Inversity

3/29/08

A dorm model for launching companies. The numbers are based on a hypothetical conversation from Brewed Fresh Daily.

Let’s establish a dormitory with some work areas/classrooms. Then, let’s recruit young adults (18-30 plus or minus) from across the globe to come live in these dorms – at no cost - and start an Ohio company.

Let’s suppose the following: We have $30 million in seed capital. We start with a 50 person dorm at $1,000 per month, per participant for rent, meals, medical, etc. $50,000 per month, $600,000 per year.

We will also need a support staff including:

-entrepreneur in residence(s)

-engineers (software. mechanical, electrical, etc)

-designers (industrial, packaging, web, etc)

-professional investor

-patent agent

-etc

Let’s assume a management/staff cost of $1,000,000 per year.

The entity, let’s call it Inversity, owns a small stake in each company (say 6%).

Let’s double those costs so the annual operating estimate is $3,200,000. Also, figure that an additional $1,000,000 per year of that capital would be invested in some of the emerging companies. At an annual cost of approx. $4,000,000 the entity has seven years of funding (plus interest).

Now, assuming this works and viable companies are forming, then we start charging $1,000 per month (or enough to cover individual costs) to participate (cheaper than college) and build-out the program.

(There are, of course, a number of legal and practical issues…)

Input welcome...