Paul Graham, the “funding gap” and Founders Co-op

Paul Graham (of Y Combinator fame) has a great post up on the growing funding gap between angel investors and institutional VCs. In his words:

“There are companies that will give $20k to a startup that has nothing more than the founders, and there are companies that will give $2 million to a startup that’s already taking off, but there aren’t enough investors who will give $200k to a startup that seems very promising but still has some things to figure out.”

This is precisely the gap Andy and I are aiming to fill by creating Founders Co-op. Unlike Y Combinator we’re not out looking for the next Google, but if we’re careful about the kind of people and ideas we back, we don’t think it should take much money to get an idea to market, to see a strong return on our investment, and to do what we love in the process.

In the same post, Paul goes on to say this:

“…as it gets cheaper to start startups, this sparsely occupied territory is becoming more and more valuable.”

Y Combinator has already proven this to be true. It may take us a little while, but we’re working on adding another data point to the series.