Charles River Ventures, a firm whose portfolio includes big names like Twitter and Scribd, announced an experimental seed program called QuickStart three years ago, and it 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, surprisingly, provided specific numbers on how the program is performing.
In the program's 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 these 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 are as many as 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 and the firm have since "parted ways.") Many of the companies applying weren't a good fit with CRV's investment focus. The most out-there may have been an "animal recycling" company, which basically involves collecting and using roadkill for various applications. When the firm asked if it really considered itself a technology startup, the company replied that it uses computers to send email.
"I wouldn't say it's an unqualified success," Zachary said of the QuickStart effort. "It's a program that, if you're relatively small in headcount -- it's a dangerous thing to announce."