Could we be coming out of a nuclear winter?
March 25, 2009, 12:01 am
Boston Venture Firm Seeks Entrepreneurial Spark
By Jenna Wortham
Spark Capital, a venture capital firm based in Boston, is trying to turn the economy’s tumult into an opportunity to find fresh ideas. On Wednesday, the company is unveiling Start@Spark, a seed investment arm for early-stage Web companies that will grant as much as $250,000 to a handful of budding entrepreneurs.
“We are being a bit contrarian here,” said Todd Dagres, founder and general partner at Spark Capital. “Most VCs are triaging their portfolios,” and wondering how long the downturn will last, he said.
“Given the volatility of the market, we think start-ups are less risky than later-stage companies,” said Mr. Dagres.
Younger start-ups generally haven’t accrued a significant amount of debt or a stable of salaried employees. They also tend to be at a point where generating revenue is less crucial than for more mature companies, he said.
In addition, he said, “we had some luck early on with companies we put seed money into,” such as OneRiot and micro-blogging platform Tumblr. “We felt if we formalized this process as a program, we would see more of these deals,” he said.
As my colleague Matt Richtel and I reported in early March, large-scale downsizing and the upset of several key industries has churned out an abundance of diverse entrepreneurs fine-tuning their big ideas and business plans in lieu of pursuing traditional corporate job opportunities.
“A great talent pool has emerged out of necessity,” he said.
Mr. Dagres said Spark Capital’s initiative will focus on New York- and Boston-area companies and has an eye out for companies dabbling in social media and financial services, among others. The company’s ultimate hope to get “two or three great little start-ups out of this,” he said.