Given that eCompanies created the very backbone of Business.com,
Gumbel feels that the cost of the incubator was well worth it:
"The most important thing that happened was when eCompanies
bought the URL of Business.com for $7.5 million. That received a
lot of publicity and was really the founding moment of the
company."
Another graduate of eCompanies, however, thinks his
venture's worthiness is only conditional. Because he gave such
a large portion of equity to eCompanies, Brett Morrison, 31,
co-founder and chief information officer of ememories.com, believes
it will have been worth it only if his business becomes a
billion-dollar company. Ememories offers film processing, online
photo albums and free digital uploads. Morrison, along with partner
Carlos Blanco, founded the company in 1998. They joined eCompanies
in November 1999 after a cool reception from other investors. The
incubator staff went to work in its usual, ex-pedient way; and
according to research company PCData Online, by March 2000,
ememories' site was No. 1 among sites that offer photo
processing or photo sharing. The company recently signed a deal
with Kodak that brought investment capital and affiliated contacts.
Despite the early advantages an incubator delivers, Morrison
cautions entrepreneurs to evaluate carefully the loss of equity.
"If we execute the plan, we'll reach a billion, but
we're not there yet," he says. "If it's not a
billion-dollar company, it wasn't worth it."
Incubation seems right for many companies. The speed to market
is a big advantage for Internet start-ups. With many of the
functions handled by someone else, and with the help of mentors,
the entrepreneur gets a jumpstart on the competition. But each
founder has to decide whether the equity they give up to the new
for-profit incubators is balanced by what they get in return.
Content Continues Below
Cynthia
Harrington, a freelance writer in Austin, Texas, writes about
business for a variety of publications, including Bloomberg
Wealth Manager and Senior magazines.
Page
1 |
2 |
3 | 4