The Tech Square Ventures Model

David Cummings on Startups

Urvaksh broke the news on Friday about a new $10 million seed fund  called Tech Square Ventures run by Blake Patton . Atlanta has a dearth of seed stage, high risk capital, so this is great for the city. Blake is an experienced operator who is well-regarded in the startup community, having run several venture-backed companies, making him an ideal person to lead a new fund.

From an entrepreneur perspective, I think it’s important to understand how a $10 million seed fund typically works:

  • Capital is committed but not sitting in the bank (it has to be called from the investors, often at a rate of 20% per year for five years)
  • 99% of the capital is from investors and 1% is from the partners
  • 2.5% of the total fund amount is made available for the first five years for operating costs (e.g. $250,000/year to pay for salaries, office space…

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