Singapore accelerator JFDI could invest up to 4 times more per startup

Singapore-based startup accelerator Joyful Frog Digital Incubator (JFDI) today announced that it could invest up to four times more than it usually does in selected startups for its upcoming bootcamp, which goes on for 100 days. Each team will get an initial S$50,000 (US$37,000), while promising teams will get an additional S$70,000 (US$53,000).

In return, JFDI will get a fixed 8.88 percent equity stake in each team. This announcement marks a significant departure from JFDI’s investment in startups during past incarnations of its program. During 2014, each startup initially got S$25,000 (US$18,800).

The fixed equity stake is also an interesting choice, given that JFDI has previously held varying stakes between five and 20 percent in participating startups. The eight percent equity stake seems, however, more in line with what other accelerators recently arrived in Singapore take. Muru-D, for example, plans to take a six percent equity stake from the startups participating in its own program.

(Update on May 21: The post has been updated with responses by JFDI’s Hugh Mason.)

JFDI used to publish a table of metrics depicting standardized valuations that the accelerator gave startups based on their traction, co-founder and CEO Hugh Mason tells Tech in Asia. “But it was complicated – there is no precise way to value an early stage company, haggling slowed down the recruitment process, and founders told us they just wanted a simple number. So we listened to that,” he explains.

Mason points to the fixed equity percentage of between six and nine percent that a lot of accelerators have, adding that JFDI decided to “mark to market and pick an auspicious number.” Time will tell if this is the right way to go, but Mason stresses the message JFDI wants to send to founders: if you are successful, it shouldn’t be a big deal for JFDI to make a little less. And if you’re not, well, easy come, easy go. “The point is to JFDI [Just Frogging Do It, as the accelerator’s initials can alternatively be read] and just build value,” he adds.

All teams in the program will also be offered a S$1.2 million (US$908,000) package (which will include technical resources and vendor perks), as well as one-on-one mentoring. In addition the teams will be able to present to over 100 early-stage investors at the program’s demo day. Successful industry figures, including many of JFDI’s illustrious alumni, such as Tradegecko and OurHealthMate, will mentor the teams.

More funding, less legwork

The twist this time is that part of the program will take place online, for the benefit of those startups that have a hard time relocating to Singapore in order to participate.

“Costs are much lower elsewhere in the region and the market for our startups is also often back home,” JFDI co-founder and chairman Meng Wong says in a statement. “So this time around we are experimenting with transformational technologies like Slack to virtualise our offering, giving teams the option to accelerate with us wherever they choose to be based, for part of the program.”

The switch makes sense from this point of view – startups that have a strong market base in one country don’t have to suddenly up and leave to participate in the accelerator, plus they save on relocation and living expenses. However, this might be seen as compromising the social, face-to-face collaborative aspect traditionally associated with incubators and accelerators. Mason wonders if this might just be a holdover from the past, though.

“It’s interesting; I personally prefer always working face-to-face but I wonder if that’s my generation,” he says. According to Mason, JFDI switched its entire team to workplace chat app Slack a few months ago, with “transformational” results. Half the JFDI team now works out of the accelerator’s recently opened office in Cebu, Philippines, and the feedback seems to be very positive.

JFDI recognizes there’s probably not one solution that fits all in this case. Feedback has shown that one country might favor face-to-face communication, such as Malaysia, while another country might be more open to working remotely, as seems to be the case with India, Mason points out. “We want to try an experiment and see what people think,” he explains. “If we can make it work, it would mean we could take up the many requests for partnership we have had with co-working spaces and similar places, where startup communities come together around the region.”

According to JFDI, it may well choose to move entirely to the cloud, if this first experiment proves successful. Alternatively, it might attempt to offer a mixed program that blends the online and offline experience and provides entrepreneurs the access and resources they need without making them relocate.