Jul. 16 2010 - 12:22 pm | 59 views | 0 recommendations | 8 comments

Seed funds: Biased against anyone over 30?

By ANNE FIELD

Sure, it’s hard to keep up with the venture accelerator/seed funds out there, all variations on the original Y Combinator theme: Support a group of young tech-savvy entrepreneurial wannabes for three months, give them a few thousands dollars, and watch them soar.

The idea behind these efforts is that this type of company doesn’t need a lot in seed funding, since the founders are 20-somethings and the business requires only a small amount of capital to get going.

But this doesn’t mean these companies don’t need big capital infusions at some point. Plus there’s a dark side to these efforts, an implicit prejudice, a sort of don’t trust anyone over 30 thing.

First, I’m just catching up with a series of posts by assorted bloggers about the funding issue. While these companies don’t require a lot to get started, what about the next stage? In other words, these folks might be able to launch their business on the cheap, but after a year or two, it’s a different matter altogether. Here’s one comment:

What has changed in technology venture capital is not so much the total capital requirements, but when they are required.

via A VC

In fact, it takes an average $20 million for one of these startups to reach a sustainable cash flow level, according to this post. For entrepreneurs, it’s largely a good thing, because it means they need to raise big bucks when their business is worth more and they don’t have to watch their stake become really diluted, which is what happens when you accept large chunks of funding from VCs and angels early on.

So this is all well and good for web entrepreneurs. Or at least for some of them. But what about the people who can’t afford to pick up and move somewhere for three months? What if, God forbid, you have a family? Seems to me, a large number of potential founders are left out of this equation. And in fact, there’s a real age bias here. Really, people in their 40’s, 50’s and above have innovative ideas, understand technology, and deserve consideration.

Of course, why should this bias be a surprise? Our culture is profoundly biased against the non-young.

But I’d like to see some alternatives.