Introducing Nick Hegeman from PaintJet
Q: Could you introduce yourself and your startup, PaintJet?
A: I’m Nick Hegeman, the CEO and co-founder of PaintJet. We’re pioneering in the field of robotic painting, offering a vertically integrated solution. This means we’ve developed proprietary paints specifically designed for application by our custom robotic systems. To ensure the highest quality of work, we employ advanced imaging and analytics, allowing us to monitor every aspect of the painting process closely. This approach enables us to offer warranties unprecedented in the industry, setting new standards for quality and reliability in robotic painting solutions.
Q: What inspired the creation of PaintJet?
A: The idea for PaintJet emerged from my blend of experiences as an engineer at ExxonMobil and later as a franchise owner of CertaPro Painters. My transition into entrepreneurship was strategic, aiming to establish a business that could operate semi-autonomously, generating revenue while I pursued additional ventures. However, a significant challenge soon presented itself: the acute labor shortage in the trades, particularly in painting. This issue profoundly impacted operational efficiency and project completion rates. The turning point came during a project to paint a 150,000 square foot warehouse. Midway, due to unforeseen circumstances, I found myself and my family completing the job to meet a critical deadline. This experience highlighted the need for a more reliable, efficient solution in the painting industry. Leveraging my engineering background, I envisioned a technological approach to address these challenges. The concept of PaintJet was born from this necessity—to develop a robotic painting solution that ensures high-quality outcomes without the limitations of traditional labor. This venture represents not just a response to a personal entrepreneurial challenge but also a broader industry need for innovation and sustainability in the face of labor shortages.
Why the Founder Institute?
Q: How did you become involved with the Founder Institute?
A: My initial encounter with the Founder Institute occurred before I launched the CertaPro Painters franchise, when I applied to one of their programs for a different project. Unfortunately, that cohort didn’t materialize due to unforeseen circumstances. Fast forward to the development of PaintJet, amid the challenges of the COVID-19 pandemic, the Founder Institute reached out with an opportunity to join their fully virtual program. At that juncture, we were actively seeking funding for PaintJet, exploring various avenues without success.The timing was serendipitous; despite our efforts and making it to the final stages of negotiation with HAX SOSV, we faced rejection. This setback coincided with the Founder Institute’s offer to participate in their program. Given our situation and the need for support and direction, we decided to join the Founder Institute. Their outreach came as a beacon of hope during a crucial period, offering a pathway to refine our strategy, navigate the fundraising landscape, and access invaluable resources and mentorship. This decision marked a significant turning point for PaintJet, enabling us to leverage the Founder Institute’s network and expertise to propel our venture forward.
How a Founder Gets In
Q: Can you describe the application process for the Founder Institute?
A: Applying to the Founder Institute, for us, was streamlined due to our prior registration in their system. The process resembled what you’d typically expect from most accelerators. It involved providing comprehensive details about PaintJet, including our business activities, the team’s background, and any available pitch or marketing materials, along with our website details. A distinctive part of their application was the online assessment, which included a personality test, aiming to gauge the compatibility and potential of the founders beyond just the business plan.
Following the submission and assessment, the next step was a direct outreach from the Founder Institute. They informed us of our acceptance into the program, which was a pivotal moment for us. Post-acceptance, I had the opportunity to meet with some of the local directors. These meetings were incredibly insightful, allowing me to understand their profiles, backgrounds, and the specific objectives they aimed to achieve through the program. This personalized interaction provided a solid foundation for our journey with the Founder Institute, setting the stage for the support and mentorship that would follow.
Understanding Costs and Equity with the Founder Institute
Q: How did the Founder Institute’s pricing, equity, and funding work during your application?
A: When we applied to the Founder Institute, the financial commitment involved a fee of about a thousand dollars alongside a warrant agreement. Coming from a background where venture capital and the startup ecosystem were entirely new territories for both me and my co-founder, these terms were somewhat foreign to us. The concept of a warrant, especially, was something we had to quickly familiarize ourselves with. In hindsight, the investment into the program felt akin to hiring an experienced co-founder, given the wealth of knowledge, guidance, and support we received. Although the cost seemed substantial at the outset, and even more so in retrospect, the value it provided was immeasurable. It was a critical investment into our future, acting as a catalyst for our growth and development within the venture space. Looking back, the decision to join the Founder Institute and accept its terms was pivotal. Without this initial financial commitment and the learning curve it facilitated, PaintJet might not have achieved its current status. This step was fundamental in transitioning from novice entrepreneurs to being well-versed in navigating the complexities of the startup ecosystem.
Daily Life in the Founder Institute Program
Q: What was a typical day in the Founder Institute program like?
A: The Founder Institute program structured our weeks with specific assignments, setting a clear agenda of what needed to be accomplished. Since the program was conducted entirely online, collaboration was pivotal, especially within the small group we were part of in our cohort. This setup facilitated focused work and accountability among us. Being slightly more advanced in our startup journey compared to other participants allowed us and, having a co-founder, to efficiently divide responsibilities and tackle assignments more effectively. The workload, while significant, was manageable and not overwhelming compared to the demands of running PaintJet. The program’s structure was well-defined, with a set number of weeks, each bringing its own set of tasks and learning objectives. Core requirements were laid out from the start, with the understanding that failure to meet these could result in dismissal from the program. However, we found ourselves consistently ahead of these milestones, allowing us to progress without undue stress. In summary, the Founder Institute provided a structured yet flexible environment that mirrored the realities of entrepreneurship. It demanded commitment and focus, yet the challenges presented were always within the context of fostering growth and learning, making the experience enriching and integral to our development as founders.
The Standout Feature of the Founder Institute Program
Q: Looking back, what was a standout feature of the Founder Institute program for you?
A: For us, the defining aspect of the Founder Institute program was the access to and support from mentors and program directors. The guidance provided by these individuals, who were deeply embedded in the venture and investor community, was invaluable. They were among the few who truly grasped the vision of what we were trying to achieve with PaintJet. Their insights were especially enlightening given our background in a more conservative investment climate, typical of the East Coast, where the focus is often on short-term exit strategies rather than expansive, long-term visions. These mentors encouraged us to think bigger, challenging the conventional wisdom we had encountered in our local investor community. This shift in mindset was transformative, enabling us to consistently outperform our peers in subsequent stages of our journey. The ongoing support from these mentors, even beyond the program, has been a cornerstone of our success, particularly as we navigated fundraising.
The Funding Lab, a resource for graduates, played a crucial role in securing our pre-seed funding round. The strategies and lessons learned during this phase have been instrumental in all our subsequent fundraising efforts. The impact of the Founder Institute on our venture has been profoundly positive, offering a solid foundation for those new to the venture scene. While I may not participate again, given the network and knowledge we’ve now acquired, I wholeheartedly recommend it to newcomers in the startup ecosystem who might not have access to top-tier accelerators like Techstars or Y Combinator. The experience, network, and insights gained from the Founder Institute are invaluable for those looking to make their mark in the venture world.
Reflecting on Areas for Improvement in the Founder Institute
Q: What aspects of the Founder Institute program did you find disappointing or in need of improvement?
A: Reflecting on my experience, the primary critique centers around the cost associated with the warrant agreement—a financial instrument that the Founder Institute required from participating startups. At the time, the warrant was set at 4% of the company, which, looking back and after gaining more insight into the venture world, felt quite expensive, bordering on predatory according to some outside perspectives within the investor community. This feedback isn’t just my own reflection but echoes sentiments from others familiar with such agreements in the startup ecosystem. It’s noteworthy that the Founder Institute has since adjusted this rate to 2%, which, while still significant, is more manageable and in line with expectations for those new to the venture space. This change is a positive step, but my experience underlines the importance of startups carefully considering the implications of equity and warrant agreements. In summary, while the program offers invaluable resources, mentorship, and networking opportunities, the financial commitments, particularly around equity, warrant careful consideration. This aspect, though it has seen improvement, was the most notable area where my expectations were not fully met.
Equity Arrangements with Mentors in the Founder Institute
Q: Is it common for mentors in the Founder Institute to ask for equity in exchange for their guidance?
A: During my time at the Founder Institute, the equity arrangement, particularly with mentors, was part of the structured agreement, which encompassed a 4% warrant, with 1% allocated to the collective pool of mentors. This setup facilitated a foundation for ongoing relationships with mentors, allowing for the possibility of equity exchange for their advisory roles post-program, akin to standard market practices for advisors. The Founder Institute was transparent about the expectations and norms around such advisory engagements, providing guidance on market rates for equity or cash compensation for different levels of advisory commitment. This clarity was invaluable in navigating these arrangements and ensuring they were within the bounds of what’s considered standard in the startup ecosystem. From discussions with other founders, it seems there might be variability in how different accelerators approach mentor equity arrangements. While some alumni from other programs haven’t mentioned equity exchanges with mentors, it’s worth noting that compensating advisors with equity is a common practice, especially in early-stage startups. The key is ensuring any equity compensation is reasonable and in line with the value the advisor brings to the startup. In my case, any additional equity discussions with third-party mentors were carefully considered and aligned with standard market practices, ensuring we maintained a balanced approach to compensating valuable advisory contributions while safeguarding our startup’s equity.
Quantifiable Success from the Founder Institute
Q: Can you share more about the tangible outcomes from participating in the Founder Institute?
A: One of the most significant achievements from our time with the Founder Institute was successfully raising a $1 million pre-seed round from an institutional investor, an accomplishment that can be largely attributed to our participation in the program. This step allowed us to effectively skip the traditional angel investing phase, which is a testament to the strength and appeal of our proposition post-program. Moreover, the insights and preparation we gained through the Founder Institute enabled us to navigate the accelerator landscape with confidence. In fact, we had the unique position of declining an offer from Techstars and later, a term sheet from HAX SOSV. The latter decision was informed by the critical review and feedback on the term sheet provided by the Founder Institute, which highlighted terms that could potentially compromise our startup’s long-term viability. This level of direct support in analyzing term sheets—without the immediate need for legal consultation—was invaluable. It not only saved us resources but also equipped us with the knowledge to understand what constitutes a fair and favorable agreement in future negotiations. The Founder Institute played a pivotal role in these early successes, laying a solid foundation for our venture’s path forward and setting us up for the subsequent stages of growth and development.
Final Advice for Aspiring Founder Institute Applicants
Q: What advice would you give to someone considering applying to the Founder Institute or similar programs?
A: My foremost piece of advice for anyone looking into the Founder Institute or any accelerator program is to closely connect with and understand the director of the program. The director, along with their team, significantly influences the program’s culture, resources, and overall effectiveness. From my experience and conversations with peers, it’s clear that the director sets the tone for the entire experience and is a pivotal figure in providing support and guidance.
Unlike third-party mentors, who might not be consistently engaged, the director and their team are deeply invested in the program’s and its participants’ success. They are your primary resource and ally throughout the journey, often going above and beyond to ensure you have what you need to succeed. For PaintJet, the relationship we built with our program’s directors was instrumental in navigating challenges and seizing opportunities. Their insight, support, and dedication were key factors in our positive experience and subsequent achievements. So, to maximize the benefits of participating in an accelerator, focus on building a strong, collaborative relationship with the program director—they could very well be the catalyst for your success.