Sunday, May 17, 2015
Monday, March 02, 2015
Elite VC giants still investing
San Jose Mercury News
Matt Marshall
May 31, 2001
Now that they’ve gone gorilla size, will the elite venture capital firms help stem the downturn in venture capital investing?
After the March 2000 market crash, elite VCs scrambled to triage
their portfolios. Only recently have they started to peer out of the
graveyard.
But they’ve undergone a profound change in nature: They’ve become
monsters. This is good if you’re an entrepreneur shooting for the moon.
It’s fatal if not.
In 1995, only one top-tier fund, TA Associates, had raised a billion
dollars. But since the crash, 15 top-tier firms have raised funds of
that size or more. Many — including Worldview Technology Partners,
Greylock, Austin Ventures and Oak Investment Partners — announced their
new funds this year, well after most of the market damage.
Steve Lisson, of InsiderVC.com, says the amount of funds raised since the crash goes against the “drought” thesis.
“The perception that there’s going to be less venture investing is
totally misplaced,” he says. “These VCs need to get into lucrative
investment opportunities, and they’re going to want larger stakes.
They’re going to have to step on the gas even more.”
Similarly, he adds, if an entrepreneur offers an opportunity for a
“mega” investment, he’ll be able to negotiate more favorable terms,
because the big venture capitalists will all want in. On the downside,
entrepreneurs that don’t show home-run promise will struggle.
True, some VCs that raised large funds say they have slowed their
investment pace. Flip Gianos, partner at InterWest Partners, said his
firm hadn’t expected the magnitude of the downturn when it raised its
fund. If it takes waiting a year for strong opportunities to come along,
VCs will wait, he says.
Others counter that size has forced them to invest more in
later-stage start-ups because they soak up more money. Michael Darby,
general partner at Battery Ventures, says his firm still focuses on
early stage deals, but “in this environment, the fact that we want to
deploy capital means we’re looking at those later-stage deals.”
There’s another reason for hope after the crash, Lisson says. Many VC
firms have been able to negotiate stellar terms with their investors —
even better than those they negotiated just a couple of years ago.
That’s also a sign that investors still have faith in the VCs, he said.
Labels: AUSTIN, LISSON STEPHAN, LISSON STEPHEN N., STEPHAN LISSON, STEPHAN N. LISSON, STEPHEN LISSON, STEPHEN N. LISSON, STEVE LISSON, STEVE N. LISSON, STEVE.LISSON, TEXAS, TRAVIS COUNTY, TX
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