torsdag 18. februar 2010

Charles River Ventures’ George Zachary: Our QuickStart portfolio earned $37M revenue

Charles River Ventures, a firm whose portfolio includes well-known companies like Twitter and Scribd, announced an experimental seed program called QuickStart three years ago, and has been making investments for two years. Today, partner George Zachary got on-stage at the Future of Funding event (where VentureBeat is one of the sponsors) and took the unusual step of offering specific numbers on how the program is doing.
In the first two years, Charles River made 22 QuickStart investments of $250,000 each in convertible notes, Zachary said. Six of those companies made $37 million in revenue during their first year of operation. Of the 16 companies that didn’t generate revenue, three have gone out of business, and one is in a “zombie” state. As Zachary put it: “I can never figure out if any of the founders are working there are not.”
Judging from those early results, the program will pay off financially for CRV, but the firm has had a hard time keeping up with all the applications. There were 4,000 applications and only one person going through them full-time. (It didn’t help that CRV’s staffer was “kind of screwing off,” Zachary said; that staff member has since “parted ways”.) Many of those companies weren’t a good fit with the firm’s investment focus. The most out-there may have been an “animal recycling” company, which basically involves collecting and using roadkill. When CRV asked if the the company really considered itself a technology startup, and it replied that the company uses computers to send email.
“I wouldn’t say it’s an unqualified success,” Zachary said. “It’s a program that if you’re a relatively small in headcount, it’s a dangerous thing to announce.”

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