April 25, 2014
On May 1st – exactly one week from today – NYC’s Grand Central Tech Accelerator will close its application process for startups. If you haven’t applied yet or don’t even know what makes the accelerator unique, then consider this: Do you want to work out of Facebook’s former headquarters in Midtown rent-free for a year, in exchange for zero equity of your company?
For many startups, choosing whether to apply to an accelerator program is an important decision – I mean, why shouldn’t it be? Taking part in an accelerator requires that a startup commit themselves fully to the program for a few months, at the expense of forking over some company equity. In exchange, startups get access to mentors and investors, office space, a robust community of talented people, and maybe even some funding. Aside from the time and equity spent, participation in an accelerator can often dictate the future of a startup after they’ve left the program – sometimes determining the kinds of investors they’ll attract or causing them to modify their end-goals. Before startups commit to an accelerator, it’s critical that they do their research and determine whether or not any one particular (of literally hundreds) is a good fit for their company.
“We’re a new kind of accelerator…dedicated to giving the very best entrepreneurs and companies the best resources at the very best terms,” said cofounder Charlie Bonello. “[Grand Central Tech] is comprehensive – increasing access to the benefits of the tech economy for people of different background and ages.”
Grand Central Tech aims to provide an entirely new experience for startups, experimenting with a model that’s reminiscent of a nonprofit rather than the typical business models on which accelerators are operated. The accelerator hopes to find between 12 and 18 companies to fill its inaugural class, which starts on June 15. But, before rushing into the application process, here are a few things to know about Grand Central Tech:
1. You Get Free Office Space in Manhattan
One of the defining features of Grand Central Tech is that it will offer its startups free office space in Midtown for a year (throughout the duration of the program). Indeed, the location itself is one of the accelerator’s selling points: startups will have easy access to downtown Manhattan and its diverse community. “[Through Grand Central Tech,] Midtown is no longer a burden but an advantage,” said cofounder Matt Harrigan. They’ve taken over Facebook’s former NYC headquarters, occupying 15,000 square feet overlooking Grand Central Terminal. Members of its inaugural class will also get discounted rates on legal, accounting, banking, web hosting, HR and payments services, and PR work – all offered by leading companies that neighbor their office space; PricewaterhouseCoopers has already signed on as a partner, according to Harrigan.
2. Grand Central Tech Takes No Equity Stake
TechStars requires a 6 percent equity stake in companies. Y-Combinator takes anywhere between 2 and 10 percent (averaging 6 or 7 percent). However, Grand Central Tech requires no stock from any of the companies selected for its accelerator. “On the equity front: We’re not a storefront for equity; [rather,] we try to offer the very best resources at the very best terms,” said Bonello. For Bonello and Harrigan, success is what happens when startups continue to grow and to thrive. Rather than focusing solely on the financial outcome, the accelerator aims to help companies work on things like longetivity or staff headcount. “We concentrate on metrics that transfer into economic impact instead of just yield,” said Harrigan.
3. It’s Focused on Building the Community
“Our main objective is to build the community – far from the norm, where the focus is on investment and making money from those investments,” said Harrigan. “[Grand Central Tech will] concentrate on surrounding people [with] the right complements. Not to say that we don’t want our companies to make great businesses – that’s just not mine and charlie’s personal goals.”
Community-building is Grand Central Tech’s leading principle. On the micro-level, the accelerator hopes to develop a supportive community of startups. On the macro-level, it’s focused on connecting and developing NYC’s tech community. “We’ve gathered a lot of support from the [NYC] community…[and] we’re very fortunate to partner with people who focus on building this community,” said Bonello.
4. They’ve Partnered with NYC High Schools
Tying into the focus on building the NYC community, another exclusive feature of Grand Central Tech is its partnership with eight of NYC’s most innovative public and private high schools. While they’ve attracted mentors and advisors from the business community, the accelerator is also hoping to attract well-connected, knowledgeable alumni from their partner schools to serve as advisors. More notably, talented students and recent alumni from the schools can work as interns in Grand Central Tech’s startups.
5. There’s Only One Requirement for Startups
Grand Central Tech’s community-building ethos is reflected in the accelerator’s only requirement from selected startups: that they commit to rent adjacent real estate once the program has ended. The goal, of course, is to continue building the NYC tech community. Backed by the Milstein Family – renowned real estate and philanthropy giants – companies have to stay in Midtown after the accelerator has run its course. “[The Milsteins] is a family that focuses on building [NYC] and are major donors to the city; they would like to see that startups are staying in Midtown,” noted Harrigan on why the Milstein Family serves as a great partner for them. The family has promised to provide as much real estate as needed and will offer graduating startups affordable rents.
Learn more about the Grand Central Tech Accelerator, and be sure to apply by May 1st!
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