No Equity No Interest – Beware the Consulting Accelerator

BlueChilli > Blog > Blog > No Equity No Interest – Beware the Consulting Accelerator

Recently I’ve been alarmed at a growing number of consulting firms who are launching “accelerator programs” to attract startups.  A recent one even boldly proclaimed that they took no equity and no fees, where the value prop was more about the sexy office and “introductions” to “investors”.  Apart from the obvious oxymoron of a consulting firm accelerating anything, this alarmed me a lot – if there’s no fees and no equity, why are they doing it?

Digging below the surface a little and reading through the terms, you can see that one of the “benefits” is to pitch directly to their corporate partners and to meet with the corporates.  Let’s just stop right there for a second.

I’ve been privy to sit on the other-side of the equation, and to hear their pitch to the corporates.  The customer (corporate) is being sold data. Data on where disruption in the ecosystem is occurring.  Data which can be used to adopt defensive or offensive strategies.  Strategies which include hostile take overs, buying and shelving, or even directly competing.  One of the Sydney based firms setup a direct competitor within six months of analysing a startup for partnership, using the data captured through engaging with a startup. Another firm was engaged by a government department to run a hackathon which I was a judge at, and months later developed a product for the department which was eerily similar to one proposed at the hackathon, without the original founder’s knowledge or involvement.

There are amazing support programs out there for entrepreneurs which are genuine, altruistic and kick arse.  Check out Fishburners for in my opinion the best Startup Ecosystem for early stage entrepreneurs.  So make sure you understand where the “money” is coming from before applying to these.

Remember, if there’s no equity, there’s no interest.  And if you’re not the one paying, you’re not the customer – you’re the product.


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