I kind of got overtaken by how exciting it is to be part of the journey of these entrepreneurs and make a lot of small bets and enjoy the ride, even if we lose money along the way.
X: How many companies are in residence here at any one time?
SA: Every year about 150 new companies come here from the U.S., and approximately 120 companies from the rest of the world, as far away as Jordan or Turkey but more commonly we recruit from Germany, Spain, Canada, Chile, Brazil.
But the next focus of our attention is the Plug and Play Accelerator or startup camp, through which we are pre-seed-funding 30 or 40 companies a year. Again, the majority are from California, but we just launched the Plug and Play Accelerator Calgary, where we have four startups. We just launched in Spain where we have five startups, and in November we will launch Plug and Play Accelerator Moscow.
Then we look to invest or co-invest in 20 companies a year, usually in the Series A round. We feel that is where we can actually add the most value—helping to identify great ideas, and getting to live and work with the entrepreneurs.
X: Do you only invest in companies that are in residence at Plug and Play? Do you have limited partners in the investment fund, or is it exclusively your fund?
SA: No, approximately 50 percent of the companies at one point or another are residents of Plug and Play. But close to 50 percent of them are just part of our community and our contacts. All of our investments are out of Amidzad, a personal investing vehicle. We have not raised outside money.
X: It sounds like Plug and Play, as a provider of office space and services to startups, is in one sense a big funnel for your investment operation. How does a company go from renting a desk here to winning an investment?
SA: We have a very low hurdle—as long as you are a product company building your dream, and we feel that you fit the community, you can rent office space here. However, the level of our engagement as well as investment—as well as what we call corporate development—depends on our due diligence three months, six months after the residents are here. We could just end up providing office space, or we could become an investor, help them build their business development connections with the corporate world, and help them build relationships with the venture capital world, depending on how exciting we think the opportunity is.
But again, we sometimes invest in community members that may never have been physically at Plug and Play. A good example of this is Zoosk, which we feel is one of our best investments. We have played a big part in their journey, but they where never physically here. Another good example is Lending Club. They started here in Sunnyvale, and for two years they were in our building in Redwood City, then as they became more of a financial company they moved the majority of their team to San Francisco.
X: What do companies get out of being based here at Plug and Play, and how can they best take advantage of their time here?
SA: I think the best feedback I have heard is that when they are part of Plug and Play, they feel like they are on a campus, like Google or Facebook. They feel they are part of a bigger thing than just their own small startup. They join our events, and our connections are open to them for funding, for corporate development. They automatically meet other entrepreneurs. It’s almost like going to the same university together. I tell [new residents] that first, they should meet a number of Plug and Play personnel and a number of Plug and Play residents who have been here for a year or two and see what the community has to offer.
X: There’s a booming business right now in coworking spaces for startups—here at Xconomy we’ve counted at least 30 of them around the Bay Area. Do you see other coworking spaces as competition, and if so, how are you different?
SA: I believe the coworking spaces actually fill a void. You can move in quickly and have an easy lease without a long-term obligation. But that is the least of the benefits you get as the communities develop. For example, at Plug and Play we have 120 events a year. We have 180 venture capital partners coming here to meet out startups. We have about 150 corporate partners that come here to collaborate with our startups. These are the extra services and contacts that you can build on top of a
