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Q&A on Micro-VC Funds, With Someone Who Actually Invests In ThemWe've spent a lot of time lately discussing micro-VCs, including last week's news on Floodgate ($73m fund close) and 500 Startups (new $30m fund being raised). So I spent some time discussing the phenomenon with Chris Douvos, who invests in mico-VC funds through his role as a managing director with The Investment Fund for Foundations http://www.tiff.org : How long have you been investing in micro-VC funds, or super-angel, funds?? We’ve been active in this space since around 2005, and have invested over time in several of the archetypal managers. Who are those archetypical managers? Well, the main one is someone we actually haven’t given money to: Ron Conway. He’s created a fantastic ecosystem. But we’ve backed some of the people who have taken types of things he does and refined them a bit. For example, one of our earliest investments was in First Round. We think those guys have brought an aggressively thoughtful approach to the challenges of investing in seed-stage companies. I love the O’Reilly AlphaTech guys, whose differential is that they’re leveraging the larger O’Reilly ecosystem. In the case of O’Reilly or First Round or Floodgate, they’ve created brands around themselves that magnetizes interesting people. That helps them punch above their weight.
Hot ProspectsIntroducing 10 up-and-coming venture capitalists age 35 and under who belong on your radar.
- Mike Maples Raises New Fund, Dave McClure Next in Line
A couple of notes from the world of institutionalized super-angels, via filings with the SEC: First up is Floodgate, the firm formerly known as (Mike) Maples Investments. It has raised $73.5 million for its third fund, which more than doubles the $33 million raised for Fund II back in 2008.
- Index, Accel Bet Big on Squarespace
Fast-growing Squarespace, a competitor to blogging platforms such as Wordpress and TypePad, tonight announced that it has taken its first institutional money—a $38.5 million growth investment led by Index Ventures and Accel Partners. The deal values the company between $80 million and $100 million, according to a knowledgeable source. The New York-based company landed on the Inc. 500 last year, coming in at No. 339. Inc. magazine reported that the eight-employee company had grown its revenue from just under $270,000 in 2005 to $2.2 million in 2008. If there were a website development tool for dummies, Squarespace would be it. Take a look at the demo on its website. Pretty slick stuff. The company says its hosted service is used by “tens of thousands of websites” worldwide and that its customer list includes fashion designer Marc Ecko, PR powerhouse Porter Novelli, TV journalist Bob Woodruff, ABC News Radio, actor Kevin Pollak and shock jock Don Imus.
- Kwedit Shifts Gears, Rolling Out PayNearMe Next Month
VC-backed startup Kwedit http://www.kwedit.com/ is best known for three things: for enabling people to pay for digital goods online through small amounts of virtual credit; for its silly name; and for the viciously funny lambasting http://www.colbertnation.com/the-colbert-report-videos/265469/march-02-2010/the-word---kid-owe it received by Stephen Colbert for both of these things. But Kwedit’s founders and investors have had a bigger ambition for the company almost from the start: to enable at least one-quarter of the U.S. population to make remote cash transactions -- from global remittances to bill paying to catalog shopping to the purchase of virtual goods in social media games. “Basically, if you want to use cash to pay a vendor but can’t hand it to them directly, we’re building a set of services to do that for you,” Shader told me back in March /67396/kwedit-founder-danny-shader-on-why-his-highly-hyped-company-isnt-what-you-think/ Apparently, those services are nearly ready. In August, peHUB has learned, the company rolls out PayNearMe http://www.paynearme.com According to its site, the service is targeting “25 percent of American households that don’t have a credit or debit card” along with the “75 percent who do, [but] don’t want to use them online for security, privacy, or budgeting reasons.”
- Making Sense of Micro-VCs and Super Angels -- A Primer
For better or worse, Micro-VC’s and Super Angels seem to be the new intriguing sub-segment within Venture Capital. Funds like First Round Capital, Floodgate, Lowercase, Founder Collective, IA Venture Partners, Harrison Metal, and Felicis and individuals like Ron Conway, Keith Rabois and others show up multiple times a day on TechCrunch and seem to be behind every high profile investment in the internet world. How did this happen? Are these groups just a new fad or is a fundamental and long lasting change happening in the early-stage financing eco-system? Here’s a quick primer on this new category of early-stage investor:
- Modcloth Secures $19.8 million in financing
Modcloth, an innovative online retailer, has secured $19.8 million in Series B financing led by Accel Partners. Prior investors, First Round Capital and Floodgate, also participated. News of the financing was reported by peHUB in May.