Inside Project 11 Ventures: A Chat with Katie Rae and Reed Sturtevant

12/16/10Follow @gthuang

Does the world really need another seed-stage technology investment fund? Maybe not—but Boston entrepreneurs can use all the expertise they can get.

That’s where Project 11 Ventures comes into play. In the increasingly crowded field of early-stage tech investing, Project 11, which is co-led by Reed Sturtevant and Katie Rae, is taking a very hands-on approach to mentoring startups. That means helping founders (especially first-timers) refine their product, test it, think through business models, recruit talent, and work together effectively, among other things. Project 11 has announced a couple of investments already, in Boston-area startups Locately, which provides location-based information for advertisers, and peerTransfer, which focuses on international money transfers and payments.

I recently sat down with Sturtevant and Rae to talk about their investment themes and philosophy—and what really distinguishes them from other seed-stage tech investors in town. They couldn’t talk about any progress in raising their fund yet (rumored to be in the $5 million range), but they did shed some light on their unique background and their approach to working with entrepreneurs.

Sturtevant and Rae have been fixtures of the local startup scene for years. They previously worked together at Eons and Microsoft Startup Labs—in each case incubating startup ideas and testing numerous Internet businesses in parallel, rather than being more traditional “serial” entrepreneurs. Sturtevant is the tech guy, while Rae’s expertise is products and customers. Project 11 is their first fund together. (Rae was also recently tapped to be the new head of TechStars Boston.)

Becoming successful investors is a long road, of course, and lots of people will try and fail to make money as angel investors, “super angels,” or “micro-VCs.” It will take years to establish a track record of successes, and Rae and Sturtevant face a steep learning curve. Nevertheless, they are confident as they dive into the investing fray.

Here are a few nuggets from our chat:

—On their personal motivation for Project 11:

After leaving Microsoft last year, the two decided they liked working together, so they explored different startup and investment ideas. “I love making things real,” Sturtevant says. “If I step over to be an investor and coach, can I have more impact on more companies and more products than what you do with your own startup, or an Idealab [where he helped launch six companies in three years]? Could you have a broader impact by helping 10 entrepreneurs instead of trying to build 2-3 companies a year? It’s also learning, and trying to do something new every few years.”

—On where Project 11 fits into the investor ecosystem:

The fund fits above the startup accelerators (like TechStars, Y Combinator, or MassChallenge) and below the micro-cap VC firms (like Founder Collective or LaunchCapital). Project 11 wants to work together with angel investor syndicates in the ballpark of $250-500K total round sizes. “We are a hands-on seed stage fund,” Sturtevant says. “With all modesty, we believe the two of us have learned techniques and have a toolkit that lets us scale our hands-on impact in a way that other teams can’t.”

—On their investment areas and philosophy:

“We always push on the product,” Rae says. Take the various incarnations of game mechanics on the Web, for example—most people try different approaches but don’t know how to make it work, she says. Project 11 aims to fix that by helping entrepreneurs test their ideas more clearly, and make adjustments.

“We believe in underlying big trends,” Sturtevant says. “We love making sense of big data. We love mobile. We love social—things that will succeed or fail because of a social gesture.” Entrepreneurs “have to be willing to launch it, and be listening and watching usage. You should be flexible about changing your mind, but stubborn about the big goal,” he says.

—On how Project 11 will stand out from the crowd:

At Idealab, Eons, and Microsoft, Sturtevant and Rae (who worked at the latter two) were “responsible for the creation and validation of multiple businesses at the same time. We learned certain techniques and ways of prioritization that give us an advantage. We plan to be coaches, so to speak, and we know how to do that,” Sturtevant says.

Rae emphasizes, “We both bring deep focus on what is the product and how are you going to test whether or not it works? Also around the human side of it: How are you good teammates for each other? How do you make the critical decisions together? We like to get those things out on the table because they’re make or break. And then the storytelling: What are you creating? Why is it important? Why is it going to be big?”

If there’s a simple way to sum up their approach, it might be how they describe their vision of the near-term future of technology. Sturtevant says he thinks about “where end consumers are going, and how life will be different two years from now”—and then, of course, they look for “early indicators of that.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

By posting a comment, you agree to our terms and conditions.