Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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Thoughts on seed stage

It was nice to wake up to today to Fred Wilson's blog post - he articulately summarized several of the benefits of investing at the Seed Stage.  His three points (the optionality of being able to see more cards before you double down your bet, the ability to have an impact on the success of the venture, and avoiding being surprised by past decisions) are ones we think of often at First Round Capital.


Comments

Alexander Chung

As a regular reader of yours, I wanted to inform you of the launch of the SoWeSay.com beta site on Monday, March 26th, 2007. SoWeSay.com is the first symbiotic social network that allows users to create profiles, rate and review anyone else.

Below is the press release for SoWeSay.com that was issued on March 27th, 2007 via PRWeb for your review.

http://www.emediawire.com/releases/2007/3/emw514117.htm

If you have time then I would enjoy walking you through some of the key features of the site and answer any of your questions. Please contact me at pr@sowesay.com to set up a time to talk at your convenience. In addition, please let me know of any time deadlines related to your article.

Best,

Alexander Chung
Co-Founder
SoWeSay.com

Barry Caplan

Hi Josh -

Seed investment is a high demand, seemingly low supply industry for entrepreneurs. I wonder if you have any thoughts on how various industry structures are starting to blend at the edges, complicating the seed process?

E.g. (more info on my blog: www.digimediafinance.com) Hollywood, Silicon Valley, and Madison Avenue funding models are now necessarily competing in the the smae spaces.

I could easily make the argument that most of your portfolio is in Entertainment, not Tech, but the truth is it is a blend and a change we are seeing happen before our very eyes.

That means a lot of what I call "Entertainment Entrepreneurs" are increasingly confused as to where to place their bets - with Hollywood or SV style financing. There are costs and benefits associated with each.

I did an informal survey at both the recent Game Developer conference in San Francisco and the VON (Voice/Video On Net) in San Jose - exhibiting and attending companies were split roughly 50/50 between Hollywoood and Silicon Valley approaches, and prefunded companies are increasingly confused or making uninformed choices.

How does First Round see these issues evolving, especially since you are playing the game but located out of the centers of these activitities? Are you seeing the entrepreneurs giving careful consideration to the issues in order to exploit any advantages, or are they blowing in the wind on this matter? As a seed investor, does it matter to you?/Best, Barry Caplan

Jayson Dubin

Josh,

I read your blog all the time, especially when I was looking for funding. I recently did a friends and family round for a new startup ad network specializing in the video game vertical call www.egamelogic.com .

You bring up a lot of good points in this topic especially from the start up point of view of risk vs. reward. If you could address one topic related to this I would love to get your incite on how the creator or entrepreneur should value his company. You have shown the risk reward scenario for the investor but never for the creator.

For example if you have someone who has the idea, the connections, and the know how but is lacking the funds to get this new venture off the ground how much of the pie does this person give up. I recently went through this and had no guide or example as to what to ask for. Anytime I approached someone it was the same answer every time "there is no set formula". So my question to you is, what is a start up worth to the person who starts the company and what should he or she expect in return?

Ilya

Dear Mr. Kopelman,

I just graduated from Drexel University in Philadelphia, PA. I have a very good and novel start-up idea. It has amazing potential and nothing like it yet exists. The idea is not software based, no new technology will be created, but current technology will be applied in new ways. Thus, this is a "business process". My first instinct was to obtain patent protection. However, this is obviously very time consuming and expensive. I did some research on some famous start-ups, and seems like very few, if any, seek patent protection. They just ran with the idea, relying on the "first mover" advantage. What are your toughts on this? I read somewhere that you own 5 patents. Are they needed to succeed these days? Some have told me they are a waste of time. Thanks so much!

Sincerely,

Ilya Rabovetsky
elushka2@gmail.com

Brandt Cannici

I strongly agree with what you said but think that distinction between coming in at the seed round and coming in later is even sharper than you have outlined. From the perspective of an entrepreneur, I find that everyone wants to sit on the sidelines while you move the ball forward and once it seems clear you are going to score then everyone wants to get in on touchdown. Those who come in at the seed stage are believers in the visions and partners in its creation. Those who come in later are simply investors looking for a good return.

Early stage investors share the risks, the ups, the downs, and the success of the entrepreneurs. It is a unique relationship that doesn’t form at later stages and the synergy and direction created sets the stage for the future success of the company.
I think the Angels and early stage VCs are really the heart of the industry and contribute far more than the dollar figures would indicate to the overall success of the sector.

Brian Javeline

Hi Josh,
I tried tp pitch you about a year ago while developing a new product for the 2 million+ mobile home repair & remodeling contractors targetting $200 billion+ in transactions. I didn't get much traction. Now I see your company is using my previous product that I co-founded called Investment Cafe, which was just an idea a few years ago. My traction is going much faster than how Investment Cafe started. Did I earn the opportunity now for a few minute pitch? Just have someone call and I would be eager to talk.

Miguel

Why do you people try to pitch to this guy in a blog comment? Does that seem ok to you? HA, it bugged me enough to post this.

Anyway, nice post. I just started reading your site and its great info.

miguel

chanel

Its interesting reading what the VC community discuss about the online communities. I think this recent move from FB shows that the original developers are still involved.

louis vuitton wallet

Why do you people try to pitch to this guy in a blog comment? Does that seem ok to you? HA, it bugged me enough to post this.

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