We had been talking off and on with an accelerator for about a month. We had pitched them, had a few calls, but lived on the other side of the country. They wanted to meet in person which was really not feasible for us. We worked at full-time jobs while hacking away on the side and scraping together whatever money we had to fund our company.
A little flashback, first: I had dropped out of grad school and taught myself programming to start my first company. After a year of living on my wife's student loans, I got "acquihired" by a startup that was run by one of the accelerator's mentors. They gave me 3% equity, a $10k moving bonus, $15k for the company, and a $75k/year salary. I said yes.
Three months later, I decided to quit. I was the only technical person in a company consisting of the two non-technical co-founder, co-CEOs, a project manager, and myself. They had burned through $700k already and hadn't built anything yet. It was becoming clear that my product was going to be their product. In the best case scenario I would spend the next four years working on my original startup, only now for pennies on the dollar.
The purchase of my assets still hadn't gone through and I hadn't yet been paid, aside from the moving bonus and salary. The co-founders claimed I had acted in bad faith and asked for the moving bonus back. I explained that I wouldn't have moved had the moving bonus not been offered (as I couldn't have afforded it). If they had wanted that money back in case I quit, our contract should have specified as much. They relented, and we went our separate ways.
Fast forward another year, back to our accelerator story. The accelerator decides they want to afford us the opportunity to meet in person. They agree to pay for flights so long as we pay for our own hotels and car rental. We also have to talk up the trip on social media, talking about how they paid for our trip, our meetings with investors, etc. Small price to pay, we think.
We make the trip and have some pretty productive meetings. They seem to like us. We fly back, and after some back and forth, they decide they want to invest. Of course, they still need to do their due diligence, so it's going to take some time. In the meantime, my co-founder and I get fired from our jobs. You see, our boss found out about our trip to the accelerator since it was broadcast over social media. It was cool when we were working on a startup after hours. It wasn't so cool when we were talking openly about actually starting a company.
It doesn't matter, though. We made it into the accelerator. They send over the paperwork. It's a convertible note with pretty standard terms, fully signed by all the partners. We sign and send it back. We can't believe it's happening. I sign a lease on an apartment in the new city and my wife and I pack up our apartment. My co-founder does the same.
Suddenly the music changes. They go dark for a couple days. I'm nervous because I have a U-Haul scheduled. I finally get a call with one of the partners; I'm supposed to start a 3,000 mile move the next day. He explains that they can't do the deal. A check isn't coming. He can't explain why.
My mind races and I think: it couldn't have been that mentor, could it? My resume was fully transparent. They should've seen the connection. And they did their due diligence before they made the deal. How could that have slipped by?
I ask for an explanation but to no avail. They can't explain it. Not even a little bit.
Now I have to try to reorder my life. My job is gone. My apartment is already rented out to someone else. Luckily the landlord at the new place lets me out of my lease. I reschedule the U-Haul to take us to my wife's parents' house instead.
My co-founder was devastated. He wasn't used to startups. In fact, to this day he's been bouncing around trying to find a similarly stable job. I can't help but feel responsible. I recovered better. I decided to start consulting for other startups and have made a pretty good go of it.
That's my accelerator horror story. Anyone else have others?