In uncertain economic times, it is imperative to continue to support entrepreneurs and companies at their earliest stages. Although access to early stage capital may have become scarce in recent months, it is precisely at these times that entrepreneurs start attacking nascent opportunities and begin building the game changing companies of the future.

For this reason, Spark Capital is aggressively seeking to make seed investments in promising early stage companies in the New York and Boston areas. Through this program, entrepreneurs who are starting companies in the conflux of media, technology, and entertainment can be granted up to $250,000 to quickly accelerate their progress.

Whether you are a seasoned founder or a first time entrepreneur, we want to hear from you to see if we can partner to build something great.

 

Why have you launched Start@Spark?

We believe that providing entrepreneurs access to early stage capital is critical in building a vibrant eco-system of innovation. Unfortunately, as our economy works through this time of economic difficulty, normal sources of early stage funding have been reduced. Fewer angels are investing aggressively and many top tier institutional investors are turning their attention to their existing portfolios. In this funding environment, Start@Spark is an important source of both capital and acceleration for entrepreneurs.

Capital
Our region has a healthy population of large venture capital funds that invest $5 million + of capital into startup companies. However, many entrepreneurs need more modest sums to explore different markets, build an initial product, or achieve other milestones prior to a series A equity investment. Start@Spark provides this level of financing, at terms that make sense and align ourselves with the entrepreneur at each step.

Acceleration
In addition to funding, early stage entrepreneurs benefit from partners with deep experience in building great companies from their earliest stages. They also benefit from the industry insight of a team that is focused and deeply networked within the market they play. Start@Spark provides entrepreneurs with this level of support and partnership, and allows their companies to achieve much more with less time and money.

For more on why we launched Start@Spark, please see our blog.


What are the criteria for new applicants?

Please see our application page for the specific criteria we are looking for when we evaluate opportunities. We generally look for companies that have a clearly articulated problem that is big and meaningful. We look for teams that have the tools to quickly hit the ground running upon our investment and have a good sense of how they would utilize their capital to achieve specific milestones. Most importantly, we want to build a long relationship with entrepreneurs that are hungry, driven, and we enjoy working with.

Geographically, Spark Capital invests in companies across the United States and Internationally. As a rule, we focus on finding the most attractive investment opportunities and do not confine ourselves to specific locations. However, for Start@Spark, we are initially targeting companies in the New York and Boston areas. We believe that this is the best way for us to actively partner with entrepreneurs at the earliest stages of their company’s development. In time, we may expand the program to extend to other geographies as well.

What sectors are you focused on?

We seek applicants who are trying to build large and disruptive companies within our focus area of technology, media, and entertainment. Our investments span the full value chain in this sector, including gaming, technology platforms, mobile, advertising, consumer applications, infrastructure, and hardware. Consider our current portfolio of investments for examples.

Additionally, we will regularly discuss specific themes that particularly excite us on our blog.  Some of our current themes include:

What is the application process?

  1. The first step is to fill out our online application. Our goal is to respond to each applicant within 1 week of submission.
  2. If we share your excitement about the opportunity, we will invite you to present to several members of the firm. These meetings occur regularly on Fridays and alternate between sessions in Boston and New York. 
  3. Immediately after this meeting, a lead within the Spark team will be identified to dig deeper into the opportunity, conduct timely due diligence, and establish a deeper relationship with the entrepreneur. This ultimately leads to a decision whether or not to award financing to the company.

How quickly will you make your investment decisions?

Our goal with Start@Spark is to create an efficient process that is fast and allows sufficient opportunity for due diligence. We will respond very quickly to online applications and have time specifically allocated every week to meet with applicant entrepreneurs.  Our intention is for seed investment decisions to be made within 3 weeks.

How will Spark structure their investment?

Our standard Start@Spark investment will take the form of a convertible loan of up to US $250,000. This loan will later convert to equity only in the event of the company’s next round of financing at a 20% discount. We would also retain the right to at least provide 50% of the financing of the next round.

Although we are publishing our standard terms, we are open to discussing other investment structures if they are appropriate. In addition, certain businesses may require more than $250,000 to make meaningful progress. If we are excited about your business but don’t think $250,000 will provide sufficient runway, we may consider investing more or structure the deal as one of our typical early-stage equity investments.

In addition to venture funding, what else are you providing to entrepreneurs?

Every company is different, and we always do everything we can to help the companies we invest in to succeed. That is one reason that we have initially limited this program to the Boston and New York regions, as it allows the entrepreneur to have easy access to the Spark team.

In addition, companies that receive seed investment from our program would get 10 hours of free counsel from Gunderson Dettmer, a leading law firm focused on entrepreneurs and early-stage technology companies. Gunderson will help with issues on the convertible loan, company formation, intellectual property, and other issues that early stage companies often face. Additional support such as office space and other resources will be considered on a case by case basis.

Does Spark allow other investors to participate in the seed round?

Yes.

Who controls the size, timing, and participants of the Series A round?

The entrepreneur controls all aspects of the Series A round.

How else is Spark supporting innovation in the Northeast?

Start@Spark is one of many ways that Spark Capital works to promote innovation in the Northeast. In addition to being frequent speakers at industry and university conferences, we also spearheaded the formation of the Alliance for Open Competition, a group of entrepreneurs, investors, and executives dedicated to eliminating non-compete clauses in the interest of spurring innovation and improving the economic competitiveness of this region.

Additionally, Spark Capital provides support for TechStars, a mentorship-driven seed stage program based in Boulder, Colo. with a new Boston-based operation. TechStars is a selective program that offers founding teams up to $18,000 of funding along with mentorship and support from leading industry experts and investors.