Start (venture fund)

Investors and management

Investors in fund for investments into startups of Start are Yury Milner and the founder of SV Angel fund Ron Conway.

Manages fund there will be David Li, the managing partner of SV Angel^[1].

History

On January 28, 2011 it became known that Yury Milner, fall of 2010 gained $112 million from IPO Mail.ru Group, created Start fund for financing of startups in Silicon Valley. Earlier Milner said to Vedomosti that he is going to invest the money earned for Mail.ru Group in online projects as it "one of the most perspective directions for the next 10 years".

The declaration of opening of fund was made on January 28, 2011 in the headquarters of an incubator of Y Combinator in Mountain View. According to the TechCrunch edition, founders of 43 startups which are selected by Y Combinator participated in a meeting. During the meeting Start offered them financing in the amount of $150,000, and for Sunday evening the offer accepted 90% of the companies. If the offer is accepted by all, then the amount of financing will be $6.45 million.

Conditions, according to the interlocutor of Vedomosti, are as follows: the command receives $150,000 in the form of a loan with a small interest rate (it does not reveal). After the startup agrees with venture fund and receives money in the first round of financing, the loan is converted into stocks of the company proceeding from its assessment during this round.

Thus, the more expensively the fund will estimate a startup, the smaller share will be received by Start, the interlocutor of Vedomosti continues: it is incentive for entrepreneurs to make the best product and to be estimated more expensively.

The money selected with Start should be enough for completion of development and start of a product, considers the source close to fund. The very first money quickly comes to an end, and to startups instead of developing business, it is necessary to look for new means. Interim financing from Start will help them to overcome this most difficult period in startup life, he summarizes. It is a smart investment strategy, the founder of Y Combinator Paul Graham told Techcrunch: Milner and SV Angel will win even if successful will be only pair of startups.

In cooperation with Graham's incubator this model is justified, Elena Masolova, the founder of the Darberry project (in 2010 Groupon is sold) considers: it has a huge number of requests, and financing is received by qualitative projects. Masolova says that 90% of startups need additional financing after receiving the first money from angel investors. But standard this model of investment will not become, Masolova considers: only the large fund is able to afford to invest money actually blindly in a large number of startups, and they usually at an early stage are not interested in startups.

Notes