LaunchBox Digital is a new early-stage investment firm that opened its doors yesterday in Washington, D.C. Founded by Julius Genachowski, former Chief of Business Operations at IAC, Sean Greene, founder of the Away Travel Network, and John McKinley, former CTO and President of Digital Services at AOL, the company will make small, seed investments in the style popularized by Y Combinator and TechStars. LaunchBox Digital will invest between $15,000 and $30,000 in fledgling Internet companies in exchange for a 4-8% stake.
Like the investment firms it is modeled after, LaunchBox Digital will offer startups more than just cash. Startups chosen for investment during their initial investment cycle, will be required to spend 12 weeks in Washington, D.C. and will have access to business advisors and the chance to trot their businesses out in front of angels and venture capitalists who can invest in the companies further. Unlike Y Combinator, startups participating in the LaunchBox Digital program will be required to find their own accommodations while in D.C.
As cost of entry for Internet businesses goes down, small, early-stage investments are getting more and more attractive to investors. Instead of betting the bank on a handful of large investments, investors can scatter their money over a larger number of startups and increase their chances that something will stick. "There's a capital gap emerging as venture funds get larger and put more money to work per deal, but as cost to start companies go down, it gets harder for early stage companies to figure out where to go to get early stage funding," Julius Genachowski told Reuters.
LaunchBox Digital has an impressive list of advisors lined up, including Dick Costolo from Feedburner, Scott Ferber from Advertising.com, Tom and David Gardner from The Motley Fool, former FCC Chairman Reed Hundt, Jon Miller, ex-CEO of AOL, and Ross Levinsohn, former President of Fox Interactive. During the 12-week program, the firm will set up a weekly series of Advisor Programs in which people on their list will speak with participants.
The firm is currently accepting applications for their first program, LaunchBox08, which will begin in May, 2008. Applications are due at the end of February. Those interested in seed funding, but not the mentoring program, can also submit proposals to LaunchBox Digital.