For the past few years and it’s especially true this year, that there has been tremendous growth in the number of seed stage investments and the number of angels (people investing their own money) and VCs (people investing their own money *and* other people’s money)
We have been making seed investments since the earliest days at Spark. We take these seed investments very seriously. We do not invest in competitive companeis and we go through the same decision making whether it’s a $250k investment or a $2MM investment. We just do our best to stage the capital appropriately to find the right balance (company needs, founder dilution, our ownership).
An easy way to describe the decision process is we ask if we believe the founders, their vision and ability to execute have the opportunity to create something ultimately quite big
Even if it starts out quite small (as they mostly do). Sometimes it works and sometimes it doesn’t.
If we believe the company is best served by a quick flip or small exit then we encourage the founders to raise money from investors that are comfortable with that strategy or help them feel out if bootstrapping is a better model.
Truth be told i am seeing a rise with some founders that are interested in a quick flip. That’s not what I wanted to do when I worked in startups and not something i’m thinking about as a VC. It’s not a personal judgement – it’s just not something I want to do.
Yesterday i read Max Levchin’s excellent post about some of his experience and observations about the a rise in quick flip founders. I encourage you to go read it. Heres the link
http://maxlevchin.wordpress.com/2010/09/27/on-ambition/
I do not believe that raising a small amount of capital initially means that you can’t build a huge company. I disagree with people that tell me that there is no way you can build a big company from a mere $250k. You can actually do it with less.
In my mind the opportunity has little to do with the size of the first round of capital.
(please excuse typos and lack of links. Wrote this on my iPhone)