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You gotta be nuts: A VC fund dedicated to RSS?

Update, 7/11, 6:21am: Here's our Mercury News story today about RSS Investors. Also mentions a couple of examples of possible investments, including Global Medical Networks, an Israeli company looking at aggregating data for health care providers using RSS. Also, turns out the Ritchie Capital individuals mentioned are not full partners in the fund, so the reference in the comments about Quokka.com may not be relevant.

rss.jpgAs reported earlier, a new venture capital fund, called "RSS Investors," has launched. It wants to exploit new opportunities afforded by the new protocol called RSS, or Really Simple Syndication.

For the uninitiated, RSS allows you to get a bloggers' updates as s/he posts. It is all the rage because people have realized RSS can do more than send you bloggers' updates. Hotels, airlines, eBay, Craigslist can all send you information via RSS, when you subscribe -- and much more. Advertisers, for example, can now insert their messages into the feeds. There's audio, video...

Early commentary today (see links below) focused on the narrowness of the field, and likened an RSS venture fund to the "Java" fund launched by Silicon Valley venture capital Kleiner Perkins in the 1990s, which focused on supporting alternative software to Microsoft's. It didn't do so hot (CORRECTION: See here. In fact, the Java fund did pretty well). So we connected with Jim Moore, and asked him to explain his crazy idea.

First, the background. Moore is one of two partners of the fund who hail from the...

...Berkman Center for Internet & Society at Harvard Law School (bio). He hasn't been investing for a few years, but he did invest earlier, while he was a consultant. He helped advise Mobius Venture Capital (then known as Softbank Venture Capital) on their investment strategy. Among his own investments were webMethods and Software.com, before it merged with Phone.com. His blog is here. The other is John Palfrey (bio), who appears to have less investing experience, and whose blog is here.

Three other partners have had more experience in the VC field, including helping make GE's early Internet investments. So far, the fund is relying on a $20 million anchor investment by the Illinois hedge fund called Ritchie Capital Management, where two of those partners still work.

As Moore explained it, his investment in webMethods is germane to how he looks at RSS. WebMethods built software to help businesses integrate their processes, using XML (Extensible Markup Language), which allows interchange of documents on the Web. That was a key insight, Moore said, because XML became a widely available standard with network effects -- allowing whole software companies to be built around it.

RSS can be considered a subset of XML. The protocol is important, Moore says, because the version RSS 2.0 has been accepted as a minimalist standard, one that hasn't really changed for a long time -- and with Microsoft's endorsement of it, it is ready for widespread adoption, he said.

So it isn't as narrow a focus as critics suggest, Moore said. You increasingly have companies like Google, eBay, Flickr opening themselves up to allow knowledgeable users to build useful applications on top of their services, and in many cases across two or three of them, he said. "On one level, RSS is a standard, but the term RSS has become much larger than that," he told us. "The World Wide Web was in a sense a variant of the Internet -- whatās happened is that RSS is a way of thinking about software, and web services." In other words, he's talking about a whole community of developers and users who together define a new approach to services.

Moore credits Dave Winer for some of his inspiration. Moore's work at the Berkman Center has kept him abreast of significant citizen journalism and other projects in the field. Winer, credited with inventing RSS, was an officemate of Moore's. "Heās our friend, a very gifted person. He and [Joi Ito] have been hugely influential in this. Iāve learned a tremendous amount from him about the space." Winer helped Moore think through the possibilities of citizen journalism, and Harvard was early to pull in people for journalist and blogger conferences. He said OhmyNews, the citizens journalism Web site, and UpToDate, a network of physicians that provides medical information, are two powerful examples of new services. Moore was also director of the Howard Dean campaign's Internet strategy. "I've had wild experience with citizen participation," he said.

Of course, we asked him why they're in Cambridge, Mass., not in Silicon Valley. He said Ritchie Capital is in the process of opening an office on Sand Hill Road, but that geography isn't very important -- Cambridge dictated mainly by where the partners live.

Coincidentally, Moore said, his Internet provider was down today, which is why he hasn't been able to throw up a special blog for the new fund. But he said Palfrey had blogged about it, and Winer had linked.

So why did Ritchie invest?

Moore said Ritchie is picking out several areas of technology innovation to invest in, and RSS is just the latest. They've also built funds to invest in biotech, energy and consumer products, Moore said. "Itās a modest size fund," Moore said of RSS Investors, "but it can focus on early stage investing. It can be a laboratory for bringing ideas to fruition."

Other links here:

--Jeff Clavier
--Paul Kedrosky
--Tom Foremski
--Bill Flitter Pheedo
Updated, 7/01, 6:11am:
--paidContent.org
--Venture Wire (subscription only, but has some other good factoids:)

...The fund will focus on early stage companies already generating revenue, Palfrey said, and will typically invest $3 million to $5 million in Series A rounds, with money reserved for follow-on investments.

RSS Investors will focus on four or five companies within the coming year, in areas including infrastructure - including security for RSS platforms; search technology; content processing and distribution technologies. RSS Investors will likely take board seats at portfolio companies. "We want to be active partners with our portfolio companies," Palfrey said...

Updated 9:49am, corrected typo. Thanks Staci.



Comments

I think you mean John Palfrey.

Staci D. Kramer on July 1, 2005 9:03 AM
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$20M!!! Wow. These guys have to read the following blog post:

http://bnoopy.typepad.com/bnoopy/2005/06/its_a_great_tim.html

AGen on July 1, 2005 9:23 AM
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Not to worry, Matt. I actually made a similar mistake and ran a correction, too. At least we can fix them.

Staci D. Kramer on July 1, 2005 5:18 PM
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Hey, wasn't GE Equity the firm that put $70MM into Quokka.com in 2000? Yes. Yes it was. I wonder how that one did. Oh yeah, I remember: the firm couldn't bear holding onto the money and had to give it back before exploding in laughter.

The dot bombers are back...

SmartGuy on July 5, 2005 8:59 AM
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