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Project 11 Ventures: Hoping to rock out with lots of tiny investments

Posted by Scott Kirsner  August 11, 2010 04:20 PM

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reedsturt-katie.jpgThere still isn't much on the Web site to describe what Project 11 Ventures will do, aside from "invest in and assist early stage companies." The fledgling firm's Twitter account has so far had just two messages posted to it.

But I'm told the firm, founded by ex-Microsofties Reed Sturtevant and Katie Rae, is looking to raise a small first fund of under $5 million, mainly from established and wanna-be individual angel investors, and will make investments in the $10,000 to $50,000 range in Internet-enabled businesses that can prove their business models with a couple hundred grand, not millions.

Sturtevant spoke with me this morning, discussing how the firm will try to differentiate itself in Boston's seed-stage investing scene. He also mentioned that he and Rae have made a first investment using their own capital (putting $10,000 into a company he wouldn't yet name), and may do a few more small deals this fall as they work to raise the Project 11 Ventures fund.

Sturtevant and Rae are stressing their "operational expertise" working inside start-ups, incubators, and big companies. "We believe we can do executive coaching, and help people think about rapid product design and their go-to-market strategy," he said. They plan to get to know entrepreneurs — and help the entrepreneurs in whom they've invested — by holding a series of invite-only seminars. One took place yesterday at the Cambridge Innovation Center, walking participants through a half-day of exercises like creating a product road map, and understanding the different constituents (customers, partners, vendors, etc.) who will play a role in a given company's business.

Rather than listening to PowerPoint pitches in a board room, Sturtevant suggests that "you can find a lot out about how people deal with things by working with them on a real issue."

As for Project 11's investment focus, Sturtevant says he's interested in themes like "manufacturing as a service, the democratization of creative design, and people having a closer relationship with producers, like you see with Etsy and the local food movement." He also added that ideas that tap into the processing power of smartphones are appealing.

Rae is especially interested in software-as-a-service and freemium business models, "but I also love things where you really care that they're actually going to make the product — because it might improve healthcare or the way we communicate."

"All I've really done in my career is stuff that has a social and community aspect to it, and usually some kind of game mechanics," Rae continues, adding, "I really care about businesses actually making money."

Rae spoke to me from her mobile phone outside the Peet's in Newton Center; I met with Sturtevant earlier today at Crema Café in Harvard Square. "We have a list of the best free places to work," Rae jokes.

Before Microsoft, Rae and Sturtevant worked together at Eons, the social networking site for baby boomers founded by Jeff Taylor of Monster.com. And previously, Rae worked at Terra Lycos and AltaVista, and Sturtevant was at the Boston office of Idealab and Lotus Development. Both were cut loose from Microsoft in a re-org last fall.

The pair have been active in all sorts of local start-up activities this year, reviewing business plans and serving as mentors at Angel Boot Camp, TechStars Boston, and MassChallenge. They've been out to Boulder to meet with the TechStars companies there, and plan to be in Providence next week for the Betaspring start-up demo night. Sturtevant says that their primary geographical focus will be start-ups in the Boston area and New York City.

Rae and Sturtevant will also be teaching a new course at MIT this fall with Sir Tim Berners-Lee, the inventor of the Web.

Project 11's name, of course, is a reference to the most excellent mockumentary "This Is Spinal Tap," in which guitarist Nigel Tufnel shows off a special amp that goes all the way up to 11. "If we need that extra push over the cliff, you know what we do? 11. Exactly. One louder," Tufnel explains.

(Photo above by Chris Herot. Used with permission.)

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Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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