They sounded like the perfect partners for a business accelerator to guide entrepreneurs.
Elton Rivas, the darling of Jacksonville’s startup community who helped create One Spark, and Shad Khan, the ultimate entrepreneur who built a multibillion-dollar fortune.
Rivas would provide the leadership at KYN and Khan’s company would provide the capital.
The partnership in the company, named after kinship and kindred spirits, ended relatively quickly — and badly — a little more than a year later.
Monday evening, Rivas said KYN was in a “wind-down scenario due to unforeseen circumstances.” He wouldn’t talk about the funding from Khan’s company, Stache Investments.
“We’re a startup like many other startups and we have bumps along the road,” he said. “And we’re at a point right now where we’re not going to be continuing moving forward with KYN.”
He cited a series of numbers he said showed the accelerator’s success: 448 startups applied to KYN, six were accepted, five of those companies are still in business and one was in serious acquisition talks.
“We’re disappointed we can’t continue that progress, but really excited about what we accomplished,” he said.
Tuesday afternoon, Khan’s spokesman Jim Woodcock said the more than $1 million that Stache contributed to KYN “ultimately provided a disappointing level of financial support to the intended startups.”
“Stache has turned its attention to other investment vehicles which will more effectively support Jacksonville’s entrepreneurial community,” Woodcock said.
He said Khan and Stache remain committed to the city’s entrepreneurs and startup community and “welcome the opportunity to consider funding for programs that will benefit entrepreneurs and startup operations who demonstrate efficient business plans which justify that support.”
Rivas said he didn’t want to go back-and-forth with Stache over the issue, but disputed the criticism of the accelerator’s success.
He said KYN was “significantly ahead” of the benchmarks in the plan shared with Stache.
Rivas said the program has become a rallying point in Jacksonville.
“It gives the opportunity for Jacksonville to say we’ve got an accelerator that we’re working to build toward world-class levels,” Rivas said.
A success story
Rivas and others wanted to establish a business accelerator program in Downtown before they opened CoWork Jax in January 2012. But, it wasn’t the right time, he said.
While looking for a place to house CoWork, they saw the offices on East Bay Street where KYN is now located. When Rivas walked in, he said, “Man, it would be amazing to have an accelerator program in this space. It just feels right. It fits the type of culture we want to build.”
Within a few years, KYN was born out of One Spark, a next step in building the city’s entrepreneurial community.
Among the four businesses in KYN’s first class was Menuat, which sells digital menu board software that can be updated online or on mobile devices.
Owner Jeff Charette said KYN was the catalyst that helped get his business off the ground. He praised the mentorship program for giving him the confidence to take calculated risks and teaching skills such as hiring the right people.
The company is now in 31 locations and will be opening this month in the pre-security area of the international terminal at Hartsfield-Jackson Atlanta International Airport. Menuat has grown to five employees, including Charette.
KYN also led him to two key investors via “demo day”: Khan’s Stache Investments and PS27 Ventures, a Jacksonville investment firm led by Jim Stallings.
Charette was disappointed KYN was closing.
Matt Galnor, a spokesman for the JAX Chamber, said a business like KYN is important for the “entrepreneurial spirit that is alive and well in Jacksonville.”
A dream come true
What KYN has meant to Rivas is simple: “Literally, it’s been a dream come true.”
He praised the employees who “jumped in and built this thing out of the ground.” He’s proud of the way they’re handling the “wind-down procedure.”
Sometimes things don’t work, he said, leading startups to go through a series of emotions.
“The biggest emotion the team has felt is the split-personality disorder between a sense of failure and sense of accomplishment,” he said.
Part of that is fueled by the sadness of not being able to see the program through to fruition.
He said building a successful accelerator program takes a minimum of three to five years and up to five to seven years to be "really lucrative.”
Seeing the program end before that is difficult, he said.
Peter Rummell, One Spark’s majority financial supporter, said investments in early-stage startups “take time to mature into a position to provide the opportunity for significant rates of return.”
“That is what investing in early stage start-ups is all about,” Rummell said.
He also took issue with Woodcock’s statement that said Stache Investments “fulfilled its commitment to One Spark by investing more than $1 million” in KYN.
“Mr. Khan has had no direct investment in One Spark and we are confused that he does not seem to understand or appreciate that detail,” Rummell said.
“For Mr. Khan to exit this early in the process from his investments, while disappointing for the companies, does not affect any aspect of One Spark,” he added. “Jacksonville entrepreneurs and the startup community will continue to benefit from One Spark with or without Stache Investments. Jacksonville is proud of their investment in One Spark, as I am.”
Khan did offer millions in potential capital for One Spark creators that he wanted to invest in.
Moving on
Rivas will turn his attention to help One Spark continue to grow into a 365-day-a-year operation vs. just an annual festival. He is CEO of One Spark.
He and other members of KYN’s core team, as well as the mentors, will continue to work with the businesses selected for the program’s second year, which is ending early because of the closure. That relationship will likely continue through the middle of January.
He’s also working on another idea that was born out of KYN. The program’s apprenticeship program for designers and developers showed a “huge need for something like this in the community.”
He’s working with a private code development training school from outside the market to open a facility in Jacksonville at the end of this year or early next year.
“It’s a huge win if we can get that done,” he said. “It looks really positive at this point.”
Ventures like that, he said, carry forward the momentum of KYN.
Something that further proves to him that KYN was a valuable startup for Jacksonville.
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