DALLAS – Looking to capitalize on what it calls a classically under-served marketplace, Internet accelerator Q Spring LP in mid-June began operations at its Dallas headquarters, said Sam Lett, president of Q Spring. The accelerator was founded in January by Q Ventures LP, a venture capital firm based in Fort Worth, Texas. Both Q Spring and Q Ventures are part of Q Funding LP, a private investment firm that manages over $4 billion in assets for 15 large institutions and high-net-worth families worldwide.
When it is up and running, Q Spring plans on incubating approximately 20 seed-stage, Internet-oriented companies per year with a goal of preparing the companies to receive a first round of institutional venture funding. The incubation period should be about six months, Lett added. To date, the accelerator has yet to select any companies for its program, though Lett said Q Spring is currently considering extending offers to five companies to join the accelerator.
In exchange for a 10% equity stake, Q Spring will provide its portfolio companies with office space and technology infrastructure, including 30 email accounts, wireless Internet access and two T1 lines for voice and data communications. Q Spring will also have weekly meetings with its portfolio companies to identify their objectives and chart their progress.
The accelerator will also leverage its relationships with professional service providers in the legal, accounting, personnel, technology infrastructure, public relations, marketing and Web development industries to provide its portfolio companies with reduced rate access to these services. Lett said he anticipates Q Spring developing partnership agreements with professional service firms in each of these categories, so that Q Spring’s portfolio companies will have a list of seven to 10 preferred providers to choose from in each industry. Lett declined to identify any of the potential service providers.
Q Ventures retains the right to participate in a Q Spring portfolio company’s first round of funding once it graduates from the accelerator. “Q Ventures does not have the first crack at these companies, but it does have the right to join in on a round of funding. We want our companies to succeed and we don’t want to preclude other venture capitalists from bringing their resources to bear on one of the companies,” Lett added.
Lett said the ideal candidate for Q Spring is a company founded by an experienced entrepreneur with a small team of one to three people in place and a first draft of their business plan written. “They probably have limited resources money either from family, friends or angel investors – and are coming to us to leverage their resources to drive their development to proof of concept and a Series A completion of their business plan,” he said. Interested companies can submit an application, which consists of detailed resumes of its team members, an executive summary of the company and a completed questionnaire, to Q Spring through its Web site.
The idea for the accelerator was born from Q Ventures LP’s experience in founding and developing Handango.com Inc., an Internet Web site specializing in handheld computing solutions and software. “Q Spring evolved out of the success of Handango,” said Lett. “Handango represented what our networking and resources enabled us to create, and we thought we should use this model to help other start-ups.”
Q Ventures founded Handango in January of 1999. In March, the company secured a $15 million, Series C round of venture funding led by Hicks, Muse, Tate & Furst Inc.
Lett said Q Spring would likely add one to two companies a month as it ramps up its services. The accelerator’s facilities can accommodate between 10 to 15 companies, he added.