New Enterprise Associates may be big, but it isn’t unwieldy. Not according to the picture painted by Ravi Viswanathan, who joined NEA nine years ago from Goldman Sachs to co-head the firm’s growth equity effort. I sat down with Viswanathan last week at the expansive Sand Hill Road offices of the 35-year-old firm, which has raised $13.3 billion over its history, including $2.6 million it raised for its 14th fund last year. (It’s one of the largest funds in venture capital history.)
We chatted about where the firm has seen some of its biggest hits in recent years (think Workday, Tableau Software, Cvent); why it hasn’t made a single late-stage investment in 2013; and how the organization — which employs more than 100 people, including 12 general partners — decides on a deal. Our conversation has been edited for length.
NEA does deals of all sizes out of a single global fund. What’s its investing range?
We’ll do a $200,000 seed deal, [involving] two guys out of a Stanford class, all the way to a $50 million to $75 million check. We’ve written $100 million checks a couple of times – probably about 10 years ago, including for a semiconductor investment. But if I look at the last 10 growth deals, I’d say our sweet spot is in the neighborhood of $25 million to $50 million.
You have offices in Silicon Valley, Washington, D.C., China and India. How much of your fund are you investing abroad?
We invest up to 25 percent [abroad], though in the last five years, the number is less than 20 percent, because there’s been so much going on in the U.S. and, at the same time, there have been political and economic headwinds in China and India.
How much consensus do you need to make an investment? Can you ever act autonomously?
No, ultimately everything goes to the full partnership. Some of the smaller deals may occasionally get delegated [to a smaller group] but for growth deals, because it’s bigger checks, they always go up [to the general partnership for approval].
How many votes do you need to get a deal done?
You need a quorum; you need seven or eight partners to vote on it. But usually, if there’s more than one or two no’s, the deal almost never gets done. We don’t have a hard and fast blackball rule, but if there are serious reservations, we just [back off].
As a firm, we have off-sites four times a year to spend time together, so the East Coast and West Coast knows each other really well; we’re very integrated. So if a partner calls me and says, “Here are three things that really bother me about the deal you presented,” it helps you arrive at the right decision. Of course, sometimes you have to say, “This is a great investment; we should go for it.” And we’re trusting enough of each other that if someone has that much conviction, [the others can be convinced to go along].
You’ve made 24 growth investments in recent years, but none this year because of soaring valuations. Do valuations look more reasonable at the earlier financing stages? Do you have your pick of B stage companies to fund?
Series B deals concern us. The quality deals — those that have the great syndicate, the great team — you have to pay up for them. On the flip side , people have paid up and been validated, because the Series C round has been that much higher. But broadly speaking, I think valuations are pretty rich here and in New York. In Chicago, meanwhile, we’re seeing full valuations, but they aren’t astronomical.
Among the biggest venture capital firms, more seem to be adopting an agency type model. Would we see NEA embrace the same?
We have a quasi-agency model. When we invest, rarely if ever do you get one person; you get two, three, or four people: A GP, an associate, a principal. And those folks spend a lot of time with the company. Do we have an army of biz dev people and marketing people and recruiters? No. We’ve thought about it; we know some firms are having great success with it. But we haven’t made any decisions. What’s important to us is making sure that we’re convincing [founders] with data that we’re adding value above and beyond our peers.
You raised $2.6 billion last year. When will you be back in the market, and might NEA raise an ever bigger fund the next time around?
We’ll be back in the market in 2015, plus or minus a couple of quarters. As for size, we go in with a pretty open mind, but [$2.5 billion] is the default. The question we have is: what’s the right thing for the companies and the LPs? We’ve spent a lot of years figuring out this model. But every fund is a new discussion.
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