When Charles River Ventures announced its Quick Start program last year to provide a few hundred thousand dollars to startups on an expedited basis, it caused minor ripples in the Angel funding market.
For entrepreneurs it was another option for raising capital, but more than one angel investor we talked to was a little nervous about the big funds moving in on their very lucrative investments. They clearly hoped it wasn’t a trend that would be duplicated by other large funds.
CRV said they’d make 25-50 investments through Quick Start in the first two years. After six months, they are on track to do about 40 investments. Nine have been completed so far and were disclosed at a Stanford Business School quick pitch event I attended this afternoon. Three of these have completed a subsequent Series A round - Mobeus, Aveksa and Samplify. We’ll be covering a number of these in the near future. The average investment size was $250,000.
It’s still too early to tell if these investments will pay off, but CRV is doing very well overall. They say their 2000 fund will return 2-3x to limited partners, an excellent return by any measure, particularly given the 4 year nuclear investment winter from 2000-2004.
Comments
Unlike YCombinator which gets young inexperienced college students for a pittance (~20K)…CRV is funding very experienced folks, from a quick look everyone of the CEOs has at least one experience startup underneath them. Interestingly, most seem to have a partial management team also. I think CRV’s model will produce real companies vs. features that YC focuses on.
For those folks with no experience, I wouldn’t even bother submitting an application…IMHO.
Asia is a big market teeming with very competent entrepreneurs operating in very ecomonical environments, but without an angel infrastructure.
Typically an experienced person from the states would go to Asia to setup a team that costs him 1/10th of US rates to operate, and such companies can be successful / profitable typically in $100k - 200k.
The trouble is that even though VCs exist, what’s needed there are enough Angels.
I think VCs should consider funds such as this CSV fund for the Asian market that makes bets on experienced (US experience) veterans with development shops in Asia building the next Youtube but requiring some early stage funds to get the team organized.
chandrab,
I agree. It’s fascinating to watch this new funding concept spread as the model proves successful. For big funds like this, the amounts are so relatively small they have nothing to lose.
@ chandrab - I agree. I think CRV’s approach will prove a lot more successful at churning out real businesses as opposed to Y-Combinator’s “feature mill”. I need not rant on how bad I think the latter’s approach is anymore.
Asian VC in Shanghai, you get tons of money, nice building, nice house, more people working your company… China have tons of money, much bigger than Bill Gates’ bank. China Bank secures your savings. You get higher interest rates.
0% corporate crooks.
0% bankruptices.
0% corporate failures.
Kleiner, Perkins, Caufield & Byers opened VC in china.
What china wants is clean air technology and clean water technology…They would throw tons on money on startup. Banks will give you money. Less risky involve.
US…There’s huge risk getting VC… You need huge returns. You lose some ownership rights. For example, Steve jobs founded Apple… Scully fired Steve Jobs.
erratacrunch: attentionsoft is the name of the company that is participating in crv quickstart program. we are proud of our http://www.attentiontrust.org for how we respect users in control which you can see now at http://www.atten.tv as well as the soon to be renamed and improved root vaults
Mike,
You need to write an article about funding opportunities around the world instead of just in the US. You have a lot of people reading your blog from Europe, Australia etc - not just US.
Problem with the VC companies you cover - they dont give a “f*$k” about companies that are located outside the US. The only way they offer is if you have a developed company and the risk is very far reduced.
I dont want to work with VC’s that come in when the profit is a surety - why would you even bother ? Just get debt funding.
Cover some VC’s outside the US that actually give a shit about what other people are doing in the world.
This brings some interesting questions related to the funding gap to the fore.
There’s a divide between the max. angels like to commit, and the minimum VC’s like to commit. You generally hear about closing that divide from the angels’ perspective (that is, formalizing networks of angels, increasing investment liquidity and opportunities to diversify, and adding deal transparency).
You hear that VCs won’t enter the equity gap because they don’t have the proper insentives to, given that they prefer potentially huge returns. But CRV has turned that conventional wisdom on its ear. And sounds like they’ve done well at that.
Looking forward to seeing if other VCs take advantage of similar opportunities to fill the equity gap.
Thanks for this update… I and others have been wondering if CRV had actually funded any companies under this program.
Could someone provide pointers to any further info on the businesses themselves besides the obvious - what you get by going to that domain name?
Exactly how can you tell these companies won’t be features?
It seems like this assumption is being pulled out of your behind, but please continue exhibiting your wealth of knowledge and research. You are doing a public service.
@haha: there are many non-US companies being funded by US money, and much talk here about EU based funds
first of all, I like to say most funded website don’t help people get rich, help people get jobs, create innovating products, etc…
The only company that help people get job, money, innovation is…. GOOGLE. Not yahoo or anyone else from funded companies.
@haha, that may be the smartest thing I’ve ever heard you say, and then you ruined it with the “OPL” comment ;). Debt is almost always cheaper than equity and no aspiring entrepreneur should ever forget that.
bdb… I’ll give you an idea.
Problem with VC…
Overpricing stock.
Shareholders can’t afford it.
As you said, not a bad return for 2000-2004.
@Nik: Nik, Id love to know at what point these non-US Companies are funded? Im pretty certain it would not have been in the seed stages.
If Im wrong - please indicate which funds have invested outside on a seed basis?
Either way - it would be interesting to get a view of “non-us VC’s”
“first of all, I like to say most funded website don’t help people get rich, help people get jobs, create innovating products, etc…The only company that help people get job, money, innovation is…. GOOGLE. Not yahoo or anyone else from funded companies.”
Mike, can we have a Chinglish filter? These comments are so asinine I feel like I might as well be reading Digg.
Mike, can we have a Markus filter? His comments are just as “asinine” as OPL’s.
all of these companies, with the possible exception of peercommerce, have gawdawfully stupid names.
they are doomed to plunge into the chasm.
fools !!!
-s
Interesting concept, we may inquire ourselves as we are looking for capital to take our site to the next level.
Mike
Markus, good luck with your sales…
It’s surprising that when Y-Combinator does something, there are 50 posts from Y-Combinators talking about how much they love each other but the CRV folks are seemingly a bit busy focusing on having a real business model. Shocking.
Yes, many startups outside US are desperately in need of seed capital. Demand-Supply balance is skewed outside US. So VC’s with good experience in legal issues must take a little bit of exposure outside US. Right now only a very few like Kleiner, Perkins, Caufield & Byers are taking this risky bet.
@Vishal,
My comment was “as asinine as OPL’s” because I was quoting him.
@OPL,
“Markus, good luck with your sales…”
What on earth are you talking about?
I’m asking to you respect people’s privacy. All you do is cross the line, flaming, and defamatory.
Do I ever flame you?
Please back off…
Don’t take it personally OPL, that’s how the internet works. When people say ridiculous things they tend to get ridiculed. Your comment that Google is the only tech company creating jobs, innovation and/or wealth was frankly ridiculous.
I’m forgiving with non-native English speakers when they’re making an effort and trying to contribute something - but there is also no excuse for laziness with translation tools so easily available on the web. For example, accusing someone of defamation or breaching personal privacy are very serious allegations… please make an effort to understand the words you are using before using them.
What do you guys about creating some sort of a “social conscious” fund similar to Digg that could invest in a startup, turn it around, then sell it or go public with it?
Do you think the masses of people could make the right decisions in executing the plan? Or will they lack the required knowledge to run the company?
This is what I have been trying with my group on facebook:
http://www.facebook.com/group.php?gid=42683713693
Ciprian
Leave Comment
Commenting Options
Enter your personal information to the left, or sign in with your Facebook account by clicking the button below.
Alternatively, you can create an avatar that will appear whenever you leave a comment on a Gravatar-enabled blog.