American venture capital firm, Accel has introduced Atoms, a pre-seed funding initiative through which it will pump $250,000 in startups without taking any equity (or uncapped convertible) in the company, as the firm competes for participation in an increasingly congested early-stage investment world.
Accel intends to provide one-on-one mentoring for entrepreneurs through the initiative, rather than the cohort methodology used by VC firms such as Lightspeed Venture Partners and Sequoia Capital.
The $250,000 investment will be converted into stock in the startup's next round valuation, stated Accel, which has operated in India since 2008.
As per sources, till today, it has invested in 150 companies in India. Some of its portfolio companies are Swiggy, Freshworks, MoneyView, Flipkart, Rupeek, Infra.market, BrowserStack, Chargebee, Acko, Samunnati, FalconX, Mindtickle, Zenoti, Urban Company, Zetwerk, MyGlamm, BlackBuck, Moglix, Agrostar, Vedantu, and Spinny.
Manasi Shah, Vice President at Accel, said that finding 5-10 high-quality mentors who work with only 1 to 2 entrepreneurs at any given time and spend 2-3 hours per month with the startup is a significantly superior approach for getting personalized attention.
When a startup raises money, it usually does so through an equity round. The investor receives a percentage of the company in exchange for a specified amount of money. For example, a ten per cent stake in an organization valued at $10 million.
The startup's worth is determined at a later date in the case of an uncapped convertible. This is beneficial to early or pre-seed startups as it's difficult to agree on a fair valuation at that stage.
This investment of Accel is part of the firm's sixth funding of $550 million, and it intends to lead or take part in rounds led by other micro venture capitals and angel investors.
The sector-agnostic fund will invest in D2C brands, fintech, blockchain, cybersecurity, B2B marketplaces, insurtech, crypto, developer tools, consumer apps, SaaS, open-source, and health tech companies.