Sometime in 2006, Charles River Ventures (CRV) started a Venture loan program … providing much smaller batches of funding to lots of companies so they could get a leg in the door of potential blockbusters without spending a lot of money up front.
Paul states that the numbers, after a few months are …
- Number of applicants: 1,400
- Number of funded companies: 6
Now, at first glance, this seems pretty low … 6/1400 = under half a percentage point!!!
However, I need more details before I can call it a success or failure.
For example, how do the quality of business plans for this QuickStart loan compare to the ones they get for their regular funding process?
Also, could it be that thinking of this as an easy opportunity, many people just threw everything and anything and half-baked ideas at them?
(Heck, at one point, I wanted to mail 2 or 3 of my business ideas too)
Where can we get more information, if it will be made public at all?
Also, Eric asked more questions’s on Paul’s blog that should help us understand this better.
1 Mar 2007 at 10:35 pm
Our “closure rates” are more like 1 in 4 but admittedly we are not attracting all the “half-baked” idea we would if we put a press release out saying “We lend money to startups and companies that are losing money and are too early for venture capitalists and banks; we do not require equity participation or personal guarantees.” I guess if we were to broadcast this, we would spend more more time filtering through “half-baked” ideas and our closure rates would suffer.
2 Mar 2007 at 2:35 am
Agreed that putting out a generic press-release is what causes so many half-baked ideas to be sent in … but what a traditional VC does is the other extreme … being very closed and looking at ideas based on who recommends it.
So you either have 1 in 4 ideas (with the total number being about 5 out of a total 20) or something like 6 out of 1400.
Whats a good mid-way between the two extremes?