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Venture Gets Liquid, But Top Jobs Remain Scarce, Says Recruiter
Last year was a great time for venture capitalists and their investors. According to the deal database Pitchbook, U.S. venture firms saw a record $78.4 billion in exits across 845 companies, up from $39.5 billion in 2013. In fact, compared with the industry’s most recent nadir in 2009, when VCs saw just $14 billion in exits, it was a flat-out bonanza.
Don’t expect all that liquidity to transform into more venture jobs, though — so says Jon Holman, an executive recruiter who has specialized in CEO and GP searches for more than 30 years, including for firms such as Accel Partners and Sequoia Capital.
Here’s why: While all this recent liquidity has goosed the industry’s returns, the industry’s numbers are still nothing to crow about, particularly given the outperformance that VCs promise their investors. According to the National Venture Capital Association and Cambridge Associates, venture capital bested the DJIA, Nasdaq Composite, and S&P 500 during the last year, but it has tied or been beaten by the indices over the last three and five years.
Venture has more powerfully outperformed some of those same indices over the last 10 and 15 years. But because the public pension funds, endowments, and foundations that pay the industry’s tab aren’t keen to wait that long for meaningful returns, many are pressuring firms to at least lower their high fees (which are typically 2 percent on committed capital and 20 percent carry on any profits).
Says Holman: “It may not be happening to Sequoia, but damn near everybody else is under pressure in terms of their fees and carry.”
That kind of pressure means there’s less money to pass around, raising a question that isn’t difficult for most firms to answer. “They ask: Do we have the same number of partners and everyone makes less money, or do we make do with fewer partners so we can make as much as we used to? The trend over the last 15 years has been to make do with fewer partners.”
Holman says that he does “have the vague sense that there are more associates and [other junior employees] than they’re used to be.” But he says he doesn’t expect that many or most will eventually become general partners, as was once the case at venture firms. “I think now there are more associates who don’t get any share of the carry; that’s how some firms are [maintaining some of their former staffing levels].”
Certainly, it’s worth drawing a distinction between traditional venture firms and other, newer types of firms, including many seed-stage firms that have launched in recent years and are typically run by a former entrepreneur or operator with some help from more junior staffers.
The number of corporate venture firms has mushroomed, too. According to the media company Global Corporate Venturing, over the past four years, more than 475 corporate venture funds have sprung into being, bringing the worldwide total to more than 1,100.
Still, firms that have been around a cycle or two are not hiring aggressively, and that’s not likely to change, suggests Holman.
“Yes, some investors are having nice returns because of these ‘unicorns,’ but that won’t keep up,” says Holman. “Only crazy people think it will keep up. This is an asset class, and all asset classes wax and wane.”
Fetch Robotics, a seven-month-old, Bay Area-based company that makes human-size ambulatory robots for the industrial warehouses of companies like Amazon, has raised $3 million in funding from Shasta Ventures and O’Reilly AlphaTech Ventures. Venture Capital Dispatch has more here.
Kura MD, a 1.5-year-old, Roseville, Ca.-based healthcare commerce platform that facilitates HIPAA-compliant telehealth appointments between physicians and patients, has raised $1.5 million in Series A funding from Moneta Ventures, a Folsom, Ca., firm.
Leading Mark, a seven-month-old, Tokyo, Japan-based mobile app for job-seeking college graduates, has raised $1.45 million in Series A funding from Nippon Venture Capital, Mizuho Capital, Link and Motivation,SMBC Venture Capital, East Ventures, and several other angel investors, reports Tech In Asia.
Meizu Technologies, a 12-year-old, Guangdong, China-based smartphone maker, has accepted $590 million in funding from the e-commerce giant Alibaba in exchange for an undisclosed, “minority,” share of its business. As Reuters reports, Alibaba intends to push its mobile operating system within China through Meizu’s handsets. In return, Meizu will get access to Alibaba’s e-commerce sales channels.
NodeSource, a year-old, New York-based corporate software development toolkit for the node.js programming language, has raised $3 million in seed financing from Crosslink Capital and Resolute Ventures.
Quantum Biosystems, a two-year-old, Osaka, Japan-based company that’s developing a fast genome sequencer, has raised $20.5 million in funding from Jafco; Innovation Network Corp. of Japan; Mizuho Capital;University of Tokyo Edge Capital; and Mitsubishi UFJ Capital. Bloomberg has the story here.
SeatGeek, a 5.5-year-old, New York-based search engine for sports and concert tickets, is closing in on a new investment at a valuation of more than $200 million, according to Recode’s sources. Less than six months ago, the company announced $35 million in funding from Accel Partners and some famous athletes, including Peyton and Eli Manning.
Shopline, a 20-month-old, Hong Kong-based startup that offers online tools for e-commerce vendors, has raised $1.2 million in seed funding from 500 Startups, Ardent Capital, SXE Ventures, East Ventures, and COENT Venture Partners. Tech in Asia has more here.
Volusion, a 16-year-old, Austin-based company that sells e-commerce software, web design, and inbound marketing services to online businesses, has received $55 million in venture capital led by Main Street Capital Corp. Main Street provides long-term debt and equity to lower middle market companies.
Aligned Partners, a three-year-old, Menlo Park, Ca.-based venture firm “dedicated to helping founders start lean and stay lean,” has raised $50 million for its second fund. Run by general partners Jodi Sherman and Susan Mason, the firm’s first fund closed with roughly $26 million in commitments.
Line, the 15-year-old, Tokyo, Japan-based company behind a popular calling and messaging app in Japan, is launching a $42 million venture fund called Line Life Global Gateway to fund startups that provide online-to-offline, e-commerce, payment, media, and entertainment services. TechCrunch has more here.
MasterLink Securities, a 26-year-old, Taipei, Taiwan-based brokerage, is setting up a venture capital firm in Tianjin, reports The China Post. The company expects the new venture capital firm, which will launch with roughly $16 million, to open for operations next month.
Nautilus Venture Partners, a new firm cofounded by a pair or former corporate investors – Connie Sheng, formerly of Foxconn Technology Group, and Brian Kang, formerly of Samsung Ventures — has launched and is looking for up to $150 million for its debut fund, according to an SEC filing that was first flagged by Fortune.
SteadyMed Therapeutics, a 10-year-old, Tel Aviv- and San Francisco-based company that makes a “patch-pump” gadget to steadily deliver drugs to the body, has filed to go public on the Nasdaq. It hasn’t yet disclosed how many shares it will offer or at what price. Its largest outside shareholders include Samson Venture Partners, which owns 12.8 percent of the company; Deerfield Management, which owns 6.7 percent; and Federated Investors, which also owns 6.7 percent. According to Crunchbase, the company has raised $15.4 million from investors altogether.
Enviance, a 16-year-old, Carlsbad, Ca.-based software company focused on environmental, health and safety compliance, has been acquired by Battery Ventures for undisclosed terms.
Odysee, a four-year-old, San Jose, Ca.-based iOS and Android app that people use to automatically back up, as well as to share, their smartphone photos and videos, has been acquired by Google for undisclosed terms. The company appears to have raised less than $1 million in seed funding. TechCrunch has more here.
ZenCash, a four-year-old, Dallas-based company that makes cloud-based accounts receivable software, is shutting down next month, it announced on its blog last week. The company had raised two undisclosed amounts of funding from Aristos Ventures.
According to Seeking Alpha, Marc Andreessen, who joined the board of Facebook in 2008, just sold 33 percent of his indirect and direct holdings in the company.
Facebook has spent an estimated $400 million to acquire a 56-acre industrial park immediately south of its current Menlo Park headquarters, reports Silicon Valley Business Journal. The company has said that it will consider building mixed-use housing, retail, and even a hotel on the property.
The London-based office of Google Ventures hasn’t made any bets yet, despite the $125 million it launched with six months ago, reports TechWorld. Bill Maris, the corporate arm’s CEO, told The Independent last year that there’s no pressure to rush into any investments. “My instructions to the team are to avoid losing money rather than aggressively seeking to just do something. It’s like when you become a doctor and they say: first rule, don’t kill anyone. First thing: don’t lose money; next, let’s try to make some money.”
On Friday, a judge rejected venture capitalist Vinod Khosla‘s bid for a new trial in the legal fight over public access at Martins Beach, an isolated cove on the San Mateo County coast. The San Jose Mercury News hasmore here.
Peter Pham, cofounder of the Santa Monica, Ca.-based incubator Science, was incensed after an alleged hate crime took place six blocks from his Manhattan Beach home. Determined to catch the perpetrator, he turned to Twitter, the neighborhood social network Nextdoor, and the fundraising site Fundly, to quickly raise more than $27,000 as a reward to catch the person. USA Today has the story here.
Jeff Veen has joined True Ventures as a design partner. Veen, a former user experience manager at Google, had cofounded the web-based typography comapny TypeKit, acquired by Adobe in 2011. Veen then stayed on, working as a VP at Adobe until last month.
Flextronics, the publicly traded electronics manufacturer, is looking to hire a VP of business development. The job is in San Jose, Ca.
Okta, the venture-backed identify and mobile management service, is hiring a director or business development to focus on mobile partnerships. The job is in San Francisco.
The angel network Tech Coast Angels invested a total of $16.4 million across 61 deals last year, making 2014 the most active year since the network’s 1997 founding in terms of both number of deals funded and capital committed. More here.
PCH Innovations is buying the e-commerce company Fab in a deal reportedly valued at $15 million to $50 million, based on PCH’s stock. Business Insider outlines where the company, which had raised $330 million from investors, went wrong.
Vice takes readers inside the Chinese bitcoin mine that’s making $1.5 million a month.
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