Genotrope covers the comings and goings of start-ups in theHUB Boston and Cambridge area.
April 27, 2007 at 12:12 am
· Filed under Editorial, Seed Round, Start-ups
Even though this article compares the two, funding Michael Phillip’s Mobeus, CRV Quickstart has demonstrated just how different they really are from Y Combinator. At the outset, CRV Quickstart was mentioned in the same breath with both TechStars and the prototype early stage venture fund YC. This may be a stretch to focus on the similarities, when the structures of the firms determine that different types of opportunities need to be considered.
Michael Phillips is a proven serial entrepreneur that took his last company Speechworks, all the way to an IPO. Not a bad investment at all, he is the prototype candidate for funding by the VC’s. But why put him through the Quickstart program? Well for CRV, it is not a bad idea to quickly tie up a deal with a bridge loan, knowing that there is a high probability that Mobeus will get funded, therefore locking in at least a 50% of the series A investment with a proven CEO. But it doesn’t look at all like a YC deal. Maybe they will mix in some higher risk founders as they go along. It must be fun and informative to be able to see all the ideas from hundreds maybe thousands of decks coming across the transom.
The Mobeus investment does seem to validate the potential problems mentioned by Josh Kopelman and Fred Wilson concerning the ability of larger VC funds to manage the deal flow required of seed funding.
It reminds me of the Comcast phone commercial where the guy with all-over tiger tattoos is re-calling the tattoo parlor to get his tattoos removed , hoping that his new phone service will produce a new answer. It doesn’t and you hear the tattoo artist tell the guy “ you a tiger now”.
Well at this point, naming a new program and vetting some emails does not make you a YC (that link is hilarious BTW) , and it looks like it may not be so easy to lose your stripes. For now CRV is still a tiger. I am hoping to see some deals come out of Quickstart that look more like YouTube or Reddit, but betting on proven winners can’t really be faulted, it is just not that similar to YC.
And what is with the Entrepreneur Idol contest. What is next a Vett - T-Shirt contest judged by Seth Godin?
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I think everyone would like to churn out companies that have a liquidity event at some insane valuation.
YouTube = $1.6 B price on $15 MM/year in revenue
Reddit = $12.8 MM price on $0/year in revenue
Those are some tasty multiples for sure but there aren’t going to be too many more YouTube, Delicious, Reddit, JumpCut, et. al kind of acquisitions.
It’s a classic build vs. buy decision except in the case of YouTube and anyone making it out to be anything more than that is really deluding themselves about how sticky they think these sites really are.
Rem wrote @ April 27, 2007 at 9:42 pm
I was referring more to the make up of the company. unproven founders with an interesting idea. My point is that CRV just used quick start to lock up an already proven founder, rather than make a bet on a early stage deal like YC does.
Rem - fair enough but I really doubt many proven founders will use CRV’s Quick Start. They don’t need CRV.
Rem wrote @ April 28, 2007 at 7:05 am
Isn’t that the whole point of my post. Michael Phillips IS a proven founder that took his last company to IPO. He doesn’t need CRV. Just because you have the money, doesn’t mean it isn’t better to not invest it in your next start up. Using other peoples money is less risky. Maybe top VCs do add some value, contrary to your experience, Mr. Phillips must think so.
Lai wrote @ July 6, 2007 at 7:38 am
Interesting comments here. I agree with Rem. As an aspiring entrepreneur myself, with what I believe is to be the ultimate prevention to ID theft, I thought CRV’s Quickstart would be for people like me, an unproven nobody with this great idea to a major problem faced by people in this country that has a social security number. I don’t have a business plan, only ideas in my head and what little I have documented in drawings. But I am doing plenty of research on how/when and where I should begin. I am hesistant if not afraid to submit my idea to CRV because I am a nobody. But, surround me with industry experts I WILL make the right choices. I believe all founders of start-ups surround themselves with advisors early on and some might still do.
Any suggestions?
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