Jawed Karim starts Youniversity Ventures – Angel funds for Ivy League?
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Jawed Karim became famous as the secret third founder of YouTube, who had left an active role at YouTube when the video giant was acquired by Google.
After cashing into the successful venture, he had gone back to school at Stanford.
Now VentureBeat is announcing that he is starting an Angel Investment group called “Youniversity Ventures” along with two other angels who will be making strategic investments in students working out of Stanford or The University of Illonis, Urbana Champaign. The funds they will be committing will be $50,000 – $300,000.
This is kind of funny if you think about it – thats about the total angel investment funding amount all of the promising global-focused startups in this industry are looking to raise right now. To get to those funds here, however, people here have to jump through a series of complicated hoops and wrack their heads on walls trying to convince people with old-school thinking, who have never been able to go global with any idea, how this new struggling startup with promise will be able to leverage growing trends. The total set and types of hoops startups here have to go through is very similar to Series-B rounds, including requiring answers to questions most startups would never have at angel rounds anyway.
Life would be just so much simpler if successful people like Jawed Karim focused their angel investment support to the best and most promising ideas out of the subcontinent – I am sure people like him would be much better audience for startups here to pitch $MM business plans based on radical traffic growth models.
6:31 pm
Babu, money is money.
Even angels need to ensure that they are putting it somewhere, where it has a decent enough chance of going some where. You may want to call it old school but even Jawed Karim would not fund a new school startup if he didn’t agree with the game plan.
Plus I am not sure what is your definition of going global or making it.
8:17 pm
I think you’re missing a point, or we both are. We’d all agree that every investor has the right to evaluate what he’s getting into, but the devil is in that investor’s capacity to understand those ideas.
A cement exporter will never be able to understand telecom VAS businesses. A web.1.0 traffic-driven ecommerce merchant will never be able to grasp web.2.0 engagement-driven businesses without consulting help (and I consult for them, so I know).
Generally any business who has spent more than 3 years (post-revenue) building a business that gives linear returns to scale is very unlikely to understand edge-centric business models that give combinatorial-exponential pulls to returns against minimalist scale.
As an example, you achieve CExp-RTS in your business when product research, marketing, product development, support, customer service, deployment and sales are ALL outsourced back onto the customers themselves. Where they do all of this for you and then pay you for it. No traditional businessman is likely to understand how thats humanly possible, and is likely to (incorrectly) conclude that it is impossible.
Now, not understanding a new innovative space is ok – but then investors may typically start using traditional instruments of normalization to benchmark the potential of the product.
There, the issue lies with how some of the angels approach it. The good guys take it up on gut feel, trying to sell the product themselves or doing independent market-testing to figure out the potential of some space or business.
Other people ask for the same amount of documentation and information as Series-A or B investors… including answers to questions that startups may invariably not have at the time that they are raising angel funds. I.e. if the angel is asking questions about what the startup can do by scaling in the same formula three-fold, then they miss the point… angel support is meant for finding the formula and building a pipeline around it – no one knows what would happen if the current formula was scaled three-fold.
My point above was – Jawed Karim has seen viral explosive growth effects from positioning products in certain ways – YouTube was initially positioned incorrectly and never took off for its first 5 months post-launch. They’ve been through the trenches of realizing that traditional formulae of scale break down completely today. They “discovered” social-media formulae of encouraging scale, and went on to become the fastest growing business in US history.
Their claim to fame is also the fact that they were able to create a value-proposition from traction, having sold YouTube when it was making a pittance in revenue (and still doesnt really make money for Google).
Traditional thinking would never ever have supported youtube because “there’s simply no business model there except advertising, and ROI on banner-driven advertising models is declining”. Traditional thinking might have encouraged YouTube to charge subscription for viewership or for uploading videos, perhaps.
Jawed Karim is likely to then be able to constructive analyze some of the brilliant ideas coming out of this market in terms of facebook applications and other viral platforms. If he says no, the startup is likely to gain a very very good reason why not.