Back to the Earth: Seedlets and our Return to Real Seed Investing
January 12, 2012 1 Comment
I’m not much of a New Year’s resolution type. In fact, I find the notion a little silly. But I do think that stepping back and pondering the forest from time to time is essential to any business. We do it every year at High Peaks – reevaluating our strategy, doing detailed reviews of the state of affairs at each of our portfolio companies, and reassessing the market landscape we’re operating in.
2011 was a great year for us – perhaps the most exciting and fulfilling of my 12 years in the venture business, as we started investing in earnest the $25MM seed fund we closed at the end of 2010. We expanded our team, built the beginnings of a fantastic portfolio, invested with a world class collection of partners, and generally had a boatload of fun. Time will no doubt expose that we made a mistake or three in there, but at the moment they haven’t yet emerged. We are proud of the deals we’ve done and the momentum we carry into 2012.
I’m particularly excited by some of the things we launched to support the community and bring more value to our portfolio. Our Ambassador Program and Board of Advisors kicked off late in 2011, and both are bearing fruit already.
But as we reflected on the year, something was clearly missing. We realized that the incredibly active, robust state of the early stage market in New York had evolved in a way that was keeping us from doing some of what we like most – old fashioned, roll up your sleeves, small dollar seed investing. There’s been a tremendous grade inflation in the seed market – the average seed round is now well north of $1MM, with some so-called seeds as large as $4-5MM. In many cases we think this evolution has been driving entrepreneurs to overcapitalize their companies before they know where they’re going, and sell too much of their equity in the process. In response to that, today we are announcing our new High Peaks Seedlet Program.
Through our Seedlet Program we are returning to what we think seed investing should really be – small, high risk-high reward bets on great founders with truly nascent ideas. We will write checks as small as $25,000 and as large as $250,000. We’ll do some Seedlets by ourselves, and will partner with angels and other firms on others. And we’ll move fast in our decision-making.
Admittedly the name sounds a little silly. We batted around a number of options before realizing that Seedlet was a name that everyone would understand. Our Seedlets will target companies that might be pre-product, or might be just a single founder with a brilliant idea. They’ll be high risk bets, but they’ll be made at the formative stages where we like to operate, and where we believe we can be most effective. And importantly for the community, they’ll be made at a stage where despite the hype around seed investing, hardly any institutional investors are actually playing anymore in New York.
We think we’re offering something unique and important here. It will be good for us, good for the companies we invest in, and good for the community. If the early signs we’ve seen since getting focused this stuff are any indication, we’re going to land in the middle of some really exciting opportunities. We hope some of our friends in the business will join us in venturing whole-heartedly back into true seed land.
We will close our first Seedlet this week – a $150,000 investment in an alpha-stage consumer web company (though it will be a couple of months before we announce it). We’re looking at a handful of others, as well. Ideally, we’d like to do 6-10 Seedlets this year.
So send us your ideas and leads. And if you’re an entrepreneur who’s trying to figure out just what kind of round you should be raising, drop me a line and we’ll talk. We’re always happy to objectively help entrepreneurs think through these critical early decisions.
Here’s hoping that 2012 is the year that seed investing returns to what it is really supposed to be, and here’s hoping that High Peaks is a big part of that.