We deduct a program fee off the investment, which pays for your participation in our accelerator program.
This means that with our standard investment of $240,000 we deduct a $40,000 program component. So you have a net investment of $200,000 to your startup to spend as you see fit. We don't restrict how you spend that money.
The best way to think about our program fee is that we're like another member to your team – except that we can help you on pretty much every aspect of your startup including operations, sales/marketing, finance, hiring, research and development or fundraising.
This is in line with global accelerator programs, where they typically charge a service fee to support the operations of the program and the staff.
Why we charge a program fee to startups
We’re a small fund. We use the program fee to pay for some of the costs associated with our staff and operations that are provided to you. Thus, our 'budget' is proportionally tied to the number of companies we support.
This aligns incentives between us and you – we have to justify and commit to the value added services that we provide through our program, and the costs of delivering that program are a "direct" cost to participating startups, rather than being absorbed from another budget line.
We don't wave our hands about how we are "value adding" – we actively work with you to get you the right tailored support that you need.
When we talk to you about an investment, we will usually share initial ideas of particular program coaches, mentors or services that might be relevant to your startup.
Do accelerators typically charge a fee?
Many global seed accelerators now deduct a program fee. You can see a good overview (admittedly from 2017) of the various fees across different global accelerators in this Seedstars article.
In reality, all accelerators charge a fee (they have to pay people somehow) but in different ways. You won’t always see this as a founder.
Some programs will get this from a larger management fee paid by their investors (reducing the amount the fund can invest in companies), while others may operate entirely on sponsorship money from third parties.
Management fees paid by fund investors also need to cover a lot of other expenses, like financial services compliance (e.g. financial services licensing, anti-money laundering checks), accounting, legals, reporting and more.
The program fee we deduct from our investment does not subsidise these "fund operating costs" – it goes toward paying for the accelerator program operations,.
Galileo always pairs the program fee with our investment. You should be weary of any 'accelerator' that charges a fee and does not invest. We do not accept startups into the Galileo Accelerator without receiving investment from our fund.
What are the advantages of an explicit program fee?
We want to provide the best support services to early-stage companies in the market. We're a business too – we have to make sure that we have the operating cashflow needed to cover our budget to deliver our program to you.
Charging an ‘accelerator fee’ is an existing model already in use by other global accelerators as a way to make the program sustainable and ensure we can provide the very best service to you.
We are happy to have a transparent discussion of how venture funds work 'operationally' and how the program fee component factors into ensuring that we can provide a world-class accelerator program to you.
Can I not pay a fee and just take the investment or vice versa?
No. In some exceptional cases (for example later stage investments), we may make only an investment. Typically, we want all startups to go through the accelerator, as this is a big part of how we help you thrive.
What if I’m dissatisfied with the accelerator, can I get a ‘refund’?
We are all adults. If you're unhappy with how the program is tracking for you, we only ask that you speak to us early and directly, and we can work with you to resolve any concerns you might have.
We want to know if we aren't meeting your expectations – we aren't telepathic, and all feedback is useful feedback to help us improve!
If it truly does not work out or you are dissatisfied with our accelerator program we will refund your fee.
Ultimately, we’ve run multi-award winning accelerators before – we’re confident this will be one of the best experiences for you and your startup.