Crystal Tech Fund founder Paul Singh thinks high-growth companies need more than investors to be successful. He’s got the cash, but he also wants to offer so much more.
By Bree Brouwer (Contributing Writer, Women 2.0)
Most venture capitalists want a few specific outcomes when they invest in a small business or startup. They’d like the business to succeed, and they’d of course love to report back to their firm’s investors that they’re seeing positive financial returns.
But Crystal Tech Fund goes far beyond either of those goals.
The $50 million Crystal Tech Fund is one part of the Disruption Corporation, founded by Paul Singh, and focuses on providing investments to businesses sorely overlooked in the VC world: those in-between their seed and secondary funding stages. In a Washington Post story, Singh revealed that initial investments in 30 or 40 companies will start at $250,000.
“In my previous investing, I was at the stage where I was still asking the question, ‘Will this work?’” Singh said. “I’m now investing in the stage where I’m saying, ‘How big could this be?’”
Singh said most of the companies Crystal Tech helps out are ones that have some prototype or revenue, have received at least $1 million in funding already, and are trying to figure out what kind of business they’re going to be.
“We’re really just trying to fill the gap between what traditional angel investors are able to do, and what some of the bigger institutional VCs are able to do,” Singh said. “There’s so many people trying to help companies get an inch off the ground, either through giving them seed stage money or putting them through an accelerator or whatever, but once the company gets an inch off the ground, nobody’s really there to help them get a foot off the ground before the big guys can jump in with more money.”
It’s Not All About the Money
As helpful it is that Crystal Tech Fund fills in the gap in the venture capitalist world, that’s not good enough for Singh. He wants to go beyond the idea that funding companies should only ever provide startup revenue or additional capital.
“Companies succeed despite the investors, not because of them,” he said. “Our job is to provide money plus anything else the founders might reasonably need. If they want to have high-quality office space, we have that. If they want to have great apartments, believe it or not, we have those across the street. If they want good food, we’ve got celebrity chefs downstairs from Food Network making food all the time.”
As such, Crystal Tech Fund works off the idea that for businesses to be successful, VCs must also focus on developing the local community, economy and culture.
“Now that I know I personally don’t add much value other than connectivity and money, now it’s like, ‘Let me go ahead and influence the city in a way that would allow companies to be the most productive that they could ever be,” Singh said.
If You Build It, the Tech Will Come
“Through Crystal Tech Fund and through all of our other efforts through Disruption Corporation on the one-year timeline, I’m going to create the best place to live, work, play and grow if you’re a high-growth technology company. And on the 5-year timeline, I believe I can create the model of how all future cities in the United States should think about how to integrate technology workers into every part of city building.”
For example, Singh mentioned that cities should be figuring out how to include cafes and outdoor lounges to stimulate the creative and artistic professionals in their communities. He stated that Crystal Tech Fund’s really “taking a holistic view to the whole thing.”
“Let’s just make it really easy for [people] to focus on building the thing that they love, which is hopefully whatever that company is they started,” Singh said.
And in terms of the future of American cities, Singh discussed how technology companies that historically make it off the ground tend to bring in more revenue per employee, there’s more expendable income there to help develop the surrounding economy.
“For every technology job that I centralize in my office, I guarantee you that within five years there’ll be another four to five non-tech jobs created within about a mile or two of the office,” Singh said.
“I believe that by doing all this other stuff, by building this environment for people of all kinds — not just tech workers, but all creative class workers to hang out — I believe that we’ll actually in the short term make something that allows those people to be way more productive and successful. And in the long term, this will be the model for how future cities are built.”
If Singh’s Crystal Tech Fund succeeds at creating better environments and supporting the growth of small businesses, other investing firms may change direction to follow suit. At that point, Singh may see his vision of a more sustainable, flourishing American economy come true.
Do you agree with Singh’s idea of how VCs should be helping startups? Why or why not?
Photo courtesy of Stephen Elliot in Associate with Mud Productions.