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  • Anthony Stevens

Game-Changing Startup Funding Play?

Feb 21, 2010
Business, Entrepreneurship, Startups

Marcelo Calbucci posted a link to a TechCrunch scoop broke the news this morning on Seattle 2.0 that Right Side Capital announced that they will be investing seed-stage startup money in 100-200 startups a year.  That’s a lot.  Marcelo links to this Tech Crunch article, which gets into a lot more detail about the announcement and the context in which to place it.

Already startup types are starting the debate about whether this (a) is game-changing after all, (b) will work, or (c) misses the boat on some other criteria.  For the most part the reaction is positive – an evolution / revolution in the classing funding model seems overdue, especially given the drought we went through in the last couple years.  And a  new approach driven more by metrics and less by relationships is … well, interesting, if not necessarily a sure thing.  It will be fun to watch during the lead-up to the funding announcements this summer, and then see what the growth and recapitalization requirements of the original set of companies looks like.

Putting this announcement in a personal context, what would it take for me to get Crowdify off the ground?  Four months of funding?  Six months?  Twelve?  It’s so hard to say, since I have yet to do the hard grunt-work of proving out the market with real live interested customers.  It could be that the first three brand managers I talk to all love it and want to throw business my way.  It could also be that it will take a year and thousands of phone calls / e-mails to get to my first five-figure deal.  Traditional VCs would want to know that the market was there to capture FIRST, before putting any money in, and I can’t fault them.  However, we’ll see if Right Side Capital’s new approach will work, and if it does, what it means to other “idea entrepreneurs” who need time and space to execute.

Interested in your thoughts.

3 Comments
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3 Comments

  1. Friend of TechCrunch  •  Feb 22, 2010 @10:49 am

    “broke the news” means a scoop. TechCrunch broke the news.

  2. anthonyrstevens  •  Feb 22, 2010 @4:46 pm

    You are correct, sir. Incorrect usage on my part.

  3. Tony Wright  •  Feb 23, 2010 @1:36 pm

    What’s stopping you from doing some weekend work and/or taking a few days off to do some customer development? IMO, the minimum viable product to test MOST businesses is a fake screenshot of the most compelling crowdify 2.0 screen you can imagine, a bulleted list and a mini “are you interested” form.

    Scour twitter for brand managers, find some forums where they congregate, and engage. Get 500 views. Check Google analytics for “time on page” metrics and measure what % fill out the form after reading your pitch.

    If you don’t see numbers you like, pick the ones that’ll talk to you and ask them why they wouldn’t want it. Rinse, iterate, repeat until the numbers look sexy.

    You don’t need a dollar to do any of that– all you gotta do is be willing to STOP CODING for a few weeks so you can concentrate on getting intimate with your market.

    Bonus: for any seed funding outfit, market research like this is a GREAT proof point and reduces a lot of risk for investors. If you were an investor would you rather invest in a great team that had no product but a waiting list of 2,000 people who were interested in a value proposition or a great team with a built-out product that said, “It could be that the first three brand managers I talk to all love it and want to throw business my way. ”

    Why would you do ANYTHING until you’ve answered the most important question? IMO, 90% of the time “idea entrepreneur” is a label you should avoid.

    (OMFG this comment should be a blog post)