SunDown RunDown Proposing New Investment Fund for Early-Stage StartupsAnnouncements, News — By Susan Post on March 13, 2014 at 8:00 am
Finding funding as a startup is often one of the biggest challenges a new business faces. That challenge becomes even more difficult for non tech-based businesses.
Known for providing entrepreneurs a constructive place to pitch, SunDown RunDown is pitching their own idea to create a new investment fund that will be open to businesses of all industries, and also provide valuable funding dollars for early-stage startups.
The proposed fund would allocate $2 to $4 million for early-stage and pre-seed companies with smaller investments in the $10,000 to $30,000 range.
“It’s a higher-risk fund because we are definitely targeting those early-stage companies,” SunDown RunDown Organizer Paul Proffitt says.
He envisions startups using the funding to help validate their business models so they can continue to prosper, targeting, “The people that have bootstrapped their companies to a certain point but need that little oomph to get over the hump.” The ultimate goal is to provide a different type of funding that startups typically don’t have access to.
Another unique but highly-attractive aspect of the fund is the variety of businesses that are eligible.
“We’re industry agnostic,” Proffitt says. As to what types of businesses they are targeting with the potential fund, “Anybody that has a good, valid business idea that needs help.”
SunDown RunDown has outlined three questions to evaluate businesses before they consider awarding funding – one – has the business identified a market problem that customers are willing to pay for to solve?, two – is the solution marketabley better?, and three – do they have a profitable business model set up that can capture value and turn revenue back into the company?
Proffitt’s idea for the fund was driven by a gap he saw in the investment market, and a reflection of what entrepreneurs at their pitch events want to see.
“There currently really isn’t any type of fund that is out there right now that people can get risk capital,” he says. Certain funds do exist for more tech-based ventures, but SunDown RunDown wants to recognize great ideas that fall outside of that niche.
With the focus and variety of businesses, Proffit realizes the fund is asking investors to take a risk. However, “We’re trying to spread the high risk out by investing in a lot of different companies at once,” he says. It’s a process he describes as base-hit investing. You can’t hit a home run every time, but with enough singles, doubles and triples, you’re going to eventually win the game. From baseball to a number’s game, Proffitt says it’s very hard to predict a company’s success as many venture capital firms try to do, and that all businesses typically fail at the same rate.
Proffitt is allowing the idea to grow organically as he introduces the concept to the market. While the fund has been met with mostly positive feedback, investors aren’t quite ready to sign on the dotted line. By its nature, the fund is totally different from most venture capital and will take the right group of investors to launch. For this reason, there’s no set timeline for the fund, although Proffitt says they would obviously love to fast-track it.
SunDown RunDown may eventually create spaces for the entrepreneurs they hope to fund as well. The organization is also exploring opening pop-up coworking spaces in vacant commercial areas. The win-win opportunity would provide entrepreneurs a space to get their work done while providing the landlord with revenue. In exploring locations, SunDown RunDown is being mindful to not overlap customer bases with many of the other coworking spaces in down.
The organization will launch a Kickstarter campaign to fund the coworking spaces. While a time frame is not set, Proffitt is confident the idea will resonate and fall into place.
For more information, visit sundownrundown.org.