An Obvious Success
Investing in pre-revenue startups is risky. Seed-stage investors know that things typically don't go according to plan. And sophisticated investors know that they will lose money in a good percentage of their investments -- with the expectation that they will make that back plus a nice profit in some of their other deals.
Today Evan Williams announced the creation of a new company, Obvious Corporation, that purchased the assets of Odeo (a company First Round Capital invested in). As Evan wrote today in his blog, Odeo "was a humbling and highly educational experience." And he concluded that although there was real value in what the team created, the structural constraints/requirements of venture investors were not a good match for the company.
So he did something that amazed and surprised me. He dug into his own pocket to return capital to his investors. 100% of our investment. Evan did not have to do this. His shareholders are sophisticated investors and we went into this with our eyes open. We know startups are risky.
The reason I invested in Odeo in the first place was because I wanted to make a bet on Evan – and his recent actions have shown me how right I was. I continue to be a huge “Evan fan” – and should he decide to raise outside capital again, I hope to be his first phone call.
In the meantime, I will be cheering for an Obvious success from the sidelines