VC’s are not doing too hot right now. Portfolio companies are largely struggling in this economy, the IPO and M&A markets are bleak right now, raising capital for new funds has been a struggle for most, capital calls have been flakey, and flat out a lot of VC’s are looking at prior investments and valuations thinking WTF was I thinking?
Despite all of this VC’s of late have been making news by launching seed programs in various cities. The last couple of weeks have shown a plethora activity on this front as VC’s are look to make smaller investments into more companies, earlier on in their development. Below is a sample of recent headlines from TechCrunch
These programs are among many that I will include on a list below. Essentially at a high level, young (dont have to be young, but it seems most are )entrepreneurs with an idea can apply to these programs with not much more than just an idea. They are usually given the opportunity to present/interview kind of like awesome pitch below.
After seeing a series of pitches, these programs decide to fund X amount of applicant companies. Typically this level funding is around 10-50k for a small amount of the company (5-20%). In addition to the funding, the companies usually get office space and resources in addition to mentoring and guidance from accomplished entrepreneurs. Their are usually social networking events attached for all the funded companies as well as an opportunity to present your progress at the end of program to larger VC firms in hopes of getting a big round of funding. I like the idea as it removes a lot of the barriers to entry in starting a start up. You don’t need a “in” with a firm or an angel, and you don’t need to quit your job in hopes of bootstrapping to get funding later. The guidance and ability to pitch larger VC’s makes it a very worthwhile opportunity, one I’ll probably look at in the coming years (the debate of start up vs MBA looms). From a VC side, its a great way to get involved earlier and with a new generation of entrepreneurs who are more technology and media savvy than any other previous generation. These aren’t huge investments and helps them hook into good companies at the ground level. Plus these investments have a longer time to mature which is good given startups in the 04-06 era who are cash strapped are falling on tough times. Anyways here is a list again ripped from TC.
