Thoughts on Investment and Incubation

On this week’s District of Corruption show, Geoff and I discussed entrepreneurship, incubation, investment and the role that a company like Launchbox Digital plays in a regional community. It all stemmed from Jimmy Gardner’s post titled Are DC Startups Developing a Complex?

Launchbox provides a critical piece for a burgeoning startup community – namely, the resources to get going. Companies like this are known as incubators, and they are great catalysts for entrepreneur with great ideas to get started with a little seed money, assistance with all the legal hurdles and potentially the opportunity to pitch an idea to an angel investor or VC.

Passionate people with great ideas. Turning those great ideas into valuable entities worthy of investment. These are things that companies that may not have a ton of experience need.

Something that disturbs me about Jimmy’s piece is the expectation that a DC firm should invest in DC companies and nowhere else. An investment in Lookery, a Silicon Valley based startup does seem to be a questionable first move for a company looking to tie its roots to the DC community, it does not mean that regional investment won’t come. It certainly doesn’t mean that local tech deserves the investment.

I’m not a VC, but my opinion is that a company looking for an investment should be able to demonstrate an idea for revenue. Launchbox probably could help develop some of this sense. Certainly, a company looking for angel or VC money needs to have at minimum a business and revenue model and at best, track record of revenue production.

No one gets money for their good looks.

For the DC community, I still think it’s a little early for significant investment. Before all my colleagues stone me, I’d ask you tot take a step back and look objectively at what we have here. We do have a community that is coalescing quickly, but 8 months ago was really non-existant. We do have some great ideas developing from local entrepreneurs. We do have lots of networking.

However, we don’t have any demonstrable boot-strapping. We don’t have the business savviness that places like Toronto, Seattle and yes, the Valley have. We do have large enterprises dominating the landscape and while AOL is all but gone from Northern Virginia and Sprint is leaving for Kansas City, the business landscape is still dominated by Telecoms and government contracting companies.

Though this will take time to change, an incubation company like Launchbox may be just what the Doctor ordered. In an ideal world, entrepreneurs should start thinking about their ideas and writing down their notes. When asked what they do or why they do it, they should practice their confident deliveries. Never be shy about what you do or why you do; it’s good practice for when you need to pitch your ideas to potential investors). Think proactively about what you want to do and ways that you can make it fiscally sound.

If you’ve already started a company and it just doesn’t seem to be taking off, don’t hesitate to temporarily cease what you’re doing while you figure out a different approach. Think like a business, act like a business and maybe you’ll have the opportunity to be funded like a growing business.

7 Replies to “Thoughts on Investment and Incubation”

  1. Thanks for having me on Aaron, I appreciated the talk with you guys.

    I agree with you all totally in the fact that at its core, it is a business and they need to make business decisions. I do not mean to profess that they need to only invest in DC companies. This post I wrote was rather and initial reaction to my disappointment after I read the article. I think I was more let down a bit ?? As we talked about, I am totally into the new community that is blossoming here in the DC/Baltimore area and excited for people to do well here. Thus I was excited to see LaunchBox come on the scene.
    So it was not a post of anger, or chip on my shoulder, more one of frustration/dissapointment. Thats all. Nor am I saying that investments in DC companies will not come from them, I hope and pray that they do for all of us it will be a good thing.

    Like you and Geoff said on the show, it was probably more of a bad PR move than anything. I look forward to their startup camp this summer and hope that DC companies are represented well.

    Thanks again.


  2. Aaron…I think you haven’t dug down deep enough into the entrepreneurial community to accurately say that “we don’t have any demonstrable boot-strapping. We don’t have the business savviness that places like Toronto, Seattle and yes, the Valley have.” Because that’s total crap IMHO. We most definitely do.

    I see that Jimmy wrote his article as an entrepreneur who cares about the community…most investors, although not all, care about their bottom line and taking the smallest possible risks. LaunchBox Digital is not different. founded by Rob McGorvern the founder of is here in the VA/DC/MD area and really when you start digging you’ll find others.

  3. Ann, I’ve never heard of JobFox. Is that saying something? I don’t know, maybe I’ve been under a rock for the past several years.

    I also don’t mean to indicate that I think we have no bootstrapping going on. This is not a zero-sum game. But by comparison, we have far less than other regions making the potential investment pool relatively small. Again, it’s not a surprise that Launchbox would invest outside of DC but I agree that investing outside as a first investment was a questionable move.

  4. JobFox is relatively new…they are very well funded and all over the web but not through social media. I’ve had an interesting last few days to say the least and opening my eyes to a lot of what is going on and not going on. I do believe we haven’t seen anything yet of what will come out of or from this area…

    And I think the investment pool exist and will grow from a source of different investors in the near future – time will tell if Ann is right.

  5. I agree that time will tell. I don’t think we’re “ripe” yet – but I think we’re on an accelerated pace and in another 6 months to a year, who knows? I think we have all the ingredients to be a great startup community.

    A few months ago, I began planning a “30 Days of MD/DC/VA Startups” series. At that time, I could not fill out 30 days. So I back burnered the thing. You know, that’s telling…

  6. I’m sorry I missed yesterday’s show (I had the site open and everything; got stuck on a conference call). I think this topic merits more discussion. I don’t know what the answer is, but I do believe that there’s an issue with funding. I think VCs tend to fund what they know they can sell, and around here, that isn’t a consumer-facing web startup. The folks out west know who to talk to to make an investment worth it.

    The community were developing in DC is incredible, and extremely helpful, but unless we get some money and some ideas, and some exits, will it progress beyond helping independent contractors network? I’m not sure.

  7. By the way, LaunchBox is located in DC, but accepts applications from all over the world. It’s entirely possible that come this summer, no native DC folks will be a part of the program. It’s more about bringing ideas that can’t be found here to money that’s in the DC area.

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