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I welcome what you are doing. I raised a small amount of angel funding for my current gig (see link). It wasn't easy, and while the terms were OK, we spent too much time chasing a small amount of money.
We recently had to walk away from another angel, as painful as it was. I won't go into details, but one thing I've learned if something doesn't seem right, it probably isn't, and that you have to be very picky both with hires and with whose money you accept.
So I think a source of no-hassle institutional angel funding would be a great thing for entrepreneurs, as it will enable them to rapidly prototype products without getting involved in complicated entanglements too early on.
Now that more funds are opening up to smaller seed funding idea, the other part of the equation is really about making that money last longer, develop the initial product/service version with a smaller burn and test and evolve it slowly.
@Brian: I have atleast 2 founders in the same stage where they feel they are spending way too much time on raising a tiny angel round.
@Bill, @Mike: I think VCs with a formal seed model will help the situation Brain is talking about as QuickStart kind of models will likely be more risk-friendly than a group of angles, which can save everyone a lot of cycles.
At Better Labs (http://www.betterlabs.net), we have just started to open up our model to work with early stage startups in the Valley to deliver their alpha, beta and 1.0 versions which allows the founding team to run faster and more economically, as they evolve their service with user feedback. Look out for iLetYou (http://www.iletyou.com - the first one of our startup partners) going into Private Beta in the next few days. This fits right into founder who raise between $200k and $500K as we can work with them on a 18 month plan.
While I would have liked to have raised outside money; and get more people involved; I ended up self-funding it because I did not want to expose the idea to other Angel groups. At the same time I don't want to get money from people that I know who do not understand the Consumer Internet space.
Chasing this elusive investor was not the best utilisation of my time, and I must applaud CRV on this initative.
Questions:
1. What is the duration of this note?
2. Do these investments close faster than a traditional venture round?
http://www.brianberliner.com/2006/11/01/crv-qui...
For more. Enjoy!
-Brian
or..would they even be entertaining just the ideas..brilliant ones of course :)
CRV should see a major influx of new concepts and business plans. Most importantly, it should see new ideas/ventures well before its VC competitors.
This also reminds me a bit of Grameen Bank. Grameen Bank founder Muhammad Yunus recently won the Nobel Peace Prize. Grameen Bank specializes in microcredit or very small business loans (average of $200). Since 1976, Grameen Bank has made approximately $5.7 billion in loans to more than 6.6 million people in India, mostly poor people who were shunned by traditional banks. The repayment rate is an astounding 98 percent.
Hopefully CRV will have similar success with this great concept!
Check out Utah Investors - http://www.connect-utah.com/article.asp?r=1318&... or Junto Partners - 30% of the company, 50k debt and your left leg
Good luck! I am very excited to see where this goes.
There appears to be a larger trend at work here in this new low start-up cost and low capital needs world, which will lead to winners and losers:
Winners:
- The bluest of "blue-chip" VCs. The Sequoias and KPCBs of the world shine brighter when the maddening crowd is rushing to chase the latest trend of VC investing. They've been there and done that time-and-again.
- Existing Angel Investors who have a track-record. When a space gets hot (i.e., angel investing), those who have been there for a while are the old wise men. Josh Kopelman, Jeff Clavier, and others will see a rise for their services even as others rush in. There will be a flight to quality.
- Traditional VCs who are able to make the leap and really differentiate from other angel investors. Although CRV is a great firm, their success is not guaranteed. They need dealflow; their GPs needs to be seen as credible by non-nascent entrepreneurs; and they really need to be able to deliver value to their investments (beyond the simple "we love to roll up our shirtsleeves alongside our investee companies" platitudes).
Losers:
- Stuck-in-the-middle VCs: Those VCs who do a little bit of angel investing and a little bit of traditional are likely to do neither well.
- Former Great VCs who don't adapt to changing times: Remember when Softbank was king of the hill? Hot VCs who have yet to reach the echelon of Sequoia and KPCB are not assured of long-term success. They are also likely to stick-to-what-they-(think-they-)know-best. Dangerous, when the rules of the game are changing
- Later-stage/Mezzanine Investors: They just got even less relevant.
Thanks,
Eric
http://breakoutperformance.blogspot.com/2006/11...
james E ragnuth -MAAT,ACCA
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