Why the Incubator charges a £999 commitment fee

We added a £999 commitment fee to the Incubator agreement in 2026. It is paid on signing, and it is credited back in full against the 10% success fee at round close — so if you raise, it costs you nothing on net. This post is the operator-direct explanation of why we did it and what it filters for. If you are about to apply and you saw the fee on the Incubator page, this is where the reasoning lives.

The model before the fee

For the first year of the Moonlabs Incubator we ran with no commitment fee. The deal was 1% tech-for-equity plus 10% success fee on the round raised. Both sides at risk, both sides aligned, no money up front.

This is a clean structure. It is what most incubators of our shape use. It worked. We do not regret a year of running it.

What we noticed across that year is a specific failure mode that the no-fee structure does not protect against. Some percentage of the founders who signed the agreement — about one in seven — were not really committed to building the company. They were committed to exploring the idea of building the company. The signal looks the same in the application; it looks identical in the first three weeks of the build; it diverges at week six.

The week-six divergence cost both sides. The founder lost six weeks of momentum on a thing they were ambivalent about. We lost six weeks of operator time on a build that did not have a customer at the end. The economic cost of a misallocated six weeks for two operators, fully loaded, is on the order of £18,000-£25,000. The cost of spotting the ambivalence earlier would have been much lower than that.

What £999 buys at the level of signal

The function of a small commitment fee is not to make money on the fee. £999 is rounding error in our business; we have spent more than that on the catering for a single board meeting. The function is to make the act of signing the agreement require a small but non-trivial moment of friction.

Founders who are genuinely committed look at £999 and feel nothing. It is a fraction of the cost of one month of their own salary; it is a fraction of the cost of one piece of mediocre legal advice. They write the cheque and we get to work.

Founders who are ambivalent look at £999 and pause. The pause is exactly the signal we wanted to surface. Sometimes the pause becomes a conversation about what they would need to feel before they wrote the cheque — that conversation is useful and often productive. Sometimes the pause becomes a withdrawal of the application. That withdrawal saves both sides six weeks.

We have written about this principle in other essays on selection: the most expensive thing an incubator can do is to spend operator time on a project that was never going to succeed. The most valuable thing it can do is to catch that pattern before the build begins, not after. The commitment fee is a small instrument that pays for itself many times over by surfacing the signal we needed.

Why we do not charge more

We had the option, internally, to set the fee higher. £5,000 was discussed. £10,000 was discussed. We rejected both.

The argument against higher numbers is that they actively select against good founders. The kind of founder who walks away from a £5,000 fee in 2026 includes founders with brilliant ideas and limited personal cash, founders early in their careers, founders coming from non-traditional backgrounds. We want those founders. They are some of the highest-performing operators we have seen. Pricing them out would be a strategic mistake dressed up as a filter.

£999 is the right number because almost any committed founder can absorb it. It is not pretending to be a meaningful financial commitment. It is performing a specific signalling function and nothing more.

The corollary — and this is the bit we mean genuinely — is that if £999 is the thing standing between you and writing the cheque, talk to us. We have made exceptions in two cases already. The conversation matters more than the number.

Why we credit it back

Some incubators charge an upfront fee and keep it. We considered this and rejected it. Two reasons.

First, the alignment story is cleaner if the fee is credited back. The £999 is functionally a deposit on the success fee, not a fee for our time. The framing matters; it tells founders that we are still betting on the round, not on the deposit.

Second, an upfront-and-kept fee creates an unfortunate incentive for the operator to take on more companies than they can serve. Fee-based incubators have, historically, ended up over-subscribed and under-delivering. We did not want a structure that would tempt us in that direction. Crediting the fee back means our economics still depend overwhelmingly on the success fee at round close, which depends on the company actually closing a round, which depends on us doing the work.

The combination is calibrated: a small commitment moment that filters for seriousness, fully refundable against the outcome that matters, so the underlying alignment is unchanged.

What the fee covers operationally

A small but real list of things the £999 covers if the round does not close:

• The diligence work we do on the company in the first three weeks (legal review of the cap table, technical review of the proposed architecture, market positioning review)
• The shaping of the wedge before we commit to building
• The first round of investor introductions, including the writing of the introduction note that we share with our HNWI network

If we have done these things and the company chooses to walk away — for any reason — the £999 has paid for that work and we are quits. This has happened twice in pilot conversations; both times the founder agreed it was a fair settlement.

If the round closes, the £999 is forgotten because it has been credited back against the 10% success fee. From the founder's perspective the structure is identical to the old fee-free model in the success case.

What we would say to a founder applying today

If you are about to apply to the Incubator and the commitment fee gives you a moment of pause: that is the response we designed for, and you should sit with it rather than dismiss it. The question to ask yourself is not can I afford £999. It is am I prepared to commit to twelve weeks of building this thing with two operators who will be doing it alongside me, knowing that walking away has a small but non-zero cost. If the answer is yes, the £999 will feel like nothing. If the answer is no, the £999 has done its job for both sides.

We will continue to evaluate the structure. If the fee turns out to be filtering against founders we would otherwise want, we will adjust. If it turns out to be exactly right, we will keep it. This is the kind of operating choice that benefits from twelve months of running the experiment, not from twelve weeks of theorising about it. The next post on this topic will likely be in 2027 with the data.

The Moonlabs Incubator partners with founders on 1% tech-for-equity plus a 10% success fee, alongside a £999 commitment fee on signing (credited back against the success fee at round close). The Incubator page has the full deal and the application form is the front door.