You can tell from the relaxed manner of venture capitalists at recent Christmas bashes — things are getting better. The Woodside Fund brought out the big wines, Duckhorn and Caymus. Doll Capital Management, fresh from its hit with Chinese job site, 51Job, rented out the grand Asian Art Museum in San Francisco, offering an open bar and lavish food. Not to be outdone, Mayfield rented out the Computer History Museum last night, serving equally quality nosh. We bumped into Mayfield partner Kevin Fong who, while sipping at a cocktail, explained how much better things are this year than the past couple.
stories by Matt Marshall
See UPDATE here.
Noteworthy article in Electronic Engineering Times, about how the U.S. Department of Energy is looking to the Stirling engine to unleash superefficient solar power by 2011. Alas, most of the innovation is happening in Phoenix and elsewhere. For California venture capitalists, 2011 is still a bit too far out.
Law firm Gray Cary Ware & Freidenrich has emerged into a major powerhouse, from being a small valley player just two months ago.
This is a slightly edited version of a story to be carried in tomorrow’s Merc
Social software is hot, but it’s getting hotter.
John Doerr, partner at one of Silicon Valleyï¿½s premier venture firms, Kleiner Perkins Caufield Byers, held a Q&A at todayï¿½s venture capital conference sponsored by Private Equity Analyst. Many of his comments at the San Francisco event were similar to those provided a few weeks ago during our own Q&A here. He only had a half-hour, so couldn’t cover much ground, but a few things made our notebook: (more…)
Here’s a CNET interview with Don Valentine, partner at Sequoia Capital, one of the valley’s most successful venture capital firms. Nothing really new here, though we too were a bit puzzled by his attack on SAP. Jeff Nolan, of SAP Ventures, clearly has a bias, but here’s his response. Though we shouldn’t be too surprised at Valentine’s swipe at SAP. He has nothing to lose by poking fun at a “Teutonic” company from central Germany. I’d sit up, though, if he criticized a company based here in the valley, where Sequoia invests and can’t afford to burn bridges. As for his point about backing Oracle, my recollection is that CEO Larry Ellison was well on his way before taking any money. It was angel investor Don Lucas who did the heavy lifting early on.
I’ve been in London this Thanksgiving break, and the media here is blanketing coverage of the dollar’s plummet. Europeans hate it. It drives up the cost of their exports to the U.S. I’ll decline comment on U.S. fiscal policy for now, but there’s one important message here for Silicon Valley technology companies: If ever there’s been a time to sell into foreign countries, especially Europe and Japan, it’s now. Within three years, the euro has rocketed from 85 cents to $1.33 — making this a great time to grab market share.
China’s government is thinking about creating a venture capital fund of as much as $122 million a year to support domestic semiconductor start-ups, a way of getting around complaints by outsiders (think Silicon Valley chip start-ups) that Beijing’s current policy of tax refunds has discriminated against foreign companies.
How’s this for the American dream? Iranian-born Omid Kordestani (pictured left) gets pulled in for an interview in 1999, by Google co-founders Larry Page and Sergey Brin, who’d never hired a business operations person before. They bring in the whole Google team for a discussion, around the ping-pong table in their garage. Despite Kordestani’s suit and tie, somehow they agree that he’s a good fit. Kordestani then executes for five years, in one of the coolest business environments ever. IPO in 2004. Then he sells fewer than 10 percent of his shares (see latest SEC doc’s, here and here), and reaps around $40 million. Sound like work?
Clean Edge, a research and strategy firm that focuses on “clean technologies,” has released a noteworthy report for the City of San Francisco. It lists steps the City should take to maintain a leading position in the clean technology sector. They include leveraging the valley’s existing formidable resources: an environment-friendly population, an apparently commited leadership, and gobs of venture money. The report can downloaded here. The report also provides some useful listings, including the major “clean” companies operating in the San Francisco Bay Area, all the venture capital firms active in the clean tech, and some of the major conferences to keep an eye on.
It shouldn’t be a sign of success anymore to have a big first-day IPO pop of 50 percent-plus (see Reuters item below). Instead, a jump of more than say, 30 percent, should raise questions about the soundness of a company’s judgment. Why? If a company agrees to price its shares at $17, and then the stock trades at $28.50 — the company is losing out on huge amount of money it could have retained for its own operations. By selling its shares to bankers and their favorite clients for $17, and letting those people — who may have no loyalty to the company — turn around and sell shares for $28.50, the company is giving up $11.50. That shouldn’t be. Of course, you want to give investors an incentive to buy shares, and a 10 percent first-day pop is a fair. But Google showed the Dutch auction IPO — which lets the market price the shares — can work. Google wasn’t an exception, either. Several smaller companies have used the Dutch auction, and a product like PortalPlayer arguably has consumer appeal that would draw in buyers of its stock. The Santa Clara company develops semiconductors and software for personal media players such as Apple’s iPod.
Ram Shriram, the early angel investor in Google, looks to have made out even better than we thought. We already reported here how he may have made the best investment of all time, returning between 5,000 and 10,000 times his original money, pocketing about $1 billion. Turns out, Shriram was ALSO an investor in one of the venture capital firms that invested in Google in 1999, a year after Shriram invested. We’re not sure exactly which firm, because the SEC filing is vague (scroll down, and see last transaction and footnote #2). We’ve had enough experience with SEC doc’s to know that drawing conclusions can be risky. For all we know, this could be simple legal transfer from Ram’s own venture outfit, Sherpalo, to his personal account. But we’re assuming it’s Kleiner Perkins, which was previously an investor in Amazon.com, where Shriram once worked under CEO Jeff Bezos. Anyway, the filing is Shriram’s disclosure that he acquired 4,373 additional Google shares from the undisclosed venture firm (it could also be Sequoia, or even Conway’s Angel Investors). Icing on the cake.
It’s also now official that Kleiner Perkins Caufield & Byers, one of Silicon Valley’s better known venture firms, has turned its hitherto money-losing ninth fund into a winner — on the back of Google. That $460 million fund, which Kleiner Perkins started investing in 1999, had been trailing at a -21.2 percent internal rate of return, according to recent University of California data.
So far, their great wealth has all been on paper. The Forbes list of wealthiest Americans? The Google guys were on it, but we didn’t know when they would actually cash in. Now, Google co-founders Larry Page and Sergey Brin each plan to sell about 7.2 million Google shares as part of an 18-month “diversification” plan, according to a filing with the Securities and Exchange Commission today.
The top venture capital firms in Silicon Valley, foremost among them Sequoia Capital, have sought to keep secret their list of investors.
We wrote here about Othmer (pictured on left, courtesy of Mercury News photographer Joanne HoYoung Lee) and his new technology, the Voice SMS. Well, here he’s holding the new Samsung phone, in which the Voice SMS will be first featured — in stores as soon as Monday. Thanks to Jeff Nolan for this link though, which shows it has “everything.”
We’ve been raving on about the promise of China, and how Silicon Valley venture capitalists are scrambling to profit there. Other big Silicon Valley players are pouring resources into China too, the latest being Cisco, which just linked up with one of China’s biggest telecom companies, state-owned China Telecom, to build its next-generation Internet backbone.
Our last post touched on the emerging market for VC energy investments. California has fumbled recently on efforts to strengthen its policy on solar installation. But here’s Spain, making solar mandatory for new homes. Let’s watch how California responds.
Here’s an interesting discussion by PE Week’s Dan Primack of the “stealth” trend talked about in our recent Kleiner Perkins Q&A.
We just checked in with Konstantin Othmer, chief executive at Palo Alto wireless start-up Core Mobility. He’s come up with something called the “Voice SMS,” which we discussed in today’s Merc — and he’s getting paid for every single message sent by a Sprint. He’s now working on deals with other carriers.
Good things seem to happen when investor Don Lucas gets involved with companies. The folks at San Mateo’s Contactual (formerly White Pajama) recently informed us that Lucas has become an investor, so we hope for their sake Lucas is the druid they need to finish removing the curse from the company. We recently wrote here about the Curse of the White Pajama.
We haven’t done the definitive research on this yet, but we’re thinking Ram Shriram, the early angel investor in Google, made one of the best, if not the best, investment in a company ever.
Here is the full version of the Q&A published in Sunday’s San Jose Mercury News. It is part of a package of stories pegged to the quarterly MoneyTree Survey about venture capital published by the Merc.
Accel Partners, a well-known Silicon Valley venture firm, has finished raising a new $400 million fund. On its face, that’s good news for local start-ups.
Doubting whether China can really innovate, a la Silicon Valley? China sure can copy a U.S. technology and implement it in its own market. We’ve seen that in search engine Baidu (very similar to Google), semiconductor company SMIC, and job search company 51Job. So they’re just copying our stuff, right? Surely, they’ll never lead!
We’re beating a dead horse here, but we can’t refrain from beating it again. China is in. China is it. China is hip. Good grief, we’ve written about it here, here and here in just the last couple of weeks. We can’t resist because China came up yet again last night at the annual Churchill Club event here in Silicon Valley. The dinner features well-known venture capitalists who predict top technology trends over the next year or two.
There’s a tough battle going on in VC-land over transparency, and the biggest skirmish right now is happening in Texas. Read this little summary by Dan Primack, and you’ll get the details.
Psst. Don’t tell the Chinese government this, but Silicon Valley investors are beginning to make some big quick money in China.
First, the CIA launched a venture capital arm in 1999. In-Q-Tel, as it was called, nestled its offices quietly amid Silicon Valley’s top-tier venture firms on Sand Hill Road, and has started making money, as we reported here. Impressed with the results, the Army started a fund, and other branches started considering similar efforts.
San Francisco’s Penguin Computing, a player in the Linux cluster operating system space, said it has raised $10M in additional funding. LMS was the lead investor.
Three Arch Partners, the Silicon Valley healthcare VC firm, has ousted co-founder Thomas Fogarty, the wine-lover who owns the Thomas Fogarty vineyard in Woodside.
We recently wrote a column in the Merc about our meeting with JotSpot founder Joe Kraus. But we forgot to mention a little story that might help explain why Kraus is working so hard on his intriguing little company. It may be because he feels he didn’t take enough chances during his first venture, the search portal, Excite.
Californians approved Prop. 71 by an overwhelming majority, so $3 billion in state funding will be pumped into stem-cell research over the next ten years. But we’d like to take a closer look at the risks of implementation.
Check out www.didyouvote.org, a site set up by a Silicon Valley company to help get younger voters to the polls today, especially in swing states across the country. It comes via Bill Foster, a former Excite executive, and now working at San Francisco wireless company Geovector.
Venture capitalists favor Democratic candidate John Kerry for President by a slim margin, according to an unscientific poll conducted Oct. 25 and 26 by the Private Equity Week Wire, an online publication affiliated with PE Week (subscription required).
In-Q-Tel, the CIA’s venture capital arm, has apparently made money off its multiple investments in high-tech start-ups since 1999.
This blog is an example of how readers should try to get to know the authors of the blogs they are reading, and the interests they have. He’s a major investor in Cloudmark. Nothing illegal here. Just confirms the maxim: Reader beware!