StrictlyVC: October 4, 2013

110611_2084620_176987_thumbnailGood morning! Hope you’re in for an outstanding Friday. As always, I’m at if you’d like to gossip or talk shop; to sign up for the newsletter, you can click right here.


Top News in the A.M.

It’s going to be all Twitter all day (and probably all month), so let’s jump right into it. Here’s Twitter’s S-1, made publicly available for the first time yesterday. Here’s its letter to investors, and here’s the best piece I’ve read about its upcoming offering so far.

Speaking of Twitter, what follows is a feature on one of Twitter’s early investors (Institutional Venture Partners, aka IVP) that I’d promised a couple of days ago. IVP doesn’t qualify as one of Twitter’s “principal shareholders,” unlike Benchmark Capital, Spark Capital, Union Square Ventures, DST Global and Rizvi Traverse Management, all of which own at least 5 percent of the company. But IVP did co-lead Twitter’s $35 million Series C round in January 2009, so it’s probably safe to say that if Twitter’s public offering does well, IVP will make out handsomely, too.


The Rise of Old-Fashioned IVP

When Twitter goes public shortly, you can bet it will be a proud moment for Institutional Venture Partners. But it will be icing on the cake for its investors. Already, 95 of IVP’s 300 portfolio companies have gone public, and IVP’s 32-year internal rate of return (dating back to its 1980 founding) is a stunning 43.2 percent.

Interestingly, IVP has pulled off this hat trick by operating in as proudly an old-fashioned manner as possible.

Unlike many of its peers on Sand Hill Road, for example, IVP’s walls aren’t filled with contemporary art but rather dotted by the same, framed antique prints and maps of Santa Clara Country that have hung there for years.

By design, IVP doesn’t have celebrity investors. Its oldest partner is Norm Fogelsong, a former programmer at Hewlett Packard who joined IVP in 1989 and has remained virtually unknown outside of venture capital circles ever since.

IVP also eschews the popular wisdom that operators make the best venture capitalists. In a recent sit-down, Fogelsong calls venture an “apprenticeship business that you learn over time.” In fact, unlike many firms that cycle their associates out the door after a few years, IVP sends them off to business school, then brings them back and promotes them.

“Assembling a multi-generational team is one of the secrets to our success,” says Todd Chaffee, the IVP general partner who has largely assembled IVP’s current team of six general partners — along with its bench of associates, principals and vice presidents. “It gives us different eyes on every deal, and combines the energy and hustle from the younger team with the experience and insights of the older people.”

Yet there are other ways in which IVP has distinguished itself from the pack.

Though its investments used to run the gamut, the firm decided in 2000 to focus on one area almost exclusively: later-stage companies with between $10 million and $100 million in revenue. Likely, the move has paid off better than the firm could have imagined. During the go-go dot com era, emerging companies with between $10 million and $30 million in revenue could go public with the help of a boutique bank. But today’s companies need revenue in the $100 million range to go public, meaning they often need late-stage capital from firms like IVP.

More, unlike some industry peers that have collected billions of dollars from their limited partners in recent years, IVP has grown steadily, its fund sizes slowly expanding as its commitments to later-stage companies have grown. Over its last five funds, IVP has raised $225 million, $300 million, $600 million, $750 million, and $1 billion, a sum it closed on last year.

The money still adds up. Three billion dollars of the $4 billion that IVP has raised in its entire history has poured in over the last 13 years. But Fogelsong shrugs off any suggestion that it could jeopardize IVP’s continued ability to deliver big returns. “If you’re going to be a late-stage investor, investing $30 million at a time, you can’t do that with a $100 million fund.”

Which raises one final point. IVP makes just 10 to 12 investments annually, each chosen from the pool of roughly 2,000 companies it sees each year. Pacing itself means turning down some attractive deals. But sounding every bit the Stanford engineering student he once was, Fogelsong says the “idea is to make three to five times our money in three to five years, for a 41 percent internal rate of return. We don’t care how much of a company we own. What we want is to get our capital deployed properly in the best companies at a proper valuation.”

Fogelsong shoots me a confident smile. “We have a very tight, well-defined investment strategy,” he says.

It’s not not flashy. It’s not novel. Very plainly, though, it works.


New Fundings

9Slides, a two-year-old, Redmond, Wa.-based company that makes online presentation software, is raising $1 million in debt, according to an SEC filing. Earlier this year, the company raised $500,000 in seed funding from 500 Startups and individual investors, including Terrapass co-founders Karl Ulrich and Tom Miner.

Gobstopper, a year-old, San Francisco-based company whose e-learning tools help educators create questions and quizzes within the text of a digitized assignment, has raised $1.5 million in a round led by Relay Ventures, according to an SEC filing.

Koality, a year-old, San Francisco-based company whose tools helps engineers test their products, has raised $1.8 million in seed funding led by Founders Fund. Other investors in the round include Webb Investment Network, Index Ventures, UJ Ventures, Felicis Ventures and numerous angel investors.

SimplyInsured, a year-old, Mountain View, Calif.-based company that helps consumers and businesses review competing health insurance plans to estimate their out-of-pocket costs, has raised $750,000 in seed funding from Y Combinator, along with a line of individual investors.

ZoomCar, an India-based car rental company, has raised an undisclosed amount of seed funding led by Empire Angels of New York. Other investors in the round include Funders ClubBasset Investment Group and Lady Barbara Judge, the former SEC commissioner. The company has raised $1.6 million to date, including from former Treasury secretary Larry Summers.



Cue, a three-year-old, San Francisco-based company that makes a personal assistant app, has been acquired by Apple for between $40 million and $60 million, reports TechCrunch. The company had raised $4.7 million from Sequoia CapitalLerer VenturesIndex Ventures, and SV Angel among others.

AdReady, a seven-year-old, Seattle-based online advertising company that had raised $17.8 million over the years, has been acquired by CPXi, a digital media holding company. Terms of the transaction weren’t disclosed, though the companies said that AdReady will operate as an independent division of CPXi. AdReady’s investors include Madrona Venture GroupBain Capital, and Khosla Ventures.



Goldman Sachs has jumped to the top of the U.S. technology media and Internet IPO rankings this year, with Morgan Stanley second, says Bloomberg.



OnDeck, a six-year-old, small business lender with offices in New York, Virginia and Colorado, has named Aimee Fearon as VP of financial planning and analysis, and Lorna Hagen as VP of people operations. Fearon comes to Ondeck from Clear  Channel Media and Entertainment, where she was VP of finance; Hagen joins from  where she served as VP of finance. And, prior to joining OnDeck, Hagen was at Ann Inc., the parent company of Ann Taylor and Loft, where she was VP of human resources.ANN INC., where she served as VP of Human Resources. Ondeck has raised more than $100 million over the years, including from RRE VenturesFirst Round CapitalGoogle Ventures, SAP Ventures, and Institutional Venture Partners.


Job Listings

Comcast Ventures, the venture arm of Comcast Corporation, is looking for an an associate in New York City. You can learn more here.


Essential Reads

Vanity Fair’s New Establishment is out and it’s boringly predictable as always yet impossible not to read. In one interesting twist, Vanity Fair threw Zynga founder Mark Pincus overboard this year but included his wife, Ali Pincus, cofounder of the online home marketplace One Kings Lane. Pincus, writes Vanity Fair, “has long played second fiddle in the tech press to her husband.” Expect that to change if One Kings Lane eventually stages a more successful IPO.

When Twitter goes public, one of the biggest winners will be 47-year-old financier Suhail Rizvi, who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his picture from the Internet, says Reuters.

Claire Cain Miller of the New York Times reports on a very interesting detail in Twitter’s filing. Though cofounder Evan Williams relinquished day-to-day control of Twitter two years ago, he managed to hold on to all the voting rights associated with the shares owned by cofounder Jack Dorsey. (Dorsey, readers likely recall, was pushed out of the company in 2008, but rejoined it the same month that Williams left.)



Your status updates give away your gender and, for the most part, your age, according to the largest ever study of language use and personality by researchers at the University of Pennsylvania.

Here’s a fascinating look at the extensive help that American pig breeders provide to visiting farmers from China, where the average person consume 86 pounds of pork per year.

Behind Siri, there is a real woman. This is that woman.


Retail Therapy

You might feel a little like you’re wearing clown shoes, but running experts say these Hoka One Ones are great for absorbing shock.

We just finished this collection of short stories and highly recommend it. (So does the New York Times.)

Finally(!), an ice scraper for the car owner who means business.


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