Since our latest investment in Shelfari I’ve gotten a lot of emails from various entreprenuers asking how we structure our deals. Well, because we’re small we just don’t do that many deals. So far we’ve only done Shelfari, FeedDigest and Imagekind. There will be more. But we don’t have any pressure to do anything until we find something we’re excited about.
Anyway, I thought maybe this email exchange with a Stanford Law School student could shed some more light.
—————-
Hey Jon,
Thanks for writing.
Our investment is all private equity so we don’t have the same stringent requirements as a traditional VC fund as it relates to size of investments. But, in general it’s somewhere between $25,000 - $250,000.
The terms of our investment vary too depending on whether there is already a lead investor. For example, I recently invested in a Series A with Amazon and others.
http://seattlepi.nwsource.com/business/305227_shelfari27.html
In that case Amazon led the round and dictated the terms.
In the case of FeedDigest we negotiated with the entrepreneur for all of the things you mentioned.
We don’t have any hard and fast rules. We let our hearts and the spirit of the entrepreneur or team help guide us and our level of enthusiasm dictates how hard we’ll negotiate to get what we think we need to have some adequate level of protection. First round investing is VERY risky so the key thing is to believe that you have some ability to really pick winners. In our case, we’re using a lot of actual operating experience in the technology industry as well as our trusted network of successful tech entrepreneurs to guide our senses. Having a VERY good sounding board of successful technology veterans at your disposal to discuss and debate possible investments has been critical for us.
Because we don’t have limited partners and large pension funds behind us we’re able to have a great deal of flexibility in how we structure deals.
I hope this helps.
Kelly Smith
Founder
Curious Office Partners
76 S. Washington St.
Seattle, WA
98104
MOBILE: +1 206 972 6600
—–Original Message—–
From: On Behalf Of Jon Novotny
Sent: Wednesday, March 07, 2007 9:24 PM
To: info@curiousoffice.com
Subject: inquiry from Stanford Law Student
Hello,
I am a second-year law student at Stanford, and I’m writing a paper
for a venture capital course about seed funding firms that invest
primarily in software startups. I am particularly interested in the
innovative software lab model of Curious Office, and I’d like to learn
more about the program than is available on your web site.
The “Approach” page on your web site indicates that when you make an
investment in a company, you provide a variety of resources to the
company. However, the page does not indicate the size of your typical
investment or the terms under which you invest (such as rights to
participate in future equity rounds, anti-dilution preferences, etc.).
Would it be possible for you to share with me more information about
these topics?
I have found no academic articles about combination seed funding
firms/incubators such as yours, and I am excited to be writing the
first article in this space. Any assistance you may be willing to
provide would be greatly appreciated.
Thank you,
Jon Novotny
Standford
