In the high-risk world of startup investing, breakout small funds have historically returned the highest multiples. But even among that set, few are as small, or as profitable, as tiny YouWeb.
The Burlingame, Calif.-based incubator, launched by serial entrepreneur Peter Relan in 2007, has spent about $2 million so far building a small portfolio of Internet startups. Relan said he’s posted a nearly 6x cash-on cash return to investors in the period.
The largest disclosed return was from OpenFeint, a mobile social gaming platform that sold to Japanese company Gree in 2011 for $104 million. The team behind another portfolio company, mobile app platform developer Spaceport.io, joined Facebook in a talent acquisition last year. A third company, social game developer CrowdStar, has gone on to raise more than $40 million in venture funding.
Given that track record, it’s not surprising to see Relan back with a bigger budget venture. His new accelerator, Studio9plus, has about $12 million – six times as much as YouWeb – to put to work over the next few years.
The focus will be on building startups in such currently fashionable sectors as wearables, big data, mobile and sharing economies, starting with a nine-month accelerator program. Participants – generally startup teams with promising prototypes or designs that can be brought to market in a few months – are beginning to roll out initial products.
“My belief is that one a year is too few, and one hundred a year is too many,” Relan said of his rationale for the size of the accelerator program.
Studio9plus is expected to advise and mentor about 36 companies, running a series of nine-month programs with up to a dozen companies per class.
Photo of space shuttle Endeavour, lifting off from the Kennedy Space Center in Cape Canaveral, Fla., July 15, 2009. REUTERS/Pierre Ducharme