• Is Keith Teare Crazy, or Crazy Like a Fox?

    KeithTeare-youtube-400x242In Silicon Valley, entrepreneurs and investors are often rewarded for having outsize ambitions. Perhaps it’s no wonder then that tech industry veteran Keith Teare — who hasn’t managed any institutional money in his career – has set his sights on raising two new investment funds that he expects will total $800 million.

    The first $400 million fund that Teare plans to open to investors next month is Micro Fund Capital, a fund of funds that will target micro funds; a second fund that’s also targeting $400 million will make direct investments in the first portfolio’s breakout successes. Its name: 2nd Round Capital.

    Certainly, LPs could do worse than listen to Teare, whose background makes him as well-suited to invest hundreds of millions of dollars as many VCs in the business. In 1994, for example, he cofounded one of Britain’s first consumer-facing ISPs, EasyNet, which remains a large DSL carrier. Among other things, Teare also cofounded the Internet keyword company RealNames; the classified ad company edgeio; the media company TechCrunch; and Archimedes Labs, a small outfit that incubates, invests in and advises tech startups.

    Not all of Teare’s companies have been unmitigated successes. RealNames was poised to go public just as the dot com bubble burst; it shut down operations in 2002. Teare’s startup edgeio, cofounded with famed blogger Michael Arrington, also landed in the so-called deadpool in 2007. The pair did much better with TechCrunch, which sold to AOL in 2010 for a reported $30 million.

    Archimedes Labs –originally a joint endeavor of Arrington and Teare and today a company operated by six other business executives, including Kambiz Hooshmand — has also had hits and misses, though its portfolio holds promise. For example, Archimedes furnished M.dot, a mobile site building app, with its first check. (M.dot was acquired last year by GoDaddy in a mostly stock deal that could prove lucrative if GoDaddy goes public as expected.) Archimedes was also the first investor in Quixley, an app search engine that has raised roughly $75 million over the last five years, including a $50 million round led by Alibaba last fall.

    The big question, naturally, is why Teare thinks investors will give him hundreds of millions of dollars to invest for his newest act. While he has raised some outside money for Archimedes, he characterizes the amount as “very small.” (Archimedes typically writes checks of between $25,000 and $100,000 and has 14 companies in its portfolio.) Most operators with a similar profile — including Arrington — start small and raise progressively larger pools as they prove out their theses.

    Teare says that he; Hooshmand; and a third partner, Patrick Gannon, a founder at LendingClub, originally planned to raise a $25 million microfund. In fact, he says that “within about two weeks, we had $6 million in commitments.” But he says the interest was coming entirely from small investors — which gave him an idea.

    “It’s clear that microfunds are too small for institutional investors” other than the few fund of funds that target them expressly, including Cendana Capital and Weathergage Capital, says Teare. With such firms already overwhelmed by requests — and many nascent startups left with a shortage of post-seed, pre-Series A funding choices, he says, “We thought: Why not do what [Cendana] is doing on a much bigger scale? Why not go and raise a serious amount of money for microfunds?”

    Teare says he knows raising the money won’t necessarily be a walk in the park. “I’m a smart guy who knows which way the wind is blowing, but I’d say I’m highly challenged to justify to the world that I can be an investor in other people’s companies except [for showing] what I’ve done at Archimedes.”

    Then again, the whole idea of investing in already successful micro fund managers is to “mitigate” investors’ risk, he says. “The issue isn’t whether I can pick companies but whether you think [top micro fund managers] can. No individual can really do better than the market.”

    I ask Teare what happens if the leading micro VCs don’t take his money. I ask if he has shared his plans with several whose names he raises during our conversation.

    He says he hasn’t. He doesn’t seem terribly concerned that he’ll be turned away, though. “These are people who I admire and know for the most part. The personal risk for me is, can I get access to these fund and companies? And that comes down to personal relationships, which I already have.”

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    Connie

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  • What I’ve Learned in My First 18 Months of Investing

    Semil ShahI’ve been investing for a year and a half, and I’ve learned more than I would’ve imagined by just jumping into the game. Now, I’m playing with very small amounts of capital, and whatever lessons I’ve gathered for myself aren’t necessarily “right” and aren’t generally applicable to everyone. With that disclaimer, I wanted to briefly share what the key learnings (so far) have been for me in this final column for my guest run with StrictlyVC:

    Polite But Clear, Direct Language: When I’ve been talking to a founder and decide I’d like to invest, I will usually write in email: “I would love to invest in the company if you’d have me.” In a way, it is asking for permission. The investor is not in control; the founders grant access. For every investment, there are many “no’s” to deliver. I try to do these quickly over email or even in a meeting. I’ve received so many “no’s” before that it helps me deliver them, too — I hope. I also briefly describe how I expect to help once the check is deposited. As a small investor at the table, I generally ask founders to contact me anytime they need to, and I will proactively focus on helping set up the company up for future financings.

    Following Founders Versus Predicting the Future: When I started, I thought: “Hey, I’ll pick some spaces I like.” Wrong. Founders define the future and dollars simply follow. Originally, I thought I’d take a portfolio approach and focus in some areas, but as things have evolved, I just focus on the people I get to meet and make sure I pay attention to every word, every pixel, and every slide. I cannot predict the future, so I try to find people who can invent it.

    Pro Rata is a Privilege, Not a Right: Pro-rata rights are very important for small, early-stage investors. I don’t ask for them, because I don’t think I’d get them, and mostly because I don’t feel like I deserve them. Without pro rata, early-stage investments suffer quite a bit of dilution, so there’s extra pressure to be a “high-contact” hitter who hits for batting average. Over time, I hope I earn the right to ask for pro rata.

    Dialogue Over Time Pressure: I will trade many emails with a founder to ask key questions and learn more. I like email as a medium. Most people would rather talk in person or at least on the phone, but my personal preference is to get up to speed via email and then engage in live conversation. This doesn’t work for everyone, and I’ll miss things because of that, but that’s one of the things I’ve just come to accept.

    Tough Love Over Coddling: I don’t talk or write about it much, but I was a founder of a life sciences technology company before coming to the Bay Area. It was both a great and painful experience, and in part why I’ve held off starting something again. I kind of just fell into it, and I wasn’t ready. Back then, in the Boston area, there wasn’t anyone around to support or coddle us. Then, I came here and got my a__ kicked for 11 months straight. It was bad. All of these experiences make me think about existential risk. I see an early-stage company and think: “Hey, you’re awesome, but hey, you could run out of funds pretty quickly and then evaporate.” So, in the course of early-stage investing, yeah — at times, you sense existential risk for others, and then if you’re outspoken and direct like me, you have the delicate job of pointing out that existential risk. In those moments, I tend to be driven by tough love over coddling. It’s not right or wrong, and there’s always room to improve, but that’s how I’m wired, for better or worse.

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    Connie

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  • Chris Douvos: LPs Secretly Think “Certain Types” of Operational Experience Are Overrated

    Chris DouvosBy Semil Shah

    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.

    Connie

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  • LP Chris Douvos on the (Still) Difficult Case for VC

    case full o cashBy Semil Shah

    Chris Douvos is a rare animal — an LP who doesn’t shy from expressing his opinions publicly.

    Since 2011, Douvos has been a managing director with Venture Investment Associates, a fund of funds group that commits capital to venture capital, growth capital, and private equity groups. Douvos worked previously for TIFF (The Investment Fund for Foundations) and the endowment for Princeton University, “despite having not one, but two degrees from Princeton’s bitter rival, Yale,” as he says at his personal blog. We caught up last week for an email chat, part of which we’ll run separately later this week.

    Are you the only LP who blogs? Do you think other LPs will and/or should in the future?

    I think I was the most prolific blogger. Some others had tried it, but it’s time-consuming to keep it up; I’m not writing as much as I’d like nowadays, either, so I’ve got to sharpen the pencil again. Too many topics, not enough time! It’s also tricky for LPs because part of the voodoo we do is done in the shadows. We’re in an information business and knowledge is a scarce currency There’s a real “close to the vest” mentality and LPs are always glad to share their second-best ideas, but that’s about it. I’d be surprised if many LPs pick up the blogging standard, as a result.

    What’s the bull and bear LP view on the rise of equity crowdfunding and platforms such as AngelList, for example?

    I love crowdfunding and think that AngelList Syndicates has the opportunity to be massively disruptive to the funds world. I’m an investor in AngelList’s Maiden Lane fund and am watching what happens there very closely. My neighbors in Palo Alto are building a crowdfunding platform for real estate that’s really getting traction. There’s going to be evolution in all this stuff, of course, but having a front row seat is pretty exciting; after all, sometimes, we make the road by walking.

    As for the the broader LP world, it’s hard to say if there’s really a bull or bear view, as most LPs are still watching to see how some of this stuff shakes out. It’s more of a curiosity at the moment. Also, beyond [Bay Area] area codes, not that many people are really thinking about this stuff yet. As LPs, we’re trained to be patient, have an extremely long horizon, and gather data. Also, most LPs tend to be very risk averse. Jeremy Grantham famously says that 90 percent of decisions in finance first take into account career risk, and I think that’s true. It’s hard to get LPs to think — much less act — at start-up speed. That’s not a knock, it’s may even be a compliment as too many people have been run over by steamrollers looking to pick up shiny new pennies. That’s particularly true in long-dated, illiquid asset classes like VC.

    Companies are staying private longer, especially the breakouts. How does that affect an LP’s strategy?

    Venture capital is already the longest-dated, furthest-out-of-the-money option that most institutions invest in. In a post-Lehman world, institutions realized that illiquidity wasn’t free; it carried a risk premium for a reason. And once these institutions had touched the hot coal of liquidity risk, many started to actively seek to shorten the duration of their portfolios. Also, there’s a question about the evaluation horizon for funds. You rarely see results before a GP comes back with their next fund, and in a lot of cases, the evaluation horizon stretches longer than people’s attention span or tenure at an institution. This principal-agent problem is a big issue.

    To be sure, some risk appetite is seeping back into the market now, but people are asking hard questions about how long it takes to see distributions. Indeed, we’re seeing more interim liquidity, but seeing companies stay private longer makes it harder for the PE portfolio manager to make the case for VC in the Monday meeting at a multi-asset class pool of assets.

    Connie

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  • Alignment Holdings Looks to Align Investors with Mature Startups

    alignment-holdings-logo-stacked-x2You can get away with a lot when your investors are wealthy individuals. Such is the case with Collaborative Fund, a three-year-old, New York-based venture fund focused on collaborative-consumption models and backed by some big wheels, including former Sequoia Capital general partner Tom McMurray, private equity veteran Doug Smith, and Jay Kim, a venture partner and investor in Collaborative who co-founded the video game developer Nexon Corp in 1994. (The bootstrapped company went public in 2011 on the Tokyo Stock Exchange and is now valued in the billions of dollars.)

    Indeed, the same group of investors to back Collaborative are today rolling out a new, special purpose entity called Alignment Holdings that counts Collaborative founder Craig Shapiro as one general partner and Smith — who will be leading the outfit’s day-to-day affairs — the other. The idea, says Shapiro, is to work with companies that are producing real revenue, without forcing them to adhere to the constraints of a typical fund. “The life of most funds is 10 years, and you have a three- or four-year investment period after which you’re expected to harvest investments.” With Alignment, “We can invest in a business and hold it for 20 years or more.”

    I talked with Shapiro yesterday about how Alignment works, who would use it, and why he’s suddenly involved with two very disparate funds.

    What was the impetus for Alignment?

    It kind of came together because we were seeing mission-driven founders not being excited about their current liquidity options. Some feel like selling their business would detract from their mission and that going public is arduous and expensive and makes them beholden to a quarterly result. This is targeting companies whose early-stage investors may be looking to exit. It’s almost like a leveraged buyout, where we say, “At this price, we’re going to purchase your preferred shares.”

    Don’t secondary sales address this issue?

    You’re seeing some people solve for that problem through secondary markets, but it can also be really distracting, deciding who gets to sell their shares and for how much. It’s why we chose to create vehicle that’s evergreen. While the purchase side is the same — we won’t be doing anything different than, say, a private equity firm that buys shares on the secondary market — the difference is that the private equity firm will expect [to receive several times their investment] within a few years. With us, companies have a significantly longer time period to [produce a return] through smaller chunks based on revenue. It’s more like a mortgage on your house.

    Have you raised the capital yet? If not, how much are you targeting?

    We’ve raised money; Jay [Kim] is our anchor investor, but it’s still open, so our attorneys have advised us to be cautious about what we share.

    Does this kind of structure rule out syndicates?

    We could partner with an entity that has a similar return profile, but yes, it wouldn’t work if we were working with a private equity or venture shop that’s hoping a company is going go public. If I’m a VC, I’m saying, “Reinvest everything so we can get to the IPO.” Alignment is targeting companies that don’t want to rush, that would rather buy [their shares] back from employees and shareholders and refinance the company.

    What size checks will you be writing, what kind of return do you expect, and how long will these terms be?

    The size of checks will vary pretty greatly, and we can structure [these arrangements] in different ways. If a company is throwing off a lot of cash, it can carry a larger debt component at a lower rate. If it isn’t throwing off a lot of cash, you can extend the life [of the loan] but have additional equity, so if the company has a liquidity event, Alignment gets some upside.

    Do you expect that some of Collaborative’s portfolio companies [which include Kickstarter, Lyft, TaskRabbit, and Hampton Creek Foods] will eventually be candidates for Alignment? If so, would that be a conflict?

    We’ve formed an external investment committee to deal with any conflicts. The truth, though, is that because Collaborative Fund is investing so early, it will likely be years before any of our companies would be ready for Alignment Holdings. But I think it would be a great thing.

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  • A London VC on Startups, LPs, and Google’s Move to the Hood

    London_5With the official news last week that Google Ventures is opening a London office, we decided to call American-born Rob Kniaz of Hoxton Ventures, a London-based firm that closed its first $40 million fund late last year. In the view of Kniaz — who began his career in London as a market development manager with Intel before becoming a product manager at Google, then a VC with Fidelity Ventures Capital — Google’s move to London could be just the shot of adrenaline that the city’s staid venture scene needs. Our chat has been edited for length.

    I had read that raising a fund was harder than you’d expected.

    It took us almost three years. There’s far less appetite for funds here, so it probably took two or three times as long [as it would have in the U.S.]. But we got it closed last year, with 90 percent of it coming from individuals and 10 percent from institutions. People don’t understand the opportunity here because [some of the biggest successes] don’t seem European. People often think that Skype and Spotify are U.S. companies; they say, “I’d rather have tech exposure in California.”

    What are some of the biggest challenges right now for European startups?

    A lot of ideas here are comparable to ideas in the U.S. but have a harder time becoming globally competitive because they don’t have the same firepower. Because there are fewer VCs here, a company will raise $1 million, while a similar company in the U.S. raises $5 million.

    There’s also a big gap in mid to senior management talent. When I went to work for Google in 2004, probably 20 percent of the managers were ex-Amazon, with another 10 percent from Microsoft [etc]. It was almost like an academy, with people bringing best practices from legacy companies. Here, that generational knowledge isn’t passed down the same way, so the biggest challenge for us is either developing that talent, or finding people who’ve learned at the Facebooks or Googles of the world and are coming here.

    Does it seem like more people are moving to Europe from the U.S.?

    It does. At some point, people want to come home. Especially with the cost of living in San Francisco and the housing [shortage], the city is looking less tenable to a lot of people. There’s a lot of value in California, but if you already have that network in place, it makes a lot of sense to come here, especially with the pace picking up. Ten years ago, if you were a Frenchman, you went to the Valley and you didn’t come back. Now, it’s feasible to do your company here.

    You invest across Europe. Is it possible to draw broad distinctions between startups in Helsinki, Sweden and Berlin, for example?

    Finland is disproportionately excellent. The Swedes are thinking internationally from day one; there’s also tons of computer science talent familiar with the programming language Erlang, which is very good for massively parallel communications and was developed at Ericsson, outside Stockholm. And Berlin is super cool, like Brooklyn. Its livability is really high. There’s a big consumer and design focus. But it’s still in that hype cycle. People are talking about it, but it hasn’t had any tremendous successes yet except for the [e-commerce company] Zalando.

    Are you seeing more sophisticated angel investors in Europe?

    Every city has a good group of angels. It’s very different from angels in the Valley, though, who are former engineers, product directors, [and other former operators]. Here, they’ve mostly made their money in finance or banking and they’re tech fans; they don’t have that industry background.

    It all sounds a little like New York five years ago.

    It feels a lot like New York five years ago. There’s a lot of interesting stuff bubbling up, but it takes a while for people and money and ideas to come together.

    London has a few big firms: Index Ventures, Balderton Capital, Accel Partners. How do you feel about Google Ventures now coming to town?

    I’m tremendously excited about it. That London is the first place outside of California that Google is establishing an office – ahead of New York and many other places they could set up – it’s a pretty strong signal.

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    Connie

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  • A Small New Fund with a Game-Changing Idea

    kent_goldman2Unlike venture capitalists, who get to place dozens of bets in search of a winner, founders typically have one shot at winning the startup game.

    Kent Goldman, a former partner with First Round Capital, thinks he has struck on a way to improve those odds. Today, Goldman takes the wraps off a new, San Francisco-based, $30 million seed fund called Upside Partnership that will give every founding team in its portfolio a piece of its carry, making them effectively Upside’s partners.

    That’s right. Goldman will take what he characterizes as a standard management fee. But he’ll be sharing an amount of carry that he expects will reach “significantly into the double digits,” albeit “less than half” of Upside’s overall upside.

    If a venture capitalist somewhere just spit out his coffee, it’s understandable. Like it or not, Goldman may have just changed the game for everyone. What founder wouldn’t want a piece of a venture portfolio at no additional cost? And what better motivation for founders to help one another?

    VCs like to talk with entrepreneurs about what’s fair. Goldman’s model — where founders will receive carry on a sliding scale, based on Upside’s initial check size — doesn’t get much fairer.

    Other details about the fund: Unlike the many specialized seed funds springing into existence these days, Goldman says he went in the opposite direction, with plans to focus very generally on “purpose-built founders who can explain why this is the right time in their life to pursue their passion.”

    Certainly, if Goldman is predisposed toward certain sectors, you wouldn’t know if from his portfolio at First Round, where his varied investments included the hotel booking application company HotelTonight; the real time analytics platform MemSQL; and Airware, a platform that helps other companies develop commercial drones.

    Goldman says he plans to write relatively small checks, too, staying in the “$300,000 range” when possible. For one thing, he thinks there’s a dearth of VCs who are willing or able to meaningfully help startups without more money riding on those companies. He also suggests that getting into the best deals might be easier if he’s not asking founders or other investors to “make room for me.”

    As for fundraising, Goldman, who is the fund’s sole general partner for now, says it took roughly four months, with most of the capital coming from institutional investors. In fact, Goldman says that less than $2 million came from individuals, including First Round founder Josh Kopelman, with whom Goldman remains close.

    It begs the question of why Goldman left a plum job with First Round in the first place.

    “Venture tends to not be a terribly entrepreneurial industry,” Goldman says. But he had his big idea, and he couldn’t let it go.

    “I view this like any founder who leaves a great company to try something on their own,” he says. Particularly when that company’s mission involves meeting with entrepreneurs every day, it’s “hard not to catch the bug yourself.”

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    Connie

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  • Starting a Venture Fund? Your Timing Could Be Better

    explosionLast Friday, at a conference in San Francisco organized by the fund and incubator program 500 Startups, a group of institutional investors took the stage to discuss their perspective on the venture industry. Much of what the limited partners had to say was fairly predictable. But the comments of one LP in particular — Fred Giuffrida, who joined Horsley Bridge Partners in 1995, after serving as the firm’s general counsel for 12 years — struck us as particularly interesting, partly because Giuffrida has seen more cycles than many of his peers.

    While some of the panelists sounded enthusiastic about the potential of venture mega funds, for example, Giuffrida noted that the bigger the fund, “the ability to hit the kind of returns [that LPs expect] gets more difficult.”

    When the LPs were asked about general partner commitments, some of the panelists remarked that they expect to see general partners contribute between two and five percent of a fund from their own pockets. Aaron Gershenberg, a managing director at Silicon Valley Bank, said he gets particularly “excited if I see someone willing to put up 10 percent” (and much less excited, he noted, when someone who is raising a subsequent fund reduces his or her GP commitment).

    But Giuffrida was more of an outlier on the topic, saying that “if you push too much, you inject too much risk aversion into the program,” adding that “the last thing I want is a risk averse venture capitalist.” Giuffrida isn’t in the charity business, he made clear, but he also stressed that “there should be a balance and it should be meaningful within the context of people’s net worth.” Today, he said, a venture capitalist’s bank balance can determine his or her fund’s size, “which doesn’t necessarily seem to be rational.”

    Yet Giuffrida stood apart from his fellow panelists most notably when it came to broader market conditions. While several of the investors talked optimistically about the “macro opportunity,” Giuffrida observed that “there are two things that VCs do: They invest and they exit. It is a great time for exits,” he said.

    Based on traditional market cycles, though, Giuffrida doesn’t think the good times will continue uninterrupted for much longer. Using the hypothetical boiled frog as a metaphor – the one that’s placed in a pot of warming water and doesn’t realize the danger it’s in and is boiled alive – Giuffrida said the “heat is slowly rising. I kind of think we’re at 160 degrees, give or take, which maybe means . . . a correction in the next two to four years.”

    A crisis could strike, compressing that period, he said. “Or you could have a series of softer corrections that push it out further. But if it is two to four years out, this is the most dangerous time to start a fund,” he continued. “Now, and over the last couple of years — because by the time [that correction] hits, you’ll have spent all your money and your reserves.”

    And you’ll be cooked.

    Connie

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  • Bigcommerce Primes Itself for a Big Round

    Mitchell HarperBigcommerce, a five-year-old, Austin-based start-up whose software-as-a-service helps more than 55,000 companies create and manage their online stores, is in the market for more funding, co-founder and CEO Mitchell Harper suggested in a wide-ranging conversation with StrictlyVC last week.

    The company — which charges its customers a flat rate of between $24 per month, all the way up to $1,000 per month for “white glove service” — raised $40 million last July from Revolution, the investment firm cofounded by AOL cofounder Steve Case. At the time, Case told me that neither BigCommerce nor its previous investors, including General Catalyst Partners and Floodgate, were looking for such a big injection of fresh capital. The company, which has raised $75 million altogether, is operating in a space that has since heated up considerably, though.

    Most notably, Shopify, an eight-year-old, Ottawa-based startup with which BigCommerce competes most directly, raised $100 million in December led by OMERS Ventures and Insight Venture Partners. The funding is helping Shopify in its ongoing expansion from online commerce into the brick-and-mortar world, where it has launched a point-of-sale version of its software that’s optimized to run on tablets like the iPad. (Shopify has raised $122 million altogether.)

    In our conversation, Harper wasn’t specific about whether BigCommerce’s strategy going forward will involve the same path. But he did say the company might soon begin acquiring its way into new markets.

    “Most decisions have been build versus buy or partner,” he said, “but that could change. Small business use a lot of tools, from email marketing to social media to inventory; there are probably 30 or 40 adjacent products” that the company could explore. While it doesn’t have specific plans to launch into any of them, he added that in “three months that could change, the market is moving so quickly.”

    In the meantime, BigCommerce, whose revenue is currently growing 20 60 percent year over year, appears to be stepping on the gas. For example, the company, which has offices in Austin and Sydney, is opening an office in San Francisco, too, and earlier this month used some guerrilla tactics to staff it, including descending on engineers at tech bus stops that fill with Facebook, Google, and Yahoo employees. (Using both recruiters and its own engineers to hand out invitations to a happy hour, BigCommerce managed to engage with roughly 1,000 people and snag about a dozen, Harper says.)

    Harper noted that no new funding announcement is imminent, but that because capital right now is “cheap,” a new round is “definitely not off the table at the moment. It depends on the valuation, the dilution, the potential upside that an investor can bring . . . and whether they share the same vision that we do.”

    He added that that while the 320-employee company has been “optimizing for growth” and isn’t profitable as a result, it could be “very profitable” if management were focused instead on getting the company into the black.

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    Connie

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  • Preempting Others, Tiger Leads $80 Million Round in Quora

    QuoraLogoQuora, the question-and-answer platform cofounded roughly five years ago by top Facebook engineers Adam D’Angelo and Charlie Cheever, has just raised a whopping $80 million in new funding led by Tiger Global Management, the 13-year-old Park Avenue-based hedge fund. Its new valuation, reportedly: $900 million

    The deal marks the third outsize funding that Tiger has led in the last six weeks alone. In March, Tiger led a $77 million growth round in OnDeck Capital, reportedly to fuel the small business lending site’s international and product expansion plans while making it harder for other market entrants to compete. Tiger and T.Rowe Price also plugged $60 million into the online ticketing and event planning company Eventbrite at a valuation of more than $1 billion.

    Tiger and T.Rowe Price had invested a separate, $60 million in Eventbrite in just April of last year, and according to the Wall Street Journal, Eventbrite wasn’t looking to raise more money.

    Tiger’s funding of Quora — which earlier investors Peter Thiel, Matrix Partners, North Bridge Venture Partners and Quora cofounder Adam D’Angelo also joined — sounds like a similar case.

    In fact, other venture firms never really had a chance, suggests Quora’s business head, Marc Bodnick, who left the private equity firm he co-founded, Elevation Partners, to join Quora in January 2011. Quora “wasn’t actually raising money,” he tells me. “In fact, we had most of the money from the last round [$50 million round, closed in 2012] in the bank. But we’d improved the company in the two years since, and Tiger approached us about investing in the company a couple of months ago.” Tiger’s 33-year-old partner, Lee Fixel, was the one to make the call.

    Quora, which has now raised roughly $140 million altogether, plans to do four things with the funding: expand Quora into other languages, à la Wikipedia; create “great mobile products” (its ever-improving email digests are one example); scale up the product technically by hiring more engineers and product managers; and put the rest in the bank. “We want to stay independent and make sure Quora lasts forever,” says Bodnick.

    Given that the company “hasn’t even started to monetize,” according to Bodnick, it might need all that cushioning.

    “Our ultimate goal is to share and grow the world’s knowledge,” he says. “In the last two years, we’ve built the biggest [online] library of first-hand knowledge, and the second-biggest [online] library after Wikipedia of general knowledge.” (It now has material on more than 500,000 topics.)

    While the company’s revenue model is “likely going to be advertising-related” — Bodnick notes that a third of Quora’s traffic is looking for something specific and that its direct intent traffic “should create exciting financial opportunities” — that won’t be the focus for a while. “Right now,” says Bodnick, “the big question is: How do we make the product better and keep scaling it?”

    Connie

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