Steven Johnson explains today why he ended up accepting money for his Web 2.0 venture from VCs:
The assumption had always been that we would not seek out venture capital funding for the company — at least in its first year of life… we didn’t have any capital-intensive needs… we had no shortage of interest from angel investors…
So why are we — very happily — announcing a new round of financing today, with THREE venture funds participating? It begins with my friend Ed Goodman… When I started work on outside.in, Ed asked me to come in to talk about it with his partners. They had some great feedback on the concept, and Ed encouraged me to meet with Fred Wilson and Brad Burnham over at Union Square Ventures…
When we sat down for the first time, I was really just blown away by how well they understood the problems we were wrestling with… And — amazingly — they didn’t talk like VCs. They never once mentioned leveraging the incremental end-to-end value chain, or whatever. (Perhaps they did this for my benefit, and resumed picking the low-hanging fruit once I left the room — either way, it was a good show.) They said they could act much more like angels — investing smaller amounts than usual, with less restrictive terms…
And then in the closing days of the deal, my old partner from the FEED/Plastic days, Bo Peabody — one of the people I most admire in the Web investment world — asked if his fund Village Ventures could participate as well, so I couldn’t say no to that.
We’ve still got a great list of angels involved as well. Marc Andreessen just wrote in out of the blue to say that he really liked the site, and to ask if he could help out with the financing. Esther Dyson, John Borthwick, George Crowley, and Richard Smith — it’s a fantastic list of people to have behind you. (Along with our other founding investors, John Seely Brown, Mark Bailey, and Andy Karsch.)
In other words, Johnson already has money from Esther Dyson and Marc Andreessen and the like, but he now gets money from Fred Wilson as well, because Fred Wilson asked really nicely.
It’s very boring to talk about how much VC money is floating around the technology world these days, and at least in this case if outside.in works, it has the ability, in theory, to bring in insane amounts of money. But still, I have a feeling that outside.in is something which is very clever in theory, but which is going to be very difficult to make work in practice. Certainly it’s not simple enough for me to navigate intuitively. I really would love a great online guide to what’s going on in my immediate neighborhood. But whether outside.in will ever be that guide, I’m not sure.