VCs Moving Upstream
March 30, 2009 Leave a comment
I’m not sure of what to make of recent activity in certain quarters of the VC community but some VCs are delving into the messier and murkier business (at least in terms of traditional VC activity) of early stage risk capital, Spark Capital being the latest with their new seed fund. I know there are numerous reasons why they tend not to get involved in seed and early stage investing (VC and angel funding are two totally different beasts and require divergent business skills to undertake) but I think it totally makes sense. I liken it to the situation in the football Premiership whereby many of the top clubs have lower league feeder clubs nurturing talent for them.
I think it shows that some VCs are very aware of current activity and gains to be had in the digital and TMT (technology, media and telecoms) sectors and with last week’s news of the latest foray into seed funding coming from Spark Capital, those with both the funds and foresight know that if you are in a position to invest now, then it is a great time to sow ‘your own‘ seeds for the future. There’s a world of difference between VC and angel/seed investing, so why not just buy into a group who operate at the seed level, an outfit that has the potential to spot the Google, Facebook, Twitter etc of tomorrow.
Previous moves of a similar nature have been from Sequoia Capital investing $2m into Y-Combinator and (I believe but am not quite sure) Index Ventures into Seedcamp. Here’s a bunch of articles on the Sequoia and Spark buy-ins:
- Technorati on the Sequoia investment.
- XConomy on the Sequoia investment.
- TechCrunch on the Sequoia investment.
- Paid Content on the Sequoia investment.
- Y-C’s Hacker News on their new investment.