Entrepreneurs Band Together to Launch Multiple Startups
The idea of one entrepreneurial company having its hand in a number of startups at once is making a comeback. The approach, which gained traction during the Internet boom of the 90s, but deflated along with the bubble, is coming back into vogue, says the New York Times.
Behind the movement are serial entrepreneurs who are banding together to invest in promising tech ideas rather than putting all of their eggs into one company’s basket, or taking the hands-off approach of angel investor or venture capitalist. “Venture doesn’t allow us to explore, only to accept and deny,” one such executive, Michael Jones of Science, told the Times.
These organizations have been behind some big names. Yelp was created with help from MRL Ventures, run by PayPal’s former CTO Max Levchin. StumbleUpon co-founder Garret Camp’s Expa seeks to develop scalable products and services. Groupon co-founders Brad Keywell’s and Eric Lefkofsky’s company Lightbank is invested in 60 projects.
Such organizations say their strength — aside from money — is focus. Camp, for example, plans on “creating just a couple companies per year, and spending significant time with all of them.” This approach brings fledgling firms not just money, but hands-on experience at a time when they can use all the smart help they can get.
When a new company’s ready to take the next step, the investors look to VCs for additional funding while they begin to back out and give it more autonomy. “It’s like raising children,” said Ron Palmeri of MkII Ventures. “There’s a point where they eventually need their own space, but you’ll continue as a trusted adviser.”