The Difference Engine is a new programme for early stage digital businesses that provides £20k funding and mentoring support over a 16 week period for 10 companies, the programme runs twice a year.
The difference engine (@differenceengin) is a newly created programme that intends to operate in a similar manner to Y Combinator, Seedcamp and TechStars.
“The Difference Engine is a full time 16 week acceleration programme which combines investment capital of £20,000 (for 8% of the business) with mentoring, support and office accommodation with various other services provided by our partners.
At the conclusion of the programme the businesses will be expected to be investor ready, and will have to present their businesses and products to a group of venture capitalists and angel investors at a demo day. The first programme will commence in February 2010 and will be run from Boho One located in Middlesbrough.
The Difference Engine is comparable to Y Combinator (Silicon Valley), TechStars (Boulder, Colorado & Boston, Massachusetts) and Seedcamp (London). Outside of London, this will be the first major acceleration programme to be set up in Europe, and clearly demonstrates our ambition to help aspiring digital entrepreneurs.”
The difference engine is open to anyone worldwide with the condition that the successful teams must work or be available full time in the North East region during the 16 week period, after that they are under no obligation to stay in the North East – see faqs.
The programme is currently wholly public sector funded and the £20k investment capital provided will be in return for 8% which will be held by one or more non profit public sector organisations in the North East.
Presumably this capital could be used to leverage in other public sector funding (eg Business Link Solutions for Business available in the more “traditional” grant form as opposed to capital in exchange for shares in the business).
The programme will be operating at a seed capital level aiming to develop businesses that can either immediately start generating revenue and/or go on and seek further investment from Angel Investors or Venture Capital organisations. Nick Brisbourne delivered an excellent presentation last week about “Understanding Venture Capital” as embedded below and available here.
It would be great to see the drivers for the difference engine (as per slide 4 of the presentation above) to see what differences a public “seed capital” fund has in comparison to a private sector seed capital fund. Presumably “outputs” in terms of businesses and jobs created in the North East together with “promotion” opportunities for the North East are high on the agenda.
It would also be useful to know how the 8% shareholding is intended to be used once the “incubatees” from this programme mature and realise a liquidity event – returns made put back into the programme fund to achieve future sustainability with no further public funding?
Personally I think that this type of programme provides a lot of benefits to the North East region in terms of:
- Promotion of mentors with direct digital experience who operate in the North East
- Promotion of other support programmes and facilities available in the North East for starting a digital business
- Promotion of the North East as a place supportive of digital businesses and not so “grim up north”.
However, the real test will be what happens to the new businesses after the programme and it is here that I hope that the difference engine really does start to make a difference in terms of providing and promoting:
- Knowledgeable and practical support for all businesses operating in the digital sector as opposed to generic business support
- Raising awareness of the economic value that digital businesses and the digital economy can provide, especially amongst fund managers, banks and other related parties
Overall I think that this programme is a useful and timely initiative but I must admit that I am a bit confused as to where Codeworks fits into this new programme as I would have thought that it provided a natural fit for delivering this programme rather than the creation of another new “brand” (would be pleasantly surprised if “difference engine” is not a trademark by now!) within the region that is primarily funded by the Regional Development Agency One North East who in turn partly funds the other backers.
The real sign of success of this programme in my opinion however would be if the difference engine “eats it own dogfood” and during 2010 seeks and raises finance to become a private company with a remit to continue this programme in a self sustaining manner without future public sector backing – that really would be a difference!