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— Movers and Shakers —
Spark Capital, a Boston venture capital firm that invests in companies that marry media, entertainment and technology (including San Francisco-based Twitter Inc.), has launched a program to invest in seed-stage startups in the Northeast. Called Start@Spark, the program will invest up to $250,000 per company from the firm's $360 million Spark II fund, which closed in late 2007. The program is part of a broader effort by Spark to nurture the entrepreneurial communities in Boston and New York. Spark previously helped to form the Alliance for Open Competition, a group that advocates the elimination of noncompete clauses. And it's a supporter of TechStars, a mentorship-driven seed-stage program based in Boulder, Colo., that has a new Boston operation. We spoke with Todd Dagres, a founder and general partner of Spark, about the new program.
The Deal: Why are you making seed-stage investments now, given the challenging economic climate? Todd Dagres: Some of the greatest technology companies were created and achieved their market success during turbulent times. We view Start@Spark as an opportunity to not only buck the trend of investors retreating from new early-stage funding, but also to capitalize on what may be a perfect storm for the next great technology company to take root. Spark has made seed investments before. How is this different? We have done a bunch of seed investments in the past, such as in Tumblr Inc., but this formalizes the process and streamlines it so we can evaluate lots of business plans and teams. We've developed a process internally to vet the deals and to do the due diligence quickly. For example, there are assigned times during the week when a subset of the entire Spark team will sift through the applications with the entrepreneurs. Why the $250,000 limit? That's the amount that we're saying should allow a team to show enough promise to warrant a bigger investment. It should be enough to generate a prototype or develop a solid business plan that will show how the dogs will eat the dog food. We'll be saying, "How far can you get on $250,000?" If we feel they need more than $250,000 to get to a major milestone, we might partner with a another VC firm and keep our investment at $250,000. But we wouldn't do a deal in the Start@Spark program if they need $1 million to get to a point where the company is "go" or "no go." What's the difference between Start@Spark and an accelerator or an incubator? We're more old-school. We're still using a fairly traditional venture model applied to a seed opportunity. We're not an incubator that's trying to be the Wizard of Oz. We're not coming up with ideas and then finding people to work on our ideas. If we were smart enough to do that, we'd be entrepreneurs. |
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