EF’s deal is 10% equity for roughly $100k.
To give extra incentive to join, they also pay you €6k for the 4 months of the programme. Yes, it’s actually 4 (not 3, like they say), because the programme starts when they release cohort names and people start networking. That helps with your personal runway (how long you can build a business without a salary), and people don’t feel that they’ve given up that much other than time, in case EF doesn’t work out for them. I think this is a gamechanger for many people.
EF do not invest in every company that’s at EF. They only invest in 30-40% or of the companies who have teamed up. In my cohort, there were 30 people who teamed up, and 17 who did not. That’s 15 teams. This means that EF will invest in only 5 teams, i.e. 10 people, which is only 20% of the total cohort. Don’t think that because you are in the programme, you will find a co-founder and get the pre-seed investment.
People tend to complain about this deal. I disagree. At EF you start with nothing. Even when the investment happens, the most you would have done, is probably a waitlist or maybe a few FFF (friends, family and fools) customers. The 100k let’s you build things for 9-12 and pay yourselves a $2.5k-3k monthly salary. Generally you should be able to raise more capital a few months in.
Of course, when you look at the company’s pitches, it sounds like insane traction for a few months. But it’s not. For instance, one of EF’s flagship stories musiioo, claimed that they have a database with millions of songs already. Sounds impressive, right? Well, it’s not if you think more than 5 seconds about it. It’s a vanity metric. All the songs came from an open access database. Anyone tech savvy could download them and run some data analysis on them. It just sounds impressive, because it’s a large number. Anyway, just wanted to emphasise that it’s reaaaallly early for most of these companies. It’s not common to build something big in a few weeks.
When you pitch, you have “to be onto something”, not have a seed-ready company with a working business model. A few letters of intent, some decent weekly progress, etc. are good enough.
On top of this, you have to think where you are in the stack to see whether it’s a good or bad deal. If you’ve founded a successful startup before, you know investors already and they trust your business much more. That’s a bad deal then, you don’t need the EF money or the many talks and lectures. The only thing EF will be good for is your co-founder search, and that alone might be worth 10%. And it will be great for that, because you’re likely to already know what you want in a co-founder.
But if you’ve never raised much money, ever founded or worked as an early employee at a startup, then EF could be your gateway to the startup world. I think that’s the most attractive thing about EF. It’s a very easy, low-risk entry to give it a try in that world.
Short answer - they’re probably 2nd or 3rd tier. I’ve heard that they’re very hands-on and expect frequent updates but give little in return. However, that’s a good worry to have. I personally would not want them on my cap table, because it’s a meatgrinder but I’m in the very privileged of choosing our investors.
Short answer - no. The alumni community is relatively dead and there almost no events. The cohorts are very active, but once you ‘graduate’, there is nothing that sticks with you as an alumnus.