Consulting firm Herman Blackbook is launching a new micro-fund today for application developers who want to build stuff on top of “Twitter, Boxee, AppNexus, Trulia, iPhone, and more” called the New Platforms Fund. The catch? They’ll invest only “$1-3,000″ (I hope that’s $1,000, not $1, but whatever) in exchange for equity and they are only investing in “up to 10 cutting edge ideas.”
This capital is supposed to get entrepreneurs to an alpha stage, when they’ll go out and pitch for more money, from someone else.
Update: VCwear is introducing the $100 fund; they will invest that amount in t-shirts for the dumbest Twitter app you can come up with.
For the sake of comparison, the size of Kleiner Perkins’ iFund is $100 million, and it focuses only on applications for the iPhone and the iPod Touch.
Let’s be honest. There is very little reason for an entrepreneur/developer to apply for the New Platforms Fund. Incubator micro-funds like Y Combinator, TechStars and Seedcamp don’t give you much in the way of capital ($15k-$20k), but at least it’s enough to live on for a few months while you work on your idea. And those funds have very deep connections in the venture capital world to get you your first round of capital after you’ve spent their initial funds. It’s not clear at all that this new fund can do any of that for you.
If you’ve tried raising from the other guys, your friends, family and anyone else who’ll talk to you and no money is coming, I guess you could give the New Platforms Fund a try. Just don’t quit your day job. Application is here.
I was a little interested until I read the 3k limit.
BTW, that’s not even enough to get to alpha…
Sure it is enough to get to Alpha for many of these apps.
$3K pays for a fair amount of programming time if you outsource to Eastern Europe or Asia, or live there yourself.
Do your financial calcs based on posisble exits and how most of these “feature” apps turn out.
Apart from the discussion how far that $3k would take you, wouldn’t it be easier to simply set that money aside or borrow it from a friend or relative?
How far that level of investment will take you is actually closely related to your ability to raise capital from FFF.
I am on the ground in Poland, maybe that helps me put this a little in perspective.
I know families who have a joint monthly income of less than $1000, drive a car worth less than $1000 and rent because they can’t afford the mortgage on a $20000 appartment, or couldn’t raise the credit.
Such a family might be able to raise $3000 – sell the car, furniture, borrow from a neighbour.
They might even do that for something that has a high chance of return, maybe helping pay for university fees for a child that would still have to flip burgers to survive.
In many countries if you are a student finishing college, or unemployed, you can receive a government grant – in Poland it amounts to something around $500 a month for a year. It is aimed at allowing you to start your own business.
People do start businesses with that money.
My major concerns would be the cost of formal paperwork, though for such a “punt”, maybe the paperwork would be slightly less formal as well, with maybe a contract to formalise things at a future funding round.
From what I can see this is an investment thus the risk is only sweat for a student working on something instead of flipping burgers or providing outsourcing for $10 or less per hour.
If investment decisions are often made based on a term sheet for large amounts, then less formal investments on a paper napkin or ppt and a 10 minute chat on Skype might be viable for someone who isn’t just investing for profit, but also with some level of philanthropy.
It isn’t just the money, I am sure the human capital is significant for someone who isn’t business orientated, and the intention isn’t necessarily to build something beyond whiat is required for an angel pitch for additional investment.
Do you really see programmers in Poland making less than $1k/mo? Just to keep this apples and apples.
1000 U.S. dollars = 2 984.39757 Polish zloty at todays rates in Google, whereever they get those from currently.
I could point you to job listings, but most might lit a maximum salary, and what is actually offered isn’t reasonable.
Better to look at outsourcing pricing for Eastern Europe.
It should be noted that if someone is outsourcing, it is just a wage, they don’t gain any ownership or upside potential based upon these prices.
I did a search on Odesk, where the labour is generally reasonable quality, and probably slightly higher priced than other sites.
http://www.odes...viders_form=yes
Currently 127 web developers listed with rates between $5 and $10 per hour
If they were working for themeselves on their own project when they didn’t have paid freelance work, there is a fair chance the more creative ones could do an aweful lot with $3000 plus someone with marketing savvy to guide them.
There is also a fair chance that as a founder of a startup receiving VC investment there probably isn’t a green card issue for them to relocate, an added bonus if things progress further than the initial investment.
Andy, wouldn’t you rather pull out a credit card with say 0% APR for 15 months if you needed $3,000? Opposed to having to give up 3-5% of your company? I would.
If someone’s credit history is so bad that they can’t get a line of credit for $3,000, then they probably shouldn’t be creating a startup.
in search of the next great iphone app?
you can learn alot from a 12 year old on you tube about the future of ip apps.
http://professi...up/apps_locator
from what i understand there is 100+ million dollar funds that are right now trying to create a leading ip apps. its a witch hunt. appears better off trying to create games for the device. the killer app for business is access to the internet. its already here.
AppsLocator.com – got multi.
OK, send me 10K i’ll give you note money on the first round set at the vc’s choice you can convert or take a five year note at 10%, I think thats normal. payment via paypal wayne@imageDeposit.com, I also put for sale on ebay today. I’ll send Arrington that story now.
Why would I want to invest in a company who’s founder or ceo is dumb enough to use this in the first place?I just heard my first stupid idea of 09.More to come unfortunately.
Actually, I think it’s a stroke of genius.
1) he got his company featured on TechCrunch without spending a dime (free advertising)
2) he is getting people to comment on this concept which is borderline in my opinion
3) he is going to possibly catch a fish who has no choice but to give-up a large portion of their company for peanuts with a massive return on investment
I just wished I thought of this myself!
Jon
http://WoodMarvels.com – Create Unique Memories
Well, he’s getting common-sense feedback and advertising for a business-model that can never work, both of which are required to create a business.
Even if he catches a fish, that fish must be so stupid that his chances for success are low.
This idea can work if he’ll target 3rd world countries, though.
Incidentally, they’re using Wufoo for their application form, a YC company. (Great product, by the way.)
i’d rather give equity to WuFoo for $3K in credit
Thank you for sharing.
@ Garry Tan – cheers for the heads up about Wufoo … checked them out and just what I’ve been looking for…
This can be really useful to guys who got the brains in programming but lack resources for initial startups. Atleast they can build something similar like iFart Apple iPhone App and then grow up with the sucess. Depends for someone 3k$ is nothing and for starters its a decent enough amount of money!
Need seed capital for my site; to debvlop and market. Where should i look for?
http://www.good...uckwiththat.com
I’m guessing they had about $20-30K burning a hole in their pocket and thought “Hey, let’s see if we can turn this into something we can sell to Google.” As someone mentioned, saving up 3 grand on your own isn’t that difficult to do.
To be fair, though, if you’re not living some place like southern California or New York, and you’re willing to make some concessions, you could easily live for a couple of months on $3,000. If someone really just wanted a little while to escape the rat race and work on a personal project that had some potential this could almost be a good idea.
In the US this is peanuts, but to someone in India this may not be a bad deal.
It is a perfect idea as the amount of capital required for these app dev is little. Read more on how a small fund can outperform iFund.
May be they should increase it to $10k to be more effective.
$3K might not be sufficient to complete the whole nine yards (so to speak) but might be enough to encourage the entrepreneur to take the first step. Most of the ideas die even before they get started.
If models like Kiva, based on micro-loans/financing seem to be working, I have no doubt that such “micro financing/VC” models will start taking off in the future, not just for global entrepreneurs, but might also encourage a ton of budding wannabe entrepreneurs in US who are standing on the sidelines, afraid to take the first step.
Meh, I’m willing to give anyone $3k if I get enough equity of a good idea.
Hi all, thanks for the coverage. We run the New Platforms Fund.
The goal of the fund is to celebrate and promote innovation on top of new platforms. There are plenty of companies I have personally seen that are trying to raise a few dollars to move from napkin to wireframe, or to add a little in the bank while in alpha or beta. Plenty of our friends have developed apps and layers for under $10k.
We are giving more than just money. While we’re not Techstars or Ycombinator, which we respect very much, we’re also giving access to our services and a network of individuals who want to see our investments through.
So, happy holidays and new year- and looking forward to meeting some amazing people in 2009!
Darren,
you are being ridiculous.
Wake up, dude.
Brad
he’s a few years out of college with an inflated title. what do you expect?
the best is that he’s comparing his “investment vehicle” to allen & co…. hahaha.
(“Allen & Co. of tomorrow”)
It just seems to me that if the limit is 3K, you are far better off asking your parents or friends for the money than giving away a chunk of your potentially successful app to an investment firm. Getting 10K in investment makes sense because that’s enough to get going for a few months and build something special with a budget that most developers would have to scramble to find.
Who has an idea that is worth pitching to an investment company but not enough money to borrow a couple thousand dollars?
(PS. Wufoo is awesome! One of my favorite sites…)
3k for US startups? If 3k is enough to startup in US, then what is the amount one can startup with, in India? Would INR 100k do? or say INR 50k ? Any idea?
I am asking this because I want to do a microfund in India.
No way it would be enough. http://startups.in/need offers somewhere around 500K which in my opinion is still not enough to sustain in India.
3k is so little for everything except the smallest of the small microapps. During 2008 my firm helped over a dozen Web 2.0-ish entrepreneurs. At this point the minimum budget for a successful alpha/beta launch should be about 20k for design and prep and 40k for one month of implementation and the actual launch, with at least another 40k set aside or ready from investors in order to deal with changes needed for the next month or two post-launch.
I think (and I could be wrong) this is a totally diffrent ball game. He’s looking for someone with an idea and the skills to administer a few developers in the Baltic for a few months. just toss 30k out there and see if he gets any nibbles. Its the ol, throw enough s**t against the wall and somethings gotta stick strategy.
(I hope that’s $1,000, not $1, but whatever)
Robin, please check your sources before releasing a story (c’mon, it’s just a call. If you can’t reach them, that’s valuable information for readers, too).
And if Mike doesn’t give you the time to verify information it’s probably time to leave TC (and I, as a regular reader, will leave as well).
Journalism has to be a sustainable business, too. Credibility is the main intangible asset of any news company. It takes a lot to build it, but it can be destroyed in no time.
It was obviously $1k, but the source (a press release, mind you) just phrased it strangely: “$1-3,000″.
Also, not everyone lives and works in the same timezone, it’s not always as easy as picking up the phone.
>Cail — It is not Techcrunch, is this guy who is not able to to post a decent article.
He insist on writing about useless and stupid things. Just bypass his articles. I hope that Arrington reads this.
Hey ‘Jon’, I was wondering where you were, happy new year! Still not gotten over the fact that I wrote the truth about your startup?
$1K? What’s this? 1870s? I understand some folks can use the money. That kind of money is not going to get you so far these days but I guess if you are dedicated enough…
A few questions come to mind.
1. what kind of equity stake would you assume for 3k?
2. the network is obviously the crux of the deal. Can you divulge any details as to how you plan to promote?
3. I absolutely love your strategy, instead of investing 30k in 1 App that has a 1 in 10 chance of doing anything (more like 1:100)… But how do you plan to administer the stakes? I would think that with Micro seeding such as this, it would be difficult for you to have much input as far as the progression of the concept.
A quick word of advice, speaking from experience: Be careful of (or avoid all together) overseas investments. You almost certainly wont get what you were promised and you will have virtually no recourse.
dumb. based on the amount of money, the number of selections (10) and the potential number of submissions, it smells like an intellectual shakedown in which they’re simply trying to round up good ideas and find one to copy on their own…
I’m actively looking for an injection of capital, and quite honestly, I won’t even consider this. Sure you can get some cheap offshore programming, but what about hardware and other software resources that may be needed? That transition alone would soak up this cash. It wouldn’t do me any good quite frankly.
And if I could get a list of companies that can do substantial work for this sort of money? I would rather just use my personal funds like someone alluded to. I personally need some branding/graphical work and need help wrapping up my integration with the likes of FB Connect and Google FC.
Allen – allen.mcguire@gmail.com
founder, http://madtownlounge.com
That is the silliest thing i have ever heard of. 3k is not even worth the time or effort. It wont even cover the costs of a term sheet and the cell bills.
Mike what kind of valuations are they looking at for so little. is this and Idea Labs on steroids. 50% of the co for 3k.
So if its 10 investments up to 3k 3000 x 10 =30k thats the size of their commitment. What are they hoping to get out of this. A desperate person who will take that amount because their idea is so bad?
Incredibly stupid. They will give you $3K in exchange for 100% equity. Yes, it is a bad idea…
Stupid article.
Consulting firm Herman Blackbook can only offer up to 30k. so ridiculous!
Do they need a bailout?
Looks like the funding will do good only for people from other countries. Depending upon where you live in US, that’s only for around a month’s expense.
No good.
Very good PR for an unknown consulting firm with a 30 K usd budget.
How true! Just look at all the attention this post has gotten in terms of comments. A lot more people know about the firm now than did before.
I’m not going to be out asking for $3K anytime soon, but I understand the use case here in the US.
Students coming right out of school with a small pot of savings might rely on that $3K to extend to three more months in the garage (It’s plenty for three months for a frugal entrepreneur with nobody else to support).
Not everyone has connections that see $3K as a trivial amount of money. Right out of college I wouldn’t have asked my parents for that. I’d developed other connections by then, but I was lucky.
Certainly there are better sources of capital out there. But let’s not forget to support the unproven entrepreneur reaching for something to get through a gap in financing before turning to other options.
If someone is dumb enough to give you a part of their company for $1k then you probably don’t want to be investing in them.
That’s like saying if someone calls your all-in with pocket aces, you shouldn’t be playing against them. Yeah maybe if you just finished reading Karl Marx…
Wow, seems like a waste of time for both sides. The paperwork/administration alone isn’t worth the hassle for that small amt of cash.
It’s remarkable how many of the uninformed shoot from the hip in this comment thread. He is clearly not purporting to be seeding the next Google with $3k. He’s not trying to seed someone money to draw salary and start their own company (hardware included) ALL he is doing is trying to promote/incubate good ideas by giving a little extra cash to get it off the ground. I can’t tell you how many times I see developers scrape cash together from each other to fuel their app development. That’s what this does. Plus he has amazing connections in the digital media and tech world, openly shares them and is the ideal person to launch this. For those of you who want to label this as “silly” and “dumb” the least you could do would be to critique the concept on it’s merits, not your misunderstanding of them.
Michael,
So you think $3K is enough money for me to be able to migrate my website to dedicated hardware, which will have to be paid for, configure and secure it properly, get my site working again (it’s an existing company), and pay myself? Hardly – I have an existing day job that pays me this in two weeks, and that pays for my personal obligations – I can’t stick it into my “dream”. Most people need monies that will allow them to dedicate their efforts long term on their idea, not “make or break it” in one month.
My “dream” is about two years old now. I have plenty of ideas on how to improve it, and have five existing streams of revenue to keep it afloat, but with a day job and lack of extra cash, it is what it is for now. Can you tell me how this amount of money would help me? It won’t.
Allen, founder
http://madtownlounge.com
Allen – Did you read what I wrote? I said the exact opposite! It’s NOT meant to do that. It’s meant to help a developer who has a micro app idea get the idea off the ground. So you really think I or Darren actually believe $3k can do all you criticize Hb for NOT being able to do? Of course not. He is incubating and helping apps not companies.
Yes, I read what you wrote. Maybe it wasn’t clear. App development to me includes web applications, which my site is. Sure you can try to split hairs between the definition of “app” (like a FB app) and site (like mine).
If you guys are in the business of investing in existing companies that need a real kick, look me up.
Is $3k a small amount of money? Yes, but it can be the difference between pursuing an idea or letting it languish as a wire frame.
The other thing you all forget is the importance of validation. I guarantee that someone who raises money from Darren and his posse will have a much easier time finding follow-on rounds than someone without such validation — especially in this market
http://twitter.com/squasher98
Absolutely. It would be great to get millions up-front, or in a relatively short time, like facebook, myspace, etc. In the beginning, a good, viable, marketable concept plus validation and connections are essential.
Robin, you’re missing the point again (with Angelsoft you missed it too).
The world doesn’t revolve around Kleiner and their iFund. The world is much more flat.
In regards to the $1,000 – $3,000 investments here, if you’re a developer and making something for Boxee or Twitter or another platform, you probably have the time and resources to develop something in your spare time on nights and weekend. That’s how innovation has been happening for some time now.
However, what happens when you want get an awesome design for your app and bring it to market?
This is where the Herman blackbook money and guidance is helpful. Take $3,000 and you can now put a great design on the great app you built. Then take Darren’s go-to-market expertise (he has built and sold more multi-million dollar businesses than any of us have) and you may have a great new recipe of taking garage developed concepts and turning them into great startups.
I’m excited — for Darren, for New York (since this is where he’s located), for startups, and for these platforms.
Nate Westheimer
Entrepreneur in Residence, Rose Tech Ventures
Organizer, NY Tech Meetup (7,500 members)
The iFund reference was for the sake of comparison, in order to illustrate that there’s indeed still a gap between multi-million VC funds and taking capital from FFF, but that it’s fortunately filling up thanks to incubators like YCombinator, Techstars and Seedcamp.
The New Platforms Fund, IMO, is a solution looking for a problem.
Robin – spend some time on a developer forum or a platform dev thread and you will notice that a common refrain is the collection of folks who throw in $25-50 of their own cash to fund a developer’s time to build an app for the community. It’s not the same as sending $3k to India to get it outsourced and barely built to spec. What it is, is a problem seeking a solution (on the dev forums) and now Darren is formalizing it, and then some.
Maybe it’s their way of standing out: ie. sucking at what they do?
Hi all, something else that most people are overlooking is that it’s not just about the money. Sam nails it above… re-read his comments.
I’m super stoked at the launch of this and have had some great feedback. For those who are excited about this, the world is our oyster.
Happy and healthy ‘09,
Darren
Tone of the article’s a little harsh, no?
Darren’s got some expertise that’s extremely rare in Silicon Valley – he understands how an advertising agency works. I’d talk to him because you need his advice, not the three grand.
I posted my idea, Nano-fund. The idea is to invest $3-30 in stuff build on top of Google, Microsoft and Yahoo. Think different!
Robin & Techcrunch readers:
I am looking to invest $100K-$350K in TNBT (The Next Big Thing).
In addition, I seek a significant operations role in the company.
Any SERIOUS ideas/proposals should be emailed to me at jdileo5348@gmail.com. I will respond to all.
If you are the same Joe DiLeo from Sales Strategies Group then I suggest you invest in a company working in the online reputation management field. It is a significant growth market.
Your own online profile would be ideal to beta test any service for for monitoring and repair, though some such as Ripoff Report are known to be a little hard to repair.
BTW, my “company” is also known as the mob.
Be advised the 10:03 post was not made by me. My due diligence on finding a profound tech idea is real and I encourage all who are serious to contact me.
Techcrunch: can we do something about the 10:03 imposter please??!!
Yes, I don’t know what is happening here. Again, I am looking for a profound tech idea. I will take your idea and run with it, suckers!
This will be the last time I respond to the imposter, who obviously has made another fake post under my name.
Be advised that it is expected that a conf. agreement would be signed before discussing significant details of a technologist’s idea.
I have capital to invest in a tech. idea and will bring my considerable sales and operations background to bear on the company. It may sound out of the box to the skeptics but….it is what it is.
I am looking to invest $100K-$350K in TNBT (The Next Big Thing).
In addition, I seek a significant operations role in the company, preferably ownership.
Any SERIOUS ideas/proposals should be emailed to me at jdileo5348@gmail.com. Don’t forget to include a PayPal.com payment of $500 US Dollars.
I will respond to all.
$3k is still non-trivial to some people. I wouldn’t feel comfortable asking for that kind of money from my parents/friends, and I can’t imagine any of them coming to me for it, either. Especially right now.
This investment is for people who have the time but not the money, people who need to buy some time, or people who just don’t quite have the capital to finish version 1.0.
Go participate in a Startup Weekend, you’re sure to find a business or two which $3k could dress up or even launch.
whats next the 100 dollar fund.
Yep. http://www.vcwe...om/the-100-fund
I checked the application form and I have to say that, this is a scam intended to steal people’s idea.
APPLICANT’S: Please be careful not to give your detailed ideas. You will find out that you will not be getting a penny, instead your ideas will be started and sold for zillions to other angel investors.
Coders beware!!!
Makes me want to throw up a fake “fund” just to get the coverage on TechCrunch.
Doesn’t legal fees cost more than $1-3k?
What can we do with 3k, not enough for the US or anywhere really. I am looking for funding for this site, check it out, gives you a trading profile. Take it and let me know what you think http://www.freetradingquiz.com
You people are blind – its not the money – its the connections. I say, unless the connections are good – turn down their money. If they have sick connections, take the money, use it wisely, and continue. furthermore, for a resourceful entrepreneur – 3k is a good amount. Luckily, i have the advantage of being an entrepreneur who happens to have programming experience, so that saved me A TON of money with all companies i’ve ever launched.
On top of that – 3k is enough for some to file important paperwork – set up the corporation, etc… priming it for investment. And maybe a little dev. work. And lastly – these twitter apps that ive seen can all be built for less than 3k if done properly. Really – id say <60 hours – if the average dev. is between 40 and 50 an hour – thats $2400 – $3000.
I can’t imagine entrepreneur that would agree to part with equity for such pittance. I work a lot with outsourcing companies in India, China and Eastern Europe. Even in these countries it’s hard to complete a small project within such budget.
Guys, not sure what all the negativity is about. If you don’t like it, don’t apply.
That said, seems like a lot of people would want someone like Darren on their advisory board. If it comes with $3k, that’s not a bad thing, is it?
This whole negative discussion seems very counter to the ethos that SV and the tech startup scene prides itself on – a celebration of optimism and the art of the possible. Since when has it ever been bad to create more opportunities for entrepreneurs to have access to money (albeit small sums)? As long as they aren’t taking an arm and a leg in equity, then why is this a bad thing? If you don’t need it, don’t apply! And if you do happen to want someone who knows digital advertising advising you, isn’t it even better validation that your adviser puts some skin in the game as well?
Thanks for the comment, Mike. As for the negativity and the cynism, welcome to TechCrunch’s comment section