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Turning Bain Capital Ventures Into a West Coast Player
Salil Deshpande, who spent seven years as a venture investor with Bay Partners, joined Bain Capital Ventures in March of this year, and he’s been working hard ever since. Deshpande is hoping to replicate his successful track record, with hits that include early investments in Buddy Media (acquired by Salesforce.com last year for $689 million) and the peer-to-peer lender LendingClub (now valued at more than $1.5 billion). Working alongside Bain’s one other West Coast managing director, Ajay Agarwal, in the firm’s Palo Alto office, Deshpande also wants to help Bain establish a stronger presence on the West Coast venture capital scene. I met recently with Deshpande to see how it’s going. Our conversation has been edited for length.
How active is Bain Capital Ventures, and what size bets are you making?
We’ve been very prolific; we’ve closed five deals in the last three months that haven’t been announced. We’ve announced a dozen others, including Aria Systems, a company that lets companies do recurring revenue management. We just led a $40 million round in the company.
As for range, our smallest investment has been $250,000 and our largest has been $55 million in one company.
How much are you investing, and how many partners does Bain Capital Ventures have altogether?
We’re currently investing out of a $660 million fund raised in 2012. We raise a new fund every two-and-a-half years or so, so the pace of investing is high. We have nine managing directors: two here, six in Boston, and one in New York.
Do the nine of you have to agree on every deal?
First, we classify deals as early or growth. With growth deals, everyone who wants to come and do the work is invited. When it comes to early-stage deals, there are just five managing directors [who decide whether or not to move forward]. And the managing director who is sponsoring the deal decides on who the four other people will be.
Don’t partners then choose only those individuals who they think will support a deal?
Not necessarily. I always pick partners who will be critical and have the most knowledge and understanding about the deal. I don’t want to do bad deals. And these are some of the smartest guys I’ve worked with.
Is it hard, trying to establish Bain as a venture entity in this crowded, West Coast market?
There are pros and cons. Bain is a very strong, positive brand. It stands for private equity, large deals, buyouts. It stands for discipline, thoroughness, thoughtfulness, [and] being data-driven. We’re also known for philanthropy work in the Boston community.
The challenge is that the brand stands for something that doesn’t correspond exactly with what we’re trying to do [out] here, where you have to be a little faster [and] a little more responsive to the market. But the nice thing is that things are really working out here, so the brand will catch up.
Do local entrepreneurs understand that Bain Capital Ventures is a venture firm and not a unit of Bain Capital?
This market hasn’t been educated on a couple of things. First, that we exist. [Laughs.] Second, what is Bain Capital trying to accomplish? Sometimes it takes a conversation or two to let people know that we’re just like any other venture fund. We have carry and comp that’s just like other firms. We’re independent – our investment committee is just the nine of us. We have an overlap of limited partners with other Bain Capital funds, but some people incorrectly assume that we’re an evergreen fund with big Bain Capital as a solo LP. We’re like a lot of our peers, except that we happen to be part of a really big franchise.
You’ve said the firm is very data driven. How is that impacting your investing style?
There’s a value placed on being thorough and smart, which isn’t the case in all firms. They look at more metrics. Some [investors] are more intuitive and gunslinging. In the past I’ve relied on domain knowledge and intuition. So I think it’s been a very good education for me to be less intuitive and more thorough. When doing due diligence, I used to talk to a few customers. Now I talk to a dozen.
Aria Systems, a 10-year-old, San Francisco-based company that offers its clients cloud-based recurring revenue management, announced today that it has raised $40 million in its fourth round of funding. The round was led by Bain Capital Ventures and included existing investors Hummer Winblad Venture Partners, Interwest Partners, Tugboat Ventures, and Venrock as well as VMware, bringing the total funds raised to date to $83 million.
BTC China, a two-year-old, Shanghai-based bitcoin trading platform, has raised $5 million Series A from Lightspeed China Partners and Lightspeed Venture Partners, reports TechCrunch. Until now, the company has been bootstrapped by founders Bobby Lee, Linke Yang, and Xiaoyu Huang. You can learn more here.
Collective IP, a two-year-old, Boulder, Colo.-based repository of tech transfer data, has raised $2.4 million from Tango/High Country Venture among others, according to an SEC filing. The company had previously raised a $1.05 million seed round last year.
HipLogiq, a year-old, Dallas-based, Twitter data mining startup, has raised $7 million in Series B funding from Hadron Global Partners. The company has raised $12 million altogether.
Index, a months-old, San Francisco-based retail software company, has raised $7 million in Series A funding led by Innovation Endeavors, Khosla Ventures, AIMCo and 819 Capital. The company was founded by former Google Wallet executives Marc Freed-Finnegan and Jonathan Wall.
Kabbee, a 2.5-year-old, London-based price comparison service for London’s minicabs, has raised $5.76 million led by Octopus Investments. In fall of last year, the company raised its first funding, $3.25 million, from Samos Investments, Pentland Group, and Redbus Group, among others.
LeCab, a year-old, Paris-based company that competes with Uber in Europe, has raised $6.8 million in Series B funding. The company isn’t disclosing who its investors are, but its CEO, Benjamin Cardoso, tells TechCrunch not to worry about such details, explaining that they are “fortysomething French entrepreneurs who created their startups around 10 years ago.” So French! The company has previously raised $4.1 million.
LightSail, an 18-month-old, New York-based education technology startup, has raised $3.5 million in Series A funding, according to VentureWire. The company, which aims to improve students’ literacy in elementary and secondary schools, raised the money from a long list of individual investors, including Ricardo Sagrera of Viceroy Ventures; Joel Greenblatt of Gotham Capital; Chuck Strauch, former chairman and CEO of PairGain Technologies; and Seamless.com co-founder Paul Appelbaum.
Mojave Networks, a two-year-old, San Mateo, Calif.-based company whose cloud-based software is used by enterprises to block malware or other threats from employee mobile devices, has raised $5 million. The round was led by Bessemer Venture Partners. Sequoia Capital, which previously invested more than $1 million in seed funding in the company, also participated in the round.
SimpliVity, a four-year-old, Westborough, Mass.-based company, has raised $58 million led by Kleiner Perkins Caufield & Byers and Draper Fisher Jurvetson. New investors Meritech Capital Partners and Swisscom AG also joined the round, along with previous investors Accel Partners and Charles River Ventures. SimpliVity has now raised more than $101 million for its OmniCube appliance, which can reportedly handle the work of multiple appliances — from server virtualization to networking to WAN optimization — and for less cost.
TriVascular, a 15-year-old, Santa Rosa, Calif.-based company that makes stent grafts for treating abdominal aortic aneurysms, has raised $40 million in Series E financing. Investors in the round included New Enterprise Associates, Delphi Ventures, MPM Capital, Kearny Venture Partners, Kaiser Permanente Ventures, the Redmile Group, Deerfield Management, Rock Springs Capital and Permal Asset Management. The company has raised about $255 million over the years, according to Crunchbase.
Crosslink Capital, a San Francisco-based venture capital and growth equity firm, is officially in the market for its seventh fund, according to an SEC filing first flagged by peHUB. The filing doesn’t list a target and it states that the first sale has yet to occur. Crosslink had closed its sixth, $200 million fund in September 2011 after two years of fundraising. That pool was slightly smaller than the firm’s fourth and fifth funds, which both exceeded $225 million. Though the firm invests in both young and more mature businesses, it typically aims to invest between $10 million and $30 million into each of its portfolio companies.
Dave Goldberg, CEO of SurveyMonkey, tells the San Jose Mercury News that his well-funded company has no plans to IPO anytime soon. “We’re never going to rule out going public, because there can be good reasons to go public. We just don’t feel like we have those reasons,” he says.
Shirish Sathaye, who joined Khosla Ventures as a GP three years ago, has left the firm, says Fortune’s Dan Primack. A spokeswoman for the firm confirmed that Sathaye’s last day was Friday. You can learn a bit more here. Prior to joining Khosla, Sathaye spent nearly a decade with Matrix Partners. Before jumping into venture capital, Sathaye spent four years as the VP of engineering at Alteon Websystems.
USB‘s annual, three-day Global Technology and Services Conference gets underway today at scenic Cavallo Point, a stone’s throw from the Golden Gate Bridge in Sausalito, Calif. The event provides investors the chance to hear from global tech giants; you can find the agenda here.
It’s also day two of Salesforce.com‘s Dreamforce conference in San Francisco.
According to Pitchbook, 35 funds raised between $250 million and $500 million in 2007. Their median IRR as of this writing: 4.02 percent. The top performers include ARCH Venture Fund VII, Shasta Ventures II, Technology Partners Fund II, and Tenaya Capital V.
Capital One, the giant U.S. bank, has launched a new digital venture Investing group, and it is looking for a senior associate to evaluate and help lead strategic venture investments in “digital startups” on its behalf. To apply, you need at least three years of experience in management consulting or investment banking and an undergraduate degree. Preferred qualifications include some consumer financial services experience and a willingness to travel up to 30 percent of the time.
Dropbox is in the market for a fresh $250 million, sources tell Bloomberg’s Ashlee Vance, and it plans to raise the money at a valuation of more than $8 billion.
Finland’s technology startups have long viewed Silicon Valley as a gateway to funding and global recognition. But now, they’ve found an alternative closer by: Russia, whose venture firms are snapping up Web, software, and nanomaterials stakes.
Ruh roh. Most of the world’s solar panels are facing the wrong direction.
There’s an iceberg roughly the size of Chicago floating around out there, and no one knows quite where it’s headed.
Pictures of a toddler who naps with his two-month-old puppy every day. (We had to do it; it’s too cute.)
Pop open this mobile workstation at an airline gate and watch the TSA swarm!
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