Steal This Start-Up! No Longer Content to Write Checks, VCs Are Giving Away Their Best Ideas

If you have a hot idea for an Internet start-up, conventional wisdom goes, do not tell anyone. Draw up a

Fisher for founders! VCs try to catch entrepreneurs with their best start-up ideas as bait. (Photo: rfduck / Flickr)

If you have a hot idea for an Internet start-up, conventional wisdom goes, do not tell anyone. Draw up a non-disclosure agreement, file a provisional patent, and have your friends sign frieNDAs. Skip the therapist. Do not go out. Stop tweeting. Thieves, copycats and precocious 17-year olds are everywhere, handing you cocktails, eavesdropping on your Sunday brunch, eager to make a Winklevoss of you. You are in super-stealth mode, in start-up parlance, and you should most certainly not blog about how you are “working on something exciting.” That’s just begging to get Zucked.

The current generation of venture capitalists, by contrast, don’t mind getting Zucked; increasingly, they’re asking for it.

“An Android Wifi App I Need,” Fred Wilson of Union Square Ventures wrote on his popular blog in April, describing a location-aware app that would automatically switch his data connection from 3G to wifi when appropriate. “If one exists, I’d love to know the name of it so I can get it. If not, I’d love for someone to build this.”

Most tech VCs would say they swear by Silicon Valley sage Ron Conway’s adage, “We invest in the entrepreneur first, not the idea,” but we couldn’t help noticing that VCs seem increasingly comfortable placing a custom order. The practice was sanctioned in 2008 when revered Silicon Valley start-up incubator Y Combinator published its start-up wishlist. “When we read Y Combinator applications there are always ideas we’re hoping to see,” director Paul Graham wrote, in introducing the list. “In the past we’ve never said publicly what they are… We don’t like to sit on these ideas, though, because we really want people to work on them. So we’re trying something new. “Startup Ideas We’d Like to Fund” offered 30 suggestions, including “a cure for the disease of which the RIAA is a symptom” (no. 1), “Craigslist competitor” (no. 25) and “Startups for startups” (no. 30).

Mr. Wilson didn’t say he’d invest in his imaginary app. But Jordan Cooper, a venture partner at Lerer Ventures, recently offered funding and office space to anyone interested in working on an app he mostly wants for himself: a private social network where people can dish on their love lives. “I want to be able to send a photo of a girl that I really like or one that I just went out with for the first time. I want to tell a story beneath the photo, or just a short note that says ‘so pretty, but soooo boring’ or whatever captures my impressions of this temporal but potentially permanent new entrant into my life,” he wrote last month in a blog post, titled “Whitespace for the taking.” He signed off, “Holler.”

At a Wesleyan alumni event, founder Kai Bond mentioned to RRE Ventures’ Stuart Ellman that he was thinking of leaving his gaming start-up to create something new.

Just come by my office, Mr. Ellman told him. We’ll workshop ideas until we find something I want to back.

“Ah, demand-side venture,” the tech consultant and protoblogger Anil Dash said when Betabeat asked him if he’d noticed the trend.

Software developers and early adopters have always loved playing I wish this existed with each other, he said, recalling crowd-sourced web sites like LazyWeb and HalfBakery, where people posted requests addressed, like messages in a bottle, to no one in particular, and with a similar success rate.

But there’s a difference when the person thinking out loud is in a position to write a check.

“It’s also sort of the modern commissioned work,” Mr. Dash said. “‘I’m the Pope, I want some art on my walls. Go get me Michelangelo.'”

What are you looking to fund right now? we asked Craig Shapiro, former president of GOOD magazine, current CEO of socially-conscious venture capital concern Collaborative Fund, and he started giggling at us.

“It’s a secret,” he said, rocking forward and backward in his chair. “But I’ll tell you.”

On the record? we asked, confused. “It’s on the record. But it’s totally secret.”

He’s “dying to find” a universal reputation score, he said. Like a credit score, but for general trustworthiness and “how good a person you are,” factoring in your track record on sites like Kiva and eBay along with whether you shop local, offset your carbon footprint or recycle.

Such a score would have a positive impact on society and the business potential is “tremendous,” he said. Distrust of strangers is the biggest barrier for the kind of companies he wants to invest in, resource-sharing start-ups like Airbnb, a marketplace where people list their homes as bed and breakfasts. But so far, his search has come up dry.

Curiously, Chris Paik of Thrive Capital, which frequently co-invests with Mr. Shapiro, had pitched us the same idea the week before. You know what someone should do? he asked rhetorically of Betabeat, before describing a universal reputation score.

In the course of reporting this story, Betabeat asked angel investor and Reddit co-founder Alexis Ohanian if there were any ideas he wished someone would just pitch him already. By that time, Mr. Shapiro had already pitched Mr. Ohanian on the universal reputation score. “It’s funny, I had coffee with Craig and I’m helping him with that very idea,” said Mr. Ohanian, who signed on as an adviser. “That was the one I was going to give you.” They’re scouting for developers now, he said.

Totally not a secret.

If you want to Zuck someone else’s idea, there are plenty of places to look;, for example. Free start-up ideas are all over Twitter, too. Steve Poland, a former tech blogger and self-described “idea guy,” got servicey with “100+ Web Start-up Business Ideas.” Similarly, there are umpteen marketplaces that match founders with ideas to investors with money—AngelList, Kickstarter, and New York’s bajillion tech-themed meetups.

But there’s no mechanism to match a venture capitalist with an idea and a checkbook to a CEO who’s willing to build a company around it.

One reason is that commissioning start-ups is not really what most investors want VCs doing with their money. Sure, VCs have a huge influence over the evolution of the idea after they take a stake in it. But most institutional investors and other sources of funding expect VCs to buy into organic ventures that have their own momentum. “As venture capitalists, we believe deeply in the value of decentralized, emergent, start-up innovation,” Union Square Ventures partner Brad Burnham wrote recently on the fund’s blog.

The main reason, though, is that entrepreneurs aren’t interested. If they wanted to build someone else’s idea, they wouldn’t be entrepreneurs–they’d be working for a software development agency. A few people offered to build Mr. Cooper’s dating app, he said, but they weren’t committed to sticking with it long-term.

“I’d love a venue where I could pitch ideas I want to see built and then fund them,” he said. “But the truth is if that model works, I think the entrepreneurs will likely be folks who have previous relationshop with the investors who are pitching ideas.”

The mercenary 48 Hour Apps, a four-person pop-up development shop that builds apps in a weekend for $10,000, is a compromise—the team works on a commissioned app with the zeal of a start-up, but doesn’t carry it to term. 48hourapps co-founder John Britton thinks he would get bored working on an idea floated by a VC, even if it came with the promise of funding.

Hence the time limit, we surmised.

“Yeah, I don’t want to work on your idea after that,” he said.

When Ben Lin of Great Oaks Venture Capital gets an idea for an app he wants, he calls his engineering team on the West Coast. The result is not as fabulous as a start-up fronted by fresh-faced yuppies, multiple investors and a write-up in the Wall Street Journal. But when (I wish there were a site where boutique owners could upload and sell inventory from their discount racks…) launched recently, Great Oaks owned all of it.

“Ideas are not the shortage,” Mr. Lin said.

And yet in these anything-goes times, it seems unfair to deny VCs a platform to pitch. Sequoia Capital is funding grilled cheese sandwiches and location-based Dadaist art projects, but VCs aren’t supposed to have ideas? After a long over-caffeinated day of unconvincing pitches from first-time founders, VCs should be entitled to ideate with some dignity. A dedicated forum would give some credibility and exposure to VCs elevator-pitching founders., maybe. Someone should Zuck that.

Steal This Start-Up! No Longer Content to Write Checks, VCs Are Giving Away Their Best Ideas