When Charles River Ventures first launched its Quickstart seed funding program in the fall of 2006, and attracted national attention to it, many in Silicon Valley rolled their eyes. The program offers loans of up to $250,000 to entrepreneurs with nascent startups, loans that turn into equity if and when the startup closes its next round of funding. (CRV also receives a discount of up to 25 percent on the conversion price when the loan morphs into a Series A.).
One complaint was that CRV had sought the limelight for doing what angel investors can do better, invest in small concepts that require a lot of attention and don’t necessarily reap large rewards. David Sze, a partner at Greylock Partners, told the New York Times that the program could also force entrepreneurs into a relationship with CRV before they were ready. Even some entrepreneurs privately voiced doubts. If CRV were to loan a startup money, then decline to participate in its Series A, would it be game over?
The concerns are legitimate, but in its second year, Quickstart looks like it’s achieving real velocity. In an exchange yesterday, Zachary told me the program has loaned money to 19 startups. It made loans to 8 companies last year — 6 of which went on to receive “significant” Series A rounds, he said. Meanwhile, 11 more startups have already received Quickstart loans this year, and 3 of those companies are in the process of raising their first round of funding.
The best news for CRV’s entrepreneurs — in my view — is that of the six startups that have already secured first founds, CRV is a Series A investor in five. Zachary disagrees that Quickstart companies will live or die based on CRV’s future involvement with them, though. “If a seed funded company is accomplishing its goals and showing progress, it is going to be able to raise Series A,” says Zachary. “We tell the founders that they will be able to raise if they are showing real progress and traction and accomplishment of milestones. Series A investors will always fund companies that are doing well regardless of who the seed investors are.”
Zachary declined to name CRV’s Quickstart startups, but TechCrunch ran the names of the first nine last summer. (Mobeus, Aveksa, Samplify, BuddyTV, IndyAds, HandiPoints, Fonav, AttentionSoft, and PeerCommerce.
Thomson Reuters’ has financing data for just three of them: Cambridge, Mass.-based Mobeus, which makes mobile phone software, has gone on to raise $6.5 million from CRV and Sigma Partners. Enterprise security software startup Aveksa, located in Waltham, Mass., has raised $20 million, from CRV, Pequot Capital Management, and Financial Technology Ventures. And Samplify, in Santa Clara, Calif., which makes data components, has raised about $7 million from CRV and Formative Ventures.
[Update: Thank you to a reader who just pointed out to me that BuddyTV, a site that features all things TV, has received funding from investors other than CRV It first raised a $2.8 million round last June, from Gemstar-TV Guide; in April, it raised another $6 million from Madrona Venture Group. Does anyone know if I’ve missed any others, or anything about QuickStart’s 2008 class of startups?]