David Crow posted thoughts on StartupNorth about startup incubators and why we don’t have one in Toronto. As he points out, funding an incubator program is a big challenge. There aren’t enough Angels and VCs around willing to risk money on very early stage ventures here, and the ever-decreasing amounts of capital needed by tech startups look less and less attractive to investors with big chunks of money to manage. So if we’re to have a farm team, in Rick Segal’s words, how do we fund it?

I believe Toronto has both the financial and intellectual capital needed to do this.  Given that we’re having trouble getting bigger investors to fund this sort of effort, I wondered in reply whether micro-financing might be a viable alternative:

What if we tried micro-funding instead of the current approach? That might net enough investors to make it viable. We create a fund that pays for operating one session (or one year) of the program from start to finish. Price shares at, say, $5,000 apiece. Standardize the share terms so there’s no negotiation involved. Entrepreneurs offer up a fixed amount of equity in exchange for program participation. Investors share in the entrepreneurs’ risk and reward.

Who would buy? Well, at that price, I’d buy a share. I bet at least a few hundred other people would too. Wealthy investors (incl. some Angels) might purchase tens or hundreds of shares. Forward-thinking corps and a VC or two looking for higher-risk investments would buy in, and get good PR as a result. Maybe even the government buys some shares, or provides a tax incentive to others for buying. If the terms are suitable, even investors in other countries could participate.

Could we sell 2000 shares at that price? $5,000 x 2000 shares = $10M.

$10M could buy you an awfully big farm team, or even better, many cohorts of a small farm team.

Would you buy a share?