Seven years ago, Paul Singh left the Washington suburbs for Silicon Valley, where he built a start-up investment empire that helped hundreds of technology ventures get started.
Now, he has come back to Northern Virginia, hoping to replicate that success, but with a twist. Shifting his focus away from brand-new start-ups, Singh on Thursday is formally launching a venture fund in Crystal City that will seek small but established technology enterprises — ones that, with additional capital, he believes can grow into large, powerful companies.
“The world doesn’t need more start-ups,” Singh said. “It needs more businesses.”
Singh, who graduated from Northern Virginia’s Bishop O’Connell High School and George Mason University, moved to California in 2007. He was one of the original partners in 500 Startups in Mountain View, Calif., now one of the preeminent investment funds and business accelerator programs for technology companies.
Over the past couple of years, he said, competition among investors for relatively small, “seed-stage” investment deals has exploded, particularly deals with
entrepreneurs looking to raise $25,000 to $250,000 to get a venture off the ground. On the other hand, most investors remain hesitant to provide that subsequent — and slightly larger — infusion of cash that companies need to expand.
“What we’re left with is hundreds if not thousands of start-ups that have raised a small amount of money, that have some meaningful amount of revenue that could potentially grow, but they’re having a lot of trouble securing that next round of capital,” Singh said.
It’s that “post-seed” void that his company, Disruption Corp., is looking to fill with the launch of its $50 million venture fund, called the Crystal Tech Fund.
Capital isn’t all the those businesses need, Singh said. Many small, growing technology companies have just as much trouble finding adequate work space, he said, because they are often too large to share short-term co-working spaces and growing too quickly to sign long-term leases.
Singh’s solution? Offer optional, flexible office space to every company in the new fund’s portfolio. Singh has leased 27,000 square feet in Crystal City from Vornado, which has since invested $10 million in Singh’s venture fund.
So far, five technology companies — three from the Washington area, one from Tennessee and one from Texas — have raised money through the fund and started to move into the space. Out of the $50 million, Singh plans to make initial investments of about $250,000 in 30 or 40 companies, leaving most of the money available for larger infusions in whichever companies start to take off.
Vornado’s president, Mitchell N. Schear, described his company’s investment and Singh’s location decision as potential windfalls for Vornado and Crystal City.
“Our hope is that these companies that move here will mature and flourish, and when they grow to the point that they physically need more space, they will be happy with this area and want to stay here,” Mitchell said.
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