Betaspring is pressing pause on its new cycle of startups to focus on raising a fund from private investors.
Between now and spring 2015, the Providence, Rhode Island-based accelerator will be out trying to secure a new pool of private capital from which to invest in coming classes of companies, reports Betaboston's Scott Kirsner.
Betaspring graduated its most recent batch of seven startups this past June, bringing the total companies ushered through the 13 week-long program since its 2009 start to 90. In the past, the accelerator has received public funding – convertible notes of $50,000 from the City of Providence and $2 million from the State Small Credit Initiative, a federal government-funded program that was part of the post-recession stimulus package.
That latter chunk of capital proved controversial in February of this year, when Betaspring came under fire from the Rhode Island Economic Development Corporation. An audit of the accelerator’s books showed that much of the money went towards paying operating expenses and that three of the companies that received funding from that $2 million via Betaspring were not based in the state of Rhode Island.
To start its next cycle, Betaspring will need to raise a fund – from private investors this time, not public supporters.
Meanwhile, it seems like the accelerator is aiming to get more involved in its alumni startups’ successes.
“We wanted to go back and focus on our most active alumni startups, and see if we could spend a cycle figuring out what they needed, and how we could help them,” Betaspring managing partner Allan Tear told Betaboston.
It makes sense that Betaspring would want to sidestep the public sector drama and invest from its own fund. The accelerator’s most recent fund was worth $4.25 million, reports BetaBoston, through which it made investments of $15,000 to $20,000 in startups within its portfolio.
Across its 11 classes, Betaspring has seen quite a few of its companies and talented founders take off. Tracelytics raised $5.8 million from Google Ventures, Bain Capital Ventures and Flybridge Capital Partners among others before being acquired by AppNeta in 2012. The founders of Tshirt customization startup Teespring participated in Betaspring in 2010 for a separate startup called Jobzle. While that was a flop, Teespring was accepted into Y Combinator and raised $20 million from Andreessen Horowitz last winter.
In addition to the new fund, Betaspring may make some other changes in terms of the number startups it accepts per session, and the duration of each session.
