New York Venture Fund: NYC Seed

3 06 2008

The NY Times is reporting that Mayor Bloomberg has launched a new seed stage fund for pre-revenue and pre-product technology startups in NYC. Called NYC Seed, the fund has a few interesting details:

  • First-time founders are encouraged
  • NYC Seed will make investments of up to $200,000
  • NYC Seed will provide guidance from VCs, entrepreneurs, and technologists - presumably from the NYC area
  • Companies must be located in NYC

So, will this work? If by ‘work’ you mean recreate Silicon Valley, then probably not. Silicon Valley has a mindset that is extremely accepting, both financially and socially, of the failure inherent in developing new technology companies. However, if the measure of NYC Seed’s success is adding fuel to the burgeoning startup community forming in New York as in other cities, then yes I think this is a good start. They are incorporating several key ingredients of an evolving technology venture model: young founders, small investment amounts, and an involved mentor community.

Best of luck to these new companies and their founders.


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Peer Venture Partners: citizen venture capital

14 05 2008

Peer Venture Partners is an important evolution in the life cycle of new companies. Because of changing conditions in the markets of innovation - capital requirements, sources of innovation, talent, etc. - Peer is turning traditional venture capital on its head, similar to how blogging turned journalism upside down.

Jared Hutchings and Mark Campbell previously were the managing directors of the University Venture Fund, a successful fund that coinvests with VC firms and is run entirely by students. Jared and Mark have expanded the UVF model, with a few improvements, to some of the most entrepreneurially prolific campuses in the US: Stanford, Berkeley, MIT, Harvard, and Wharton. By employing student associates on these campuses, Peer does several important things:

  • Builds a network of talented prospective entrepreneurs
  • Crowdsources investment decisions across a diverse group of talented people (who are largely unencumbered by the status quo)
  • Seeds fertile innovation breeding grounds with informants who can be the first eyes on emerging technology

I think this will work. There are other ways of attacking the funding gap faced by many new companies - Y Combinator is a notable example - but I believe in the Peer model for a few reasons:

  • It’s critical to identify breakthrough technologies early. Peer will have a huge advantage by physically being in the labs, coffee shops, and study rooms where innovation is happening. Favorable deal terms, trend spotting, network development, etc.
  • In a similar vein, it’s advantageous to identify breakthrough entrepreneurial talent early. There was a recent meme tipped off by Fred Wilson about the role of youth in revolutionary ventures.
  • Why couldn’t part-time VC associates, in addition to their day job as students, be successful deal spotters? Professional VC’s get it wrong all the time. If a former lawyer can use an “amateur” medium to create one of the most popular technology publications, why couldn’t a VC fund leverage a distributed network of passionate amateurs to identify investments? It’s not a new idea, just new to venture capital. (See Wikipedia, Linux, Apache, etc.)

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