Clarification about CRV QuickStart

There’s been quite a bit of attention around our new QuickStart program – including this critical post from the O’Reilly Radar folks.   I posted the following comment to the thread because I thought that some of their  misinterpretation stems from the fact that O’Reilly & CRV haven’t had any personal, 1-on-1 discussions about the program – something I’m now trying to remedy. I can see why, from the vantage of an outsider reading the press that’s been written about the program, they might come to some of the conclusions they come to.

Also, check out the FAQ George Zachary posted to his blog.

Hi Tim & Bryce:

I read this post about our announcement with great interest and it struck me that you have certain impressions about us and our QuickStart program that may stem from the fact that the two of us (groups, firms) don’t know each other that well. So I wanted to take the opportunity to help clarify our position and try to illuminate where we’re coming from.

1. We aren’t abandoning our traditional early stage model.

-To characterize this as a ‘learning from Odeo’ is unfortunate and incomplete, because this program arose from genuine, organic interest from entrepreneurs we’ve been working with for awhile. People have been asking for seed stage convertible notes from us. 4 out of 5 of our most recent projects were seed stage convertible notes. 3 of these are in consumer services, the other is a semiconductor IP company. We formalized a program around activities we were already engaged in, so that these entrepreneurs would have a much more streamlined way to interact with us. Furthermore, we enjoy very early stage investing and want to spend time on these projects.

The thinking was, “Let’s not force all seed stage projects who fit a certain profile to go through a process that makes more sense for a traditional venture investment. Let’s put in a place a standard term sheet / deal structure so that we don’t have to reinvent the wheel every time we finance a project like this.”

-Ultimately, we are neutral as to whether or not we should do seed debt or equity. We feel that the final decision is up to the entrepreneur. We’ll gladly participate in a seed equity round if that’s what the entrepreneur deems best for his/her needs. We want to work with folks like OATV – I have a tremendous amount of respect for you guys. What we’re trying to do with this program is create some efficiency, transparency, and choices for the entrepreneur.

-Also, the fund we are currently investing out of is a $250 million fund. It’s a good size for doing both very early, seed stage projects as well as larger clean tech projects such as Celunol. It’s also a fund size that somewhat reduces our incentive to be solely focused on driving massive hits, although of course, we are happy to have hits. I don’t think being hits only focused is a good long term strategy in this business.

2. This doesn’t feel like a ’spray and pray’ approach to me – in terms of how I hear people internally speak about these seed projects. We’re doing these seed projects out of both coasts, averaging about 1-3 projects per year per investing professional. We’re still doing a decent amount of diligence and research into the seed projects we are investing in.

Btw, Bryce – yes, the west coast team is driving this program in terms of setting up the workflow, infrastructure, and processes, but our entire investing team is involved in making seed investments. Perhaps there was some confusion in messaging, but I assure you that nothing has changed internally. The last 4 seed investments we made were led by multiple people.

Having spent most of my life working hands on with developers in hardcore ‘alpha geek’ environments, I completely understand that most innovation doesn’t necessarily happen with ‘rockstar teams’ and ‘all-star angels’. In fact, most of my time is spent in the field, doing first hand research, hanging out with developers, going to user group meetings.

The reason why I’m excited about this new program is that I’m actively looking at virtual world, gaming, and next gen online socialization technologies. There’s some amount of title risk associated with these projects, because implicit in the design of the product are all of the creator’s assumptions about user behavior, emotional connection, and the sociological relationship between multiple users/groups. This investment size allows me to more palatably bear the risk of working with a couple of groups to develop a prototype and see how these assumptions manifest into the product/business. At the end of the day, I feel like I’ve personally failed if none of my seed investments flourish into viable Series A (B, etc) opportunities.

Thanks for reading my long post. I just wanted to share my perspective and try convince you that we are actually being a lot more thoughtful about this process than you seem to think we are.

Best,
Susan