As noted above, the VC firm Charles River has a seed fund that invests $250,000 per deal:
www.crv.com/AboutCRV/CRVQuickStartFAQ.html
This is a brilliant idea! Ycombinator has been a true innovator -- they saw a gap in the capital markets, they had the guts to go out and fill it, now a lot of guys are copying what they do, but they will always enjoy first mover advantage. Charles River is doing the same thing, filling a gap that everyone knows exists but no one so far has actually filled.
One of my reactions to the Ycombinator standard approach -- $15,000 for 3 months of funding -- is that 3 months is a very show time frame. I am pretty good at what I do, I frankly have a lot more experience than the kids who get Ycombinator funding, I typically work about 70 hours a week, and I know I am quite productive at what I do. I don't go for home runs but at the same time, I don't go for singles. I go for doubles, that is a risk/reward range I am comfortable with. I find it takes about 12 months to get it running reasonably well, and I have done it several times before. I would not want to work on a 3 month time schedule. If I did, I would be going for singles and singles just are not that interesting.
To me, a single is a deal where you end up with $1 million cash out after two years. A double is $5 million after two or three years. A triple would be north of $10 million, no later than four years. Anything north of $25 million is a home run. Anything above $100 is a grand slam home run.
I do not need financing, I just fund them myself, but if I did, the Charles River deal would be much more appealing. Assuming I needed the money, with $250,000, I could get two partners, we each pay ourselves $60,000 a year, perhaps burn up another $50,000 in expenses in one year, for a total burn of $230,000,leaving us $20,000 margin (admittedly, not a lot). But in one year with two really good partners, we could do a hell of a lot of work, perhaps a triple rather than a double.
I really like what Ycombinator is doing but so many of their investments seems unambitious -- two smart college students who whipped something up in a month. Perhaps they might build a company from that, but in some cases, I am skeptical.
www.crv.com/AboutCRV/CRVQuickStartFAQ.html
This is a brilliant idea! Ycombinator has been a true innovator -- they saw a gap in the capital markets, they had the guts to go out and fill it, now a lot of guys are copying what they do, but they will always enjoy first mover advantage. Charles River is doing the same thing, filling a gap that everyone knows exists but no one so far has actually filled.
One of my reactions to the Ycombinator standard approach -- $15,000 for 3 months of funding -- is that 3 months is a very show time frame. I am pretty good at what I do, I frankly have a lot more experience than the kids who get Ycombinator funding, I typically work about 70 hours a week, and I know I am quite productive at what I do. I don't go for home runs but at the same time, I don't go for singles. I go for doubles, that is a risk/reward range I am comfortable with. I find it takes about 12 months to get it running reasonably well, and I have done it several times before. I would not want to work on a 3 month time schedule. If I did, I would be going for singles and singles just are not that interesting.
To me, a single is a deal where you end up with $1 million cash out after two years. A double is $5 million after two or three years. A triple would be north of $10 million, no later than four years. Anything north of $25 million is a home run. Anything above $100 is a grand slam home run.
I do not need financing, I just fund them myself, but if I did, the Charles River deal would be much more appealing. Assuming I needed the money, with $250,000, I could get two partners, we each pay ourselves $60,000 a year, perhaps burn up another $50,000 in expenses in one year, for a total burn of $230,000,leaving us $20,000 margin (admittedly, not a lot). But in one year with two really good partners, we could do a hell of a lot of work, perhaps a triple rather than a double.
I really like what Ycombinator is doing but so many of their investments seems unambitious -- two smart college students who whipped something up in a month. Perhaps they might build a company from that, but in some cases, I am skeptical.
James Mitchell [email protected]