Funding innovation: Distributed investment strategy…
This is clever: to discover new talent the Founders Fund (with TechCrunch) has created a strategy of granting money to an entrepreneur… and then having that entrepreneur turn around and act as a mini-VC and invest in another entrepreneur.
They start by picking 12 top entrepreneurs (with a successful track record) to grant them the money, and then give the entrepreneur the choice of which startup gets funded. Clever. Very clever!
They leverage the collective intelligence of successful entrepreneurs to pick who they think will be successful in the future. With very little money committed, the original investors leverage the collective knowledge of entrepreneurs to uncover hiding, up-and-coming talent. This might be one of the best deal-flow schemes Ive ever heard about! Great funding innovation…
Take a look below. What I find clever about this one is that they turn over the screening and investment selection process over to entrepreneurs (the community), and ask them to pick future winners.
News from TechCrunch…
I’m very pleased to announce a new startup investment program today called The TechFellow Awards in partnership with Founders Fund. The goal is to honor technology innovators and stoke new investment in great early stage ideas. The TechFellow Awards program will grant at least twelve fellows $25,000 each to invest in an early stage startup of their choice. Founders Fund will invest an additional $25,000 alongside those investments and request an additional right to invest another $250,000 when the company raises its next round of financing. In all, Founders Fund expects to devote more around $3.6 million to the program
The fellows will have few restrictions on the companies they invest in. The fellows will be selected from four categories of experts: engineering leadership, product design and marketing, general management and disruptive innovation. read more from http://www.techfellow.com/
My thoughts: would this model of distributed investment decision making work well in other markets? with bigger money involved? what are the limitations? risks?
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