Judith Balea, writing for Tech In Asia;
Philippines-based IdeaSpace Foundation has decided to go a different route, however. In a bold move, the accelerator arm of the Manuel V. Pangilinan (MVP) group of companies announced today that it would no longer take a 20 percent stake in startups it will fund through its annual startup competition.
IdeaSpace executive director Diane Eustaquio has a great answer, for those who are asking why;
The reason why we took 20 percent before was to be sustainable. We thought we would sell our shares to angel investors or anyone who wants to invest in the startups later on. But angel investors always prefer that their money go to the founders so the founders can continue growing the product. Obviously, if we sold our shares, the money would go to IdeaSpace. It wasn’t really helping the startups.
I’m not sure if this is a good or a bad thing, but taking equity from startups is a common practice amongst incubator/accelerator, though there’s no written rule as to how much you should take from a startup.
…taking equity during companies’ very early stages is more of a strain rather than an opportunity.
May be the 20% equity that IdeaSpace is taking from startups is hurting them more than it helps the startups, since they’re not getting the expected returns from their investments. I think the best number will be between 8% to 15%, not too large and not too small either.