Hi, everyone, Semil Shah here, filling in with a shortened version of StrictlyVC while Connie is out for a couple of weeks. If you want to chat about today’s newsletter or anything else, you can reach me on Twitter at @semil.
Top News in the A.M.
BuzzFeed, the eight-year-old, New York-based digital content company, has raised $50 million in new funding from Andreessen Horowitz, with general partner, Chris Dixon — an early angel investor in BuzzFeed — joining BuzzFeed’s board. Buzzfeed now reaches more than 150 million people per month and will generate “triple-digit-millions” in revenue this year, Dixon wrote in a blog post published yesterday. The round brings BuzzFeed’s total funding to $96 million. Previous investors includeFounders Collective, Hearst Ventures, Lerer Hippeau Ventures, New Enterprise Associates, RRE Ventures, SoftBank Capital and SV Angel.
Ryan Sarver on Life as a VC, Twitter’s Future, and Why Startup Spillover Out of SF is Inevitable
It’s been nearly a year since Redpoint Ventures appointed Ryan Sarver, Twitter’s former Director of Platform, as a partner. At the time, Sarver was making the occasional angel investment, but he has spent the last 10 months or so getting up to speed as a formal, full-time investor. We caught up with him last week to find out how it’s going.
You recently left Twitter for Sand Hill Road. What was the process like talking to VC firms? What about the process do folks on the outside perhaps not fully appreciate?
Originally my plan when I left Twitter last year was to take three to four months off and then start something on my own. I had a few ideas brewing that I was curious about and if you had asked me, there was no doubt in my mind that was what I was going to do.
When I signaled that I was leaving Twitter, a few firms reached out to talk — some about EIRing and some about doing investing full time. I was still pretty focused on starting something in the fall, but after spending the summer getting to know the Redpoint team, I started to seriously consider the role. I spent a lot of time thinking back through my career to what I felt most fulfilled by and realized that I most enjoyed the early, foundational days of a company. Team building, vision setting, figuring things out when you have almost no information and no resources. I didn’t enjoy being part of a larger organization as much and realized that venture could be a way for me to do more of the parts that I loved and less of the parts that I didn’t.
I think the most unique thing about the hiring process is that, unlike a startup, you’re being hired into a partnership which makes the process fairly complicated. There isn’t a single hiring manager but many, and your time horizon is much, much longer. It’s a more complex process in many ways, but rightfully so.
What are your first few deals as a VC, and how did you go from “interested” to “having conviction” as an investor?
I’ve done two deals so far, but only one, Secret, has been announced. I think the idea of having and maintaining conviction has been one of the hardest parts for me in the role. It’s much easier when you’re an individual making angel investments to find founders and companies that you get passionate about. It’s a whole other thing to do it as part of a partnership with much bigger checks. To me the difficulty is in the lack of information and time in a deal. Founders are dealing with very imperfect information and they are living and breathing the space. As an investor, you’re getting to spend very little time with a team before you have to make a call. Naturally, I’ve found the deals that I have the most conviction about are the ones where I am coming to the deal with a lot of background in the space. There are a million reasons companies can fail, so you have to find the few things about the team and their approach that you can hang your hat on and that give you optimism that this one is going to beat the odds.
As someone with deep experience at Twitter, do you believe Twitter can grow its user base?
I think of it like “could Twitter as a product be valuable to more than 300 million people” and I have no doubt that that’s true. In many ways, I think it can be more widely applicable than Facebook even. Twitter is a real-time information service, similar to news, with messaging layered on top of it. Twitter’s biggest problem is twofold. First, it needs to better explain itself to the masses so that the next billion users know why they should be using Twitter. Everyone has heard of Twitter, but most people have no idea what role it fills in their lives. For those of us who have figured it out, it’s magical, invaluable and addictive.
Second, the product itself has to be more understandable to the masses without losing its soul. Tons of people have signed up for the service only to churn out because they don’t get value from Twitter. I don’t think this is a reflection of whether or not they can get value from Twitter, but instead a failing of the product to make it easy for the average user to get that value. Really it comes down to helping them find great accounts and delivering relevant content to them quickly. They have a huge challenge in front of them to accomplish those things, and I don’t think there is a silver bullet for them, but I feel strongly that it’s a product that could touch a billion users.
Give us an idea of how much time you spend in San Francisco versus the Valley.
I’ve gotten asked this a lot recently and I think the prevailing thought is that all deals have moved up to the city and out of the Valley. While it’s definitely true that there has been a big shift to the city, I’m still seeing some great deals down in the Valley. An overwhelming majority of consumer and mobile deals have moved to the city, so if those are the only deals you’re looking at, then you’re in the city 90 percent of the time. With that being said, we’ve seen some great deals down in the Valley [that] are typically more focused on b2b and infrastructure. RelateIQ and Jaunt, two of our more recent b2b deals, are both based down in the Valley, for example, whereas Secret, Coin, and HomeJoy are three recent consumer deals up in the city. On an average week, I’m probably splitting my time between Menlo [Park] and San Francisco.
Residential and commercial real estate in the city continues to get crazier and crazier, and I do think you’re going to see that trend push some new companies to open their first offices outside of San Francisco.
Fiverr, a four-year-old, Tel Aviv-based online marketplace offering tasks and services (starting at $5), has raised $30 million in new funding led byQumra Capital, with participation from earlier backers Bessemer Venture Partners, Accel Partners and individual investors. The company has now raised $50 million altogether. The WSJ has much more here.
FoodPanda, a two-year-old, Berlin-based food delivery service incubated by Rocket Internet, has raised a fresh $60 million in funding from existing investors Falcon Edge Capital and Rocket Internet,reports TechCrunch. The round brings FoodPanda’s total funding to $108 million. Earlier backers include iMENA Holdings, Investment AB Kinnevik, and Phenomen Ventures.
MagForce, a Berlin-based medical device company, has raised $15 million in funding from Mithril Capital Management for its subsidiary, MagForce USA, whose new medical device aims to treat solid brain and prostate cancer tumors. Mithril, led by Peter Thiel and Ajay Royan, has the option to double the size of the round, according to reports.
Weddington Way, a three-year-old, San Francisco-based social shopping site for wedding parties, has raised $9 million in Series A funding led by Javelin Ventures. Earlier investors Battery Ventures, Felicis Ventures, and Trinity Ventures also participated in the round, which brings the company’s total funding to $11.5 million.
From today’s WSJ: “Boutique investment bank Moelis & Co. plans to launch an Australian initial public offering of a company that will give local investors access to global equities via partnerships with U.S. fund managers. Global Wealth Partners Fund is seeking to raise between 100 million Australian dollars ($93 million) and A$300 million before fees ahead of a late-September listing . . .The company has been marketing the offering over the past three weeks.”
Alex Haislip, a reporter and marketing executive who has long written about venture capital (he was a favorite colleague of Connie’s at Reuters), has suffered a major brain hemorrhage caused by a large tumor. Haislip has been in and out of consciousness but right now has significant paralysis on his right side and his former classmates have organized a fundraiser for his young family. (His disability benefits cover just 60 percent of his pay.) If you’d like to pitch in to help the Haislips, please click here for more information.
Brian Jorgenson, a 32-year-old, former Microsoft employee, was sentenced to two years in prison on Friday for an insider trading scheme in which he passed along information gleaned in his role as a corporate finance manager to a former colleague who traded stocks and options. The two made more than $400,000 from their partnership. The judge who handed down Jorgenson’s sentence said it was “important that you serve as a public example.” Reuters has more here.
Cultivation Capital of St. Louis, Missouri, is hiring a director of operations who will double as a “fund principal,” receiving some ownership in the fund and helping make decisions on its behalf.
CB Insights has published a list of “most active VCs by year” since 2004.
The New York times gives readers a glimpse into Apple University, the tech giant’s secretive, six-year-old internal training program.
Wired’s Mat Honan “liked” everything he saw on Facebook for 48 hours. Here’s how the experiment played out.
In case you missed it Friday, that reported Alibaba investment in Snapchat isn’t happening, reports Recode.
Why Zero Freitas is buying up all the vinyl records in the world.
An analyst who “nailed” the housing crash is quietly revealing the Next Big Thing.
First-person hyperlapse videos.
Handmade oil paintings of your digital images.
Kiravan, when you’re serious about exploring the world.