Micro funds: Innovation for Angels/advisory startups

You may have heard about VC/ PE funds, Angel funds, Seed funds, Ycombinator model funds etc. Have you ever heard about any Alpha fund?

Get ready to take your ideas off to an alpha stage with the entry in 2009.

Recently founded New York based consulting and advisory firm HermanBlackbook has introduced New Platforms fund to promote application developers to build interesting applications on top of platforms like Twitter, iPhone, Boxee, AppNexus, Trulia etc. for a minor equity stake in the company.

The interesting and not-so-interesting thing about this fund is the amount of investment. It will range only between $1-3000. While it may sound very interesting to some developers, some of them will sincerely throw away a laugh at it. However I still feel it as a Micro fund for ideas to reach the startup stage and anticipate the rise of such funds in India very soon too. VC wear offers $100 fund, read more.

It is indeed interesting to see dynamism and newer ways to utilize the money in the investor’s circle; a question that comes to my mind is what need does this small amount really solves for an application developer? Is it his Coffee/ beer/ pizza bills to attend Xcamps? or the electricity/ home rent for a month or the software license cost?

Though it shouldn’t ideally be software license cost because most programmers usually explore open source platforms for prototype anyways and also an idea should demonstrate the lesser cash burn per month before it creates twinkle in the eyes of at least an angel investor and thus to get selected.

I have never been to US (or Silicon Valley), hence do not really know the needs of the app developers in that region but for India I think this can be a rocking idea. A little modified version could be to invest in some of the killer startups hanging at the helm of death along with the advisory that newer startups like Morpheus Venture Partners bring. Arranging to invest such small amounts shouldn’t really be a big deal and works perfect in Indian scenario and hence they demonstrate their skin the game before talking about the stakes in the company.

Even more, India has a huge pool of risk-averse angel investors; they can certainly take bets with these smaller amounts. Big business houses like Reliance, MiH, Bennett & Coleman, Bharti etc. should also learn something from this. Actually I’m learning to respect his initiative more and more with the length of this post.

Here is what Darren Harmen (founder Herman Blackbook) blogged about this initiative.

Of course I’m aware of the challenges that lie ahead, still I may like to explore a little modified version of it in Indian geography when I’m capable of doing so.

Would you?


3 responses to “Micro funds: Innovation for Angels/advisory startups

  1. Good analysis.

    Just added your blog to my RSS reader

  2. This would not even be enough to pay the bills. They need to get practical unless their idea of this fund is meant to play a practical joke.

    also. i have come across another mini micro fund from India a few years back called startups in need

    check this http://startups.in/need

    peanuts, i would say.

    • @Dharani Actually you are logical in so many ways, however, while mentoring two young entrepreneurs in getting started I realized that they actually needed some seed capital which was of the range of 1 lakh and they could easily give 10X return to the investor within 2 years. So there’s a need for such a concept as well.

      @Sameer You words matter. Look forward to your insightful comments again.

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