How to Spend a $37 Venture-Capital Infusion

The six startups funded by the world's cheapest venture capitalist are spending their $37 cash infusions on pizza, beer, gooseberry seeds, cake pops, and lots of web hosting.
Image may contain Clothing Apparel Hat Party Hat Human and Person
Nika Vee/Flickr

Maciej Ceglowski, the noted Silicon Valley venture capitalist, spent two weeks deciding how to award his much-anticipated first funding round. He read through scads of e-mails, and then sent 300 rejection letters, some to Silicon Valley’s most elite seed-stage startups. Only six proposals won his approval and his highly coveted prize: $37 transmitted via PayPal.

So what are the winners spending their investment money on? Everything from gooseberry seeds to cake pops to beer to WordPress themes. Mostly, though, they’re buying web hosting. And they say the small seed investment is oddly motivating.

Ceglowski’s $222 fund, the Pinboard Investment Co-Prosperity Cloud, has generated wildly disproportionate interest in Silicon Valley, captivating budding entrepreneurs within startup incubators like YCombinator and attracting co-investment offers from powerhouse venture capitalist Marc Andreessen, who usually deals in sums exponentially larger. (In this case, Andreessen has offered to pony up $300 total.)

The co-prosperity cloud isn’t spreading much money, but it is successfully promoting a big idea, namely that certain types of startups require very little capital, particularly if the founders possess sufficient technical skill, domain knowledge, focus, and connections to other people who can help them build and promote their business.

The co-prosperity cloud’s collection of modestly ambitious and aggressively practical internet projects would seem to fit the low-investment model quite well; all are kindred spirits to Pinboard.in, Ceglowski’s basic but rock-solid online bookmarks manager.

Here’s how the fund’s six startups are planning to spend their $37, and what non-monetary benefits each hopes to reap from membership in the cloud:

Food By People is buying cake pops. Food By People is a site for selling home-baked goods online, so creators Bernard Huang and Hang Su are catalyzing activity by spending their $37 in Pinboard Cloud funds acquiring exactly 18.5 cake pops from the site’s longest standing baker, Pink Umbrella. Ceglowski’s advice and network of contacts, meanwhile, should come in handy as the site moves “to take full advantage,” as Huang puts it, of so-called Cottage Food Laws that have legalized the sale of home-baked goods in 31 states.

Growstuff is buying gooseberry seeds (sorta). Technically, creator Alex “Skud” Bayley will channel her $37 directly into web hosting. But since she’s been paying out of pocket until now to run her sharing and tracking site for home gardeners, the Melbourne, Australia-based “anti-capitalist entrepreneur” will now have $37 to put to other uses. “I spent some time last night looking at a seed/plant catalogue and considering whether I could grow guavas here, or maybe gooseberries,” Bayley says. “I could point at the gooseberry bush and say, ‘See those gooseberries? Pinboard paid for them.’” Bayley also hopes Ceglowski can help with the promotion and publicity needed to reach her goal of 100,000 users.

Parent Interviews is carefully weighing its options. Indy Griffiths writes from Dunedin, New Zealand that “I don’t know how I’ll spend the $37 – so many possibilities, etc.” For now, he’s carefully drawing down a portion of the sum to pay the bills on his virtual private server – web hosting, basically – which runs a site for organizing parent-teacher interview evenings. It’s designed to be both cheaper and easier to use than the competition, and Griffiths says Ceglowski’s seal of approval will help him sign up more schools.

If Griffiths seems indecisive about allocating his $37, bear in mind that his caution is probably warranted: he has limited financial experience at just 17 years of age. But he’s building up quite a résumé. “One reason I did this project for school was because I watched my mum struggle to use the website my school previously used,” Griffiths says. “I have gotten so many compliments about how easy the site is to use from random parents. Easy, simple, functional.”

Sailor Forecasts is buying web hosting … in exotic Brazil: Luiz Irber and Guilherme Castelao are spending their $37 on monthly fees toward a virtual private server, that is to say, web hosting. Boring, if prudent. More interesting: Irber and Castelao are based in and near Sao Pãulo, Brazil, where they are developing an internet application targeting sailors.

The idea behind the service is to convert graphical marine forecasts into concise text summaries that can be downloaded cheaply via email on boats at sea, where internet access is priced at a premium. Irber and Castelao are looking forward to tapping Ceglowski and fellow Pinboard cloud winners for advice on server administration chores and developing their user interface; with backgrounds researching earth science and oceanography, respectively, the pair anticipate needing some help navigating all the tech needed to complete their app.

“In our [Pinboard cloud fund] mailing list there were already offers to help with sysadmin and frontend, and that will be very welcome for us,” says Irber. “It will be fun!”

Simple Cyber Security is buying Amazon web hosting to improve Amazon web hosting: Nik White’s startup aims to provide “hardened” bundles of server software for Amazon’s popular Elastic Compute Cloud (EC2) pay-by-the-hour web hosting service. Hardening means White has to secure the software in advance against hackers, and he anticipates spending his $37 paying Amazon for the EC2 time necessary to build and test his bundles.

The bigger value he sees in joining the Pinboard cloud is that it gave him “a big kick in the pants… I made more progress this week than I have since I came up with the idea.” News of his selection also spiked traffic to his placeholder website, an offer from an incubator fund (turned down), and collaboration overtures from two different companies.

Board Game Scores is buying pizza and beer. Lucas Howell is building an online community for board game obsessives, so it makes sense he’s spending his $37 on the gastronomic complements to cardboard, dice, and plastic avatars. Howell says the brews and slices will be consumed at a “board game night where I'm unveiling my site to a half dozen or so friends and fellow board game nuts.”

Beyond money, Howell says being selected will give him the “mental impetus to get up earlier and work later to make my site a success,” which is particularly important as he tries to emerge from the shadow of incumbent website BoardGameGeek, improve on that site’s loading speed and uptime, and offer an experience more focused on game tracking and strategy discussion than on new games.