Monday, October 31, 2005

A Confederacy of Startups

A Confederacy of Startups
Software by Rob posted today about another variation on the Ycombinator concept:

"What if someone put a bunch of development teams together who had complementary ideas but not enough money to start companies? In other words, pair the advantages of a startup with the size and capital of a larger organization.

Imagine if Google's development teams were a handful of smaller startups with bits of seed money and the potential to work together to make stacks of cash? Teams of 2-20 developers that are nearly autonomous, but linked together under a funding umbrella and a collective name, with motivation to work together for mutual benefit (based on the monetary structure of the deal), but also motivated to work their butts off because they're allowed to keep a huge chunk of the profit their little company generates. Something between an incubator and present-day Google.

It would land somewhere between anarchy and chaos, but would be amazing to watch."

I like the idea, but I'd go one further--why not create a VC fund that did nothing but make $25,000 investments. One price fits all--$25K for 5%. It's like the VC equivalent of a dollar store.

Once you get past all the crap involved in negotiating a VC deal, you could probably do a ton of deals. And the transparency would probably appeal to founders as well.

4 comments:

Helen said...

Hmmm sounds interesting. I got the impression that Google was sort of like that (not that I know much about the secret inner workings of Google), but don't small teams work on all the nifty apps that come out of Google Labs? I suppose they are still controlled by the overarching administration. Oh yeah, and they don't keep a huge chunk of the profit. Doh!

Are you suggesting a VC fund that only invests $25k in different projects? Is $25k enough for anything? I know it wouldn't be enough for us at Seriosity, but perhaps for student groups that have the next amazing thing?

William Grosso said...

Well, 5% for 25K sounds like a weird number. Not enough money to really enable anything.

But, 20% for 100K, without a lot of the overhead associated with a VC pitch? I know a fair number of people who would look at that and think really hard.

"If I worked 90 hour weeks for a year and got to own 75% of the outcome and didn't have to dip into my savings to do so ..."

I'm guessing that unlocks a lot of currently closed doors.

Chris said...

I agree with Bill that being able to start a company without risking personal bankruptcy is a big plus.

Maybe you would have the set price ($100K for 20%), and then limit the process to two meetings and then a firm yes or no. I think two meetings are necessary just to do the appropriate digging after the first meeting.

And having a set deal would really accelerate things.

William Grosso said...

So maybe a topic for YehCon is how to make this happen?