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To: stockman_scott who wrote (30710)	11/5/2006 6:37:56 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 57684

Some follow-up on the Charles River loan program: Angel Fires Back Charles River Ventures loan program takes some flak. November 3, 2006 As Charles River Ventures looks to lending as a way to provide seed funding to start-ups, angel investors have doubts about CRV’s strategy. Ian Sobieski, managing director of Band of Angels, said Friday CRV’s aim of providing a loan of up to $250,000 to a start-up was a good way to “waste money,” and unlikely to produce successful companies. “It’s good they’ve identified seed investments as important. But you can’t do seed investment systemically, and still provide partner time to all those investments on a large volume basis,” he said, adding “You can’t simply carpet bomb the space and be successful.” He went on to contend that large firms like CRV, which have over $300 million under management, and nine general partners won’t have time to perform the necessary due diligence on its new seed program. Other turnoffs for entrepreneurs are the strings attached to CRV money. As CRV general partner George Zachary clarifies, CRV wants the right to participate equally in a first round with other investors as a condition of providing seed funding. In other words, if the entrepreneur went with two firms to provide a first round, CRV would want the right to participate up to 50 percent in the round. If three venture firms were selected, CRV would want the option of participating up to 33 percent in the round. Waltham, Massachusetts-based Charles River Ventures first unveiled its lending program, dubbed CRV QuickStart, earlier this week. Mr. Zachary, a general partner at CRV, said the last four of five companies that CRV seed funded had participated in the lending program, and that he decided to formalize the program for others. At the time of the announcement, Mr. Zachary declined to provide details about the companies participating, noting they were in “stealth mode,” but hinted that one was involved in semiconductor intellectual property, and three others were Internet-related companies in the e-commerce, social networking, and mobile arenas. Whether CRV thinks it has the resources to perform appropriate due diligence, and mentoring to CRV QuickStart companies remains unclear. Calls Friday for response to the angel-side critique of its model were not returned. In the meantime, CRV is not alone in trying to find ways to efficiently seed new companies. LightSpeed Gemini Internet Lab (LGiLab), a joint venture between Lightspeed Venture Partners and Gemini Israel is dedicated to seed investments in very early stage internet start-ups in Israel. It announced its first investment Thursday, in BP Interactive Technologies, a new fantasy sports service. In its blog, LGiLab general manager Ouriel Ohayon noted the CRV QuickStart move, and responded that it has a few key differences, namely that it involves two VCs, that invests up to $1 million in Israeli projects. “I am sure we can anticipate more moves like those soon. In the US, and other places where innovation is growing,” he said. Contact the writer: SWolfe@redherring.com redherring.com