Right Side Capital: Making seed stage startup funding more efficient
The guys behind Right Side Capital Management believe the early seed stage of funding for technology startup companies is very inefficient.
Kevin Dick and David Lambert, two of the three founders of Right Side of San Francisco, were in Baltimore today to pitch their investment fund to some of the city's most eager startup entrepreneurs at the Emerging Technologies Center in Canton.
They're traveling all over the country with their pitch, talking to both startups and larger investors and technology companies who are excited about getting access to a pipeline of new little companies that they could perhaps invest in.
Here's what I gathered is Right Side's vision and strategy:
1) Any tech startup can apply to their group for funding.
2) Each company investment will be in the $50,000 to $1 million range, with the median around $250,000.
3) They'll give the entrepreneur a decision (yay or nay) in two weeks -- so no waiting for months on end for an answer.
4) They'll value your company and you'll get notice of their investment, which is pretty much non-negotiable.
5) They'll standardize all the legal stuff, to drive down deal costs by about 70 percent -- which means more money in the startup's pocket.
6) They'll like to see a good, competent team with at least some solid operational experience.
7) They'll take a preferred equity position in your company, usually no more than 30 percent, but won't sit on your board.
8) Oh, and they want to invest in 100 to 150 startups a year, which is ambitious. But for their investment model to work, they have to go for that scale.
Basically, the reality for most early startups is that they are little more than an idea on paper, or perhaps a little more.
Such individuals and companies are looking for an infusion of capital to hire a couple of people and get to work on an early version of their product.
Another reality, on the investment side, is that angel investors and venture capital firms may only do a handful of deals a year.
But Right Side is looking to do more with more -- the more they diversify their investments, the greater the chance they'll get decent returns for their investors when the company you started sells for a couple million a few years from now.
Yet, Dick and Lambert expect 50 percent of their investments to be duds. It's the other 50 percent that they hope to make a killing on.
What do you think? If you're an entpreneur with an idea for a new business, what more information would you want to know about Right Side?
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