Apr 29

Prototype Invest: It is time for more than money and connections

Tech with tags: , 4 Comments »

Josh Catone posted on Prototype Invest “a unique type of early stage investment firm. Rather than put money into startups, Prototype supplies technology in exchange for equity. This is an investment firm for anyone who has ever been told, ‘Ideas are a dime a dozen, kid. Come back when you have a working prototype.’”

The idea is that anyone with an idea can pitch to these guys, and get them to build something. You could argue that it is a bit gimmicky, or that outsourcing this may not make sense, but I think that one thing is true:

Money isn’t enough

There are lots of ways to get money, including bootstrapping yourself, which is increasingly viable as the costs of doing business online are just so small compared to other markets (couldn’t do it as easily if you need to manufacture something). If you can’t do that, then you have a lot of options still, from angel to banks to VC.

If you have a great idea, then getting the money may not be the problem. Traditionally, people have chosen a VC based on their connections and past history. I know startups who have taken the minimum amount of money that kept a VC interested, just to get access to the connections and network. There is some value there.

But, there is room for a lot more. I believe that VC’s would be wise to start offering more of the stack. Take a Facebook application for example. Imagine that you had an idea, and were choosing between two investors who were up for funding your flying monkey application:

  • Big Shots: “We will give you the money on these terms, and will connect you.”
  • Tech Shots: “We will give you the money on these terms, but we offer more. We have an in-house lab that specializes in Facebook development. We helped build Sailing Monkey before you, and know about both the technical aspects, as well as the business aspects (read: how to actually make money on this Facebook thing)

I know which one I would choose. Who knows if Prototype Invest will take off, but I love the idea, and hope that others bloom and grow so entrepreneurs have choice. With that choice they will be able to make a match with the right VC to give them what they are missing.