeline: DecideAlready, a group decision collaboration tool, and CheddarGetter,a online subscription billing service in beta. While different tools, both have a similarities in design and interface.
The Evolution of Venture Capital?
Venture capital has been undergoing some changes recently. One of the newest venture capital models is YCombinator, a seed investment firm that provides around $15,000-$20,000 in funding, plus mentorship, connections, and legal help, in exchange for a small equity stake.
SproutBox is a completely different system, but still provides a twist on the old venture capital model. Being in Bloomington, Indiana may be a hindrance to attracting entrepreneurs however, because it is not usually considered a major entrepreneurship hub. Only being able to help four startups a cycle also limits SproutBox's scope, though we understand that working on too many startups dilutes focus.