In the early ’90s I attempted to start a computer game company with five other partners. Somehow the role of front man eventually fell to me. If you know anything about me, you know that I’m not a “people person,” yet I was told that my no-bullshit approach to pitching what out fledgling company had to offer was just what possible investors wanted to hear.
So I spent the next few years attending the annual CGDC and E3 events, scheduling meetings with possible backers, and generally making my life miserable. Our company had enough god ideas to fill a binder as thick as the Los Angeles phone book, but all anyone wanted to know was how much money we planed on making, so that they could calculate what their cut would be if they invested. Even AOL, who was desperate for activities that would keep its subscribers online for long stretches of time (at a premium), was interested only in an immediate profit.
We tried to interest a few angel investors, but since we weren’t selling hardware of software that you could put in a box in a shelf, they didn’t understand what we were trying to do. (“People will gather in communities online, just to play in a virtual world you created? You’re nuts.” This was 1996, before Everquest broke open the floodgates.) By 1998, having exhausted every funding possibility, we packed it in, with only a thick binder and a lot of frequent flier miles to show for our efforts. That, and utter contempt for the venture capital industry.
Nothing has happened in twelve years to change my opinion, especially after watching what She Who Must Be Obeyed had to go through as one of her startups was funded. Nothing, that is, until last week, when I was asked to help a friend build a web site for her new investment fund. Hearing the hesitation in my voice, she said “Go to my temporary site and read the story, then we’ll talk.” This is what I read:
And so, I did something desperate. I said, “Look, just take the $25k. Give me 5% of the company, give me 10% of the company â€” I don’t really care. All I want is the opportunity to continue doing this, which is to say, sitting down with people like you and helping them get started on their dreams. So here’s my offer:
You decide how much equity I get. Then, when there comes a day that that equity has value, here’s what we’ll do: the two of us will find new people to invest in. You can sit with me on this side of the table, and together we’ll use that money to facilitate other people’s dreams. How does that sound? Would you like to be angel investor yourself someday? Would you like to be my partner?”
There was another long pause, but this one felt different. Finally, he asked, “Under those terms, why wouldn’t I give you twenty percent?”
Then he added, “That’s pretty much the best deal I’ve ever heard.”
The more I thought about it, the more I realized he was right.
Had such an arrangement existed when I was trying to get funded, I would have jumped at the opportunity, and would have been all too grateful to extend that opportunity to the next bunch of newcomers. I agreed to build the site, and today Presumed Abundance launched.
The fund isn’t for every company, just those in the “social enterprise” arena. Regardless, it’s a staggeringly good idea, one of those “Why didn’t I think of that?” moments. And it’s bound to piss off traditional venture capitalists because it completely disintermediates them. (Hey, I just used “disinermediates” on a blog that isn’t Boing Boing.)
Take a few minutes to go through the site. They’re accepting proposals, and maybe you know someone with a good social idea who could use a little startup cash. Or, if you have cash of your own to distribute, replicate the Presumed Abundance model.
And don’t forget the Belm Blog Community Networking Project.