Hi, everyone, Semil Shah here, filling in with an abbreviated version of StrictlyVC while Connie takes a little time off. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.
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Chris Douvos: LPs Secretly Think “Certain Types” of Operational Experience are Overrated
Earlier this week, we featured a Q&A with Chris Douvos of Venture Investment Associates, a straight-shooting LP whose career began at Princeton University Investment Company more than a dozen years ago. Because the interview ran a bit long, and because Douvos is a smart guy with interesting insights, we decided to run the rest of our interview with him here today.
Are LPs starting to look for different kinds of backgrounds in the partnerships they back? If so, how?
In terms of backgrounds, there’s not a lot of change; I think that classically trained LPs like to see some operational experience among their GPs, but there’s also a belief that certain types of knowledge and experience get stale quickly.
There are a lot of people coming straight out of “hot companies” right now looking to raise funds, and I think that history teaches us that a lot of these funds will have unfulfilling results. In fact, some of the best investors out there — real titans of the VC world — had little operational experience.
But there are many different routes to success. I think the flavor of the month right now is “the platform.” A position that a bunch of funds seem to be adding right now is “VP of Platform” or something similar. The archetype in this regard for me was Brett Berson at First Round. For years, I called him the unsung MVP of the venture business. And indeed, [First Round founder] Josh [Kopelman] and the whole First Round team have done an amazing job of conceptualizing, building, and iterating their platform. The True [Ventures] guys have done an admirable job, as well. Of course, Andreessen Horowitz has built something special, too. But having known all those guys since the beginning, I see how significant an investment the building of these platforms has been, and I think it’ll be challenge to replicate.
What’s the one thing you believe founders should know about LPs in general?
LPs are putting their GPs under an enormous amount of pressure right now as they evaluate if they even want to invest in venture capital. Aside from the [roughly] dozen firms that don’t need to worry about fundraising, everyone seems to be on the “watch list” right now. Proof points — whether they’re nice exits or strong telltales of progress — can mean the difference between an easy fundraise and a protracted slog for that stressed-out board member of yours.
All Def Digital, a year-old, L.A.-based online comedy and music network co-founded last year by hip hop mogul Russell Simmons, has raised $5 million led by Greycroft Partners. Other participants in the round included Advancit Capital, e.ventures, and Nu Horizons Investments, created by Simmons and his ex-wife, Kimora Lee Simmons-Leissner. Deadline has more here.
RedPoint Global, an eight-year-old, Wellesley Hills, Ma.-based maker of data management and digital marketing software, has raised $5.2 million in new funding led by Grotech Ventures, with participation from Sagamore Ventures. The company has raised $11.6 million altogether, shows Crunchbase.
Rocket Internet, the seven-year-old, Berlin-based incubator founded by the renowned Samwer brothers, has collected $446 million from Philippine Long Distance Telephone in exchange for a 10 percent stake in its business. Rocket Internet has helped form — as well as made early investments in — a long list of companies since its founding. Included in its porfolio: online fashion retailers Dafiti, Lamoda, Jumia, and Zalando, which target customers in Latin America, Russia, Africa, and Europe, respectively.
Splice Machine, a two-year-old, San Francisco-based company whose transactional database sits on top of the Hadoop file system, has added $3 million to its Series B round from Correlation Ventures, Roger Sippl and Roger Bamford. The funding brings the round to $18 million. Earlier investors in the financing included Interwest Partners and Mohr Davidow Ventures. Splice Machine has now raised $22 million altogether, shows Crunchbase.
Two Tap, a 1.5-year-old, Palo Alto, Ca.-based platform that helps publishers of mobile apps or websites sell products directly in their applications, has raised $2.7 million in seed funding. Its backers include Digital Garage, Green Visor Capital, Initialized Capital, Khosla Ventures, SV Angel, Transmedia Capital and individual investors.
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iDreamSky Technology, a Chinese publishing platform for games played on mobile devices, has raised $116 million by offering 7.7 million ADSs at $15, above the expected $12 to $14 range. More here.
Microlin Bio, a diagnostic and therapeutics biotech, postponed its IPO yesterday. Renaissance Capital has more here.
Tobira Therapeutics, a biotech developing an immunotherapy treatment for liver disease and HIV, has also postponed its IPO. More here.
Emu, a two-year-old, Palo Alto, Ca.-based company whose messaging app can monitor chats and infer what people are talking about, has been acquired by Google for undisclosed terms. The company had raised $1.5 million in seed funding, including from TriplePoint Capital, Menlo Ventures, DFJ, and Kleiner Perkins Caufield & Byers. Wired analyzes the deal here.
Directr, a 1.5-year-old, Boston-based mobile app company that makes it easy for users to create movies on their phones, has been acquired by Google for undisclosed terms. The company had raised $1.7 million in seed funding from a long list of investors, including Advancit Capital, NextView Ventures, Boston Seed Capital, and Reddit cofounder Alexis Ohanian. TechCrunch has more here.
Ringadoc, a four-year-old, L.A.-based cloud-based physician call-back service, has been acquired by the electronic health records company Practice Fusion for undisclosed terms. The company had raised at least $1.9 million, including from Founders Fund, Siemer VC, and Telegraph Hill Group, and Practice Fusion CEO Ryan Howard. RIngadoc was incubated at Practice Fusion’s San Francisco headquarters. MobiHealthNews has more here.
Former Yahoo president Sue Decker gives HBR an insider’s account of the Yahoo-Alibaba deal that she helped broker in 2005.
Mike Kail is Yahoo‘s newly appointed chief information officer and SVP of infrastructure, a role that will see him leading Yahoo’s IT and data center operations. Kail was previously VP of IT operations at Netflix.
A court has ruled that Hong Kong tycoon Albert Yeung can sue Googleover its autocomplete results suggesting he has links to organized crime. More here.
Universal Music Group is recruiting an analyst and an associate for its corporate development and strategy group. The jobs are in Santa Monica, Ca.
In 2005, 31 firms raised funds of between $100 million and $250 million. The top performers of that bunch are Skyline Venture Partners Fund IV, Storm Ventures Fund III, and Union Square Ventures 2004, according to Pitchbook, which says the funds’ median IRR is -0.04 percent and the top-quartile IRR hurdle rate is 4.96 percent.
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