North Bridge tried a new thing this spring. We were excited by the number of new seed companies in Boston, NYC and California (the economy has spurred growth everywhere!), so we decided to host a competition to fund a new company that had not raised prior money and only needed a few thousand to get to the first proof points in its business. We offered $50k cash and $25k in development services.
We’re pleased to announce that we selected 2! One from the east coast: Profitably and one from the west coast: Magoosh.
We had many dozens of applicants and narrowed it down to 10. Each of the finalists presented to our selection committee of investors at North Bridge. Then the final two presented to the entire partnership.
This was a great exercise for us, and we are excited to support the number of new, young, repeat or successful entrepreneurs starting ideas at the seed stage and needing very little capital to get a first product to market. As one can imagine, in this category, many applicants landed in the digital media, B2B web applications, and general consumer internet space.
It was a fun challenge to get to know entrepreneurs and turn around funding this quickly (the competition was start-to-finish just over a month). We typically look at seed investments as a way to get entrepreneurs who we know we want to be in business with started quickly on their idea/project/product. This was similar but constrained by the competitions’ time limits–getting to know who you’ll be in business with (on both sides) usually takes the most time, in my opinion.
Also, because this was a competition, we do not expect that the entrepreneur has to keep working with North Bridge in future rounds of funding. There have been comments about the stigma that funding from VCs creates at the seed stage, and if structured and planned correctly, I think that can be avoided. Spray and pray models (where a VC makes many many seed investments and only plans to follow on with 1 or 2) are difficult to manage. This create these stigmas when follow on funding is not granted. Companies are often left out to dry. Of course, the same result can happen when companies have to raise money from a completely new type and set of investors at every stage (angels vs institutional investors, e.g.). This is one of the reasons we only picked 2 companies rather than award all 10 finalists or even more than that. The biggest limitation on our value add is time not money, so we wanted to be careful to not stretch too thin.
Congrats again to the teams at Magoosh and Profitably!