21. Expenses

2

An accelerator is a hybrid of service provider and investment fund …

Operating the program obviously incurs expenses, including: paying for meeting space, signage, catering, videographers, flyers, etc. is the major expense.

In addition, there are expenses related to:

  • Growing visibility of the “Fledge” brand
  • Recruiting the applicants
  • Drafting and updating the contracts
  • Accounting for all the RBF investments

Plus all the typical overhead of running both a service-oriented business, and an investment fund.

All of this work fully employs the time of the Managing Director year-round, plus when the 10-week program is in session, employs a Program Manager to assist in coordination of the participants and mentors.

To make Fledge a fiscally sustainable company, the key is to keep the total expenses less than or equal to the total cash stipends.

With that rule in place, each $1 in investment incurs no more than $1 in expenses. With a 2x multiple on that $2 via the revenue-based financing, that is potentially $2 in profit. Given some of the RBF will not be returned, there is a 50% margin for failure to achieve break-even, not counting the value of the “residual” equity.

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