Funding individuals, before they’ve founded a company — the Talent Investor

It matters what the most ambitious people do with their lives. At Entrepreneur First we believe the most ambitious and talented individuals should be founding companies. There is now a stage of Venture Capital dedicated to making sure this happens.

What defines a Talent Investor?

Talent Investors typically provide many of the services you would see in an accelerator; mentorship, office space, investment into the company. However, there is a key difference — Talent Investors fund individuals, rather than companies.

No cofounder? No problem

The four distinguishing features of Talent Investors:

    • They select individuals, not teams

You can apply to a Talent Investor, before you have a team, or an idea. At selection, they evaluate you as an individual based on your potential to be a founder.
Different Talent Investors look for different things. Over the last 8 years, we have interviewed thousands of people and worked with >1,500, so we know have a good idea of what a founder looks like, before they’ve actually become a founder.

    • Funding paid to an individual

Talent Investors pay a monthly, or lump sum, amount to individuals (rather than to a company) who are selected to join their programme. This is to cover living costs for the period of time before they form and incorporate a company.
What’s interesting about this is that there is no need to repay this stipend, even if you don’t form a team or a company. Often the stipend gives the Talent Investor an option to invest in any company you produce through their process.
When we created the stipend model in 2013, we wanted to enable more individuals to experiment with founding a company. When we brought in the stipend it changed the socio-economic profile of the individuals who applied to and joined EF.

    • The opportunity to find a cofounder, or team members

One of the biggest barriers to starting a company, particularly outside of Silicon Valley, is finding a cofounder. It can be slow and costly at best, or impossible at worst, to find a cofounder. Limited cofounder supply makes it really hard to start a company.
Talent Investors typically bring on cohorts of individuals simultaneously, all of whom are looking for a cofounder. By giving potential founders exposure to a wide variety of backgrounds it helps build companies that would otherwise not have been created. They run programmes to facilitate the formation of cofounding teams, for example through hackathons.
When we first tried to build teams from scratch, it took us a while to learn the secret ingredient to make it work — it’s not about getting people into teams, it’s actually about quickly getting people out of the wrong teams. At EF, we recommend that teams break up when we see that they aren’t being productive together. Individuals typically go through 2.4 potential cofounders, before finding the right one. Unlike in the real world, the cost of breaking up is low as there are a pool of other potential cofounders for them to work with.
You can read more about the parallels of finding a cofounder with online dating here.

    • Support to develop ideas

Talent Investors select individuals based on their potential, not on their idea. When we first started doing this, we were told it was crazy. We were told if an individual didn’t have an idea, there was no way they could be a founder.
What we found was that in ecosystems where founding a startup isn’t the norm, it can be hard to know what a good idea looks like. Ideation frameworks can support individuals to not only develop ideas, but develop high value, differentiated ideas.
Different Talent Investors tackle ideation in different ways. We use the concept of Edge, which is based on our experience of working with >1,500 individuals to develop their idea. You can read more about it here.

So who are the Talent Investors?

Entrepreneur First

EF is the originator of the talent investor model and is balanced somewhat towards technically defensible companies and B2B, though it has also supported great B2C and marketplace businesses like Cleo and Encore.

Founded: 2011

Locations: London, Singapore, Berlin, Paris, Hong Kong, Bangalore

Stipend: A monthly stipend for three months dependent on location; £2,000 London, S$5,000 Singapore & Bangalore, €2,000 Berlin & Paris, HK$30,000 Hong Kong

Investment: £80,000 in Europe, $55,000 in Asia

Full disclosure, I am a co-founder of EF

 

Antler

Founded: 2018

Locations: Singapore, Stockholm, Amsterdam, London, Sydney, New York

Stipend: S$4,000 per month for two months

Investment: unclear from their website, but I’ve heard around S$60,000

Pioneer

Pioneer doesn’t meet all of the criteria to be a Talent Investor as they don’t provide an official team building programme — instead they have an online community where individuals can meet each other. I really like the model that Daniel Gross is developing — It’s an exciting development in the Talent Investor space.

Founded: 2018

Locations: Remote for the first phase, with a round trip ticket to San Francisco for the second

Stipend: $1,000

Investment: The right to invest $100,000 alongside other investors, with a cap of 20% of the round size.

Entrepreneur First is the world’s leading talent investor. We invest time and money in the world’s most talented and ambitious individuals, helping them to find a co-founder, develop an idea, and start a company.So far, we’ve helped 1,000+ people create 200+ companies, worth a combined $1.5bn

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