Funding individuals, before they’ve founded a company — meet the Talent Investors
It matters what the most ambitious people do with their lives. At Entrepreneur First we believe the most ambitious and talented individuals should be founding companies. There is now a stage of Venture Capital dedicated to making sure this happens.
This new stage are called ‘Talent Investors’ who are willing to invest in individuals before they have a company, or even an idea.
Almost 8 years ago, Entrepreneur First pioneered this new model of investing and we’re delighted to see so many others join this new market (see below). Today we are announcing a $115m fund to invest in 2,200 individuals across the world. You can read more here.
What defines a Talent Investor?
Talent Investors typically provide many of the services you would see in an accelerator; mentorship, office space, investment into the company. However, there is a key difference — Talent Investors fund individuals, rather than companies.
The four distinguishing features of Talent Investors:
- They select individuals, not teams
You can apply to a Talent Investor, before you have a team, or an idea. At selection, they evaluate you as an individual based on your potential to be a founder.
Different Talent Investors look for different things. Over the last 8 years, we have interviewed thousands of people and worked with >1,200, so we know have a good idea on what a founder looks like, before they’ve actually become a founder.
2. Funding paid to an individual
Talent Investors pay a monthly, or lump sum, amount to individuals (rather than to a company) who are selected to join their programme. This is to cover living costs for the period of time before they form and incorporate a company.
What’s interesting about this is that there is no need to repay this stipend, even if you don’t form a team or a company. Often the stipend gives the Talent Investor an option to invest in any company you produce through their process.
When we created the stipend model in 2013, we wanted to enable more individuals to experiment with founding a company. When we brought in the stipend it changed the socio-economic profile of the individuals who applied to and joined EF.
3. The opportunity to find a cofounder, or team members
One of the biggest barriers to starting a company, particularly outside of Silicon Valley, is finding a cofounder. It can be slow and costly at best, or impossible at worst, to find a cofounder. Limited cofounder supply makes it really hard to start a company.
Talent Investors typically bring on cohorts of individuals simultaneously, all of whom are looking for a cofounder. By giving potential founders exposure to a wide variety of backgrounds it helps build companies that would otherwise not have been created.They run programmes to facilitate the formation of cofounding teams, for example through hackathons.
When we first tried to build teams from scratch, it took us a while to learn the secret ingredient to make it work — it’s not about getting people into teams, it’s actually about quickly getting people out of the wrong teams. At EF, we recommend that teams break up when we see that they aren’t being productive together. Individuals typically go through 2.4 potential cofounders, before finding the right one. Unlike in the real world, the cost of breaking up is low as there are a pool of other potential cofounders for them to work with.
You can read more about the parallels of finding a cofounder with online dating.
4. Support to develop ideas
Talent Investors select individuals based on their potential, not on their idea. When we first started doing this, we were told it was crazy. We were told if an individual didn’t have an idea, there was no way they could be a founder.
What we found was that in ecosystems where founding a startup isn’t the norm, it can be hard to know what a good idea looks like. Ideation frameworks can support individuals to not only develop ideas, but develop high value, differentiated ideas.
Different Talent Investors tackle ideation in different ways. We use the concept of Edge, which is based on our experience of working with >1,500 individuals to develop their idea. You can read more about it here.
So who are the Talent Investors?
Founded: 2011
Locations: London, Singapore, Berlin, Paris, Hong Kong, Bangalore
Stipend: A monthly stipend for three months dependent on location; £2,000 London, S$5,000 Singapore & Bangalore, €2,000 Berlin & Paris, HK$30,000 Hong Kong
Investment: £80,000 in Europe, $55,000 in Asia
Full disclosure, I am a co-founder of EF
Founded: 2018
Locations: Singapore, Stockholm, Amsterdam, London, Sydney
Stipend: S$4,000 per month for two months
Investment: unclear from their website, but I’ve heard around S$60,000
Founded: 2017
Locations: Berlin
Stipend: 2,000 Euros per month for 4 months, with 3.5% of any idea developed in this stage
Investment: 100,000 Euros, in return for a portion of your future token (companies do an ICO at the end of the programme)
Pioneer doesn’t meet all of the criteria to be a Talent Investor as they don’t provide an official team building programme — instead they have an online community where individuals can meet each other. I really like the model that Daniel Gross is developing — It’s an exciting development in the Talent Investor space.
Founded: 2018
Locations: Remote for the first phase, with a round trip ticket to San Francisco for the second
Stipend: $1,000
Investment: The right to invest $100,000 alongside other investors, with a cap of 20% of the round size.
What’s next
Investing and supporting individuals is becoming an increasingly hot topic, whether it be Talent Investors, or education programmes such as Lambda School. At EF we believe it matters what the most ambitious people do with their lives — new ways of supporting individuals can only help further that mission.
If you’re thinking about founding a startup, we run programmes in Paris, Berlin, Hong Kong, Singapore, Bangalore and London, you can apply here.
