VentureBeat

Every famous Silicon Valley venture capital firm is driven by a partner with a reputation of working relentlessly and tirelessly to win deals. At Kleiner Perkins, it is John Doerr. At Sequoia, it is Doug Leone. At New Enterprise Associates, it is Dick Kramlich.

Already having made serious money since launching NEA 29 years ago, Dick Kramlich, 72, is still moving at the rapid pace he always has. Now, Kramlich is moving to Shanghai for a year, to boost his firm’s profile there. The WSJ’s Rebecca Buckman writes about the move.

Kramlich is known for his big appetite for risk (see our coverage of some of the firm’s more gutsy bets, and how they’ve paid off). He first began investing in China in 2000, back when most Silicon Valley firms hadn’t really started to take China seriously. He was decisive in his firm’s decision to invest $300 million in Chinese companies, beginning with chip maker Semiconductor Manufacturing International Corp.

Kramlich told me a couple of years ago that NEA made money off of that investment, but SMIC which went public with great success, has since had a rocky ride, and is trading at $5 now, down from $17.50 when its shares first were offered (see our coverage of Kramlich’s investment in SMIC here). It’s not clear whether the firm has made money on SMIC, or on its other Chinese investments, a question not asked in the WSJ article. (We’ve asked too).

NEA has followed a more “opportunistic” strategy than its peers. It moved more rapidly to invest in later stage companies, when it became more lucrative to do so. That has created some confusion for entrepreneurs, because it creates the appearance it is no longer focused on rolling up its sleeves and helping entrepreneurs in their earliest stages — the classic role associated with Silicon Valley venture capitalists. Not long ago we wrote a piece about NEA had apparently abandoned early stage investing. NEA partner Kittu Kolluri responded to that piece, saying we’d misunderstood, and provided stats showing the firm is still investing in lots of early companies, even at the $1 million or less level.

Early on his career, Kramlich was the first person to have invested in Ethernet technology with Bob Metcalfe. Before joining NEA, Kramlich was one of the first venture capitalists in the valley, working with Arthur Rock at the firm Arthur Rock & Associates. Rock invested in Intel and Apple.

Kramlich said he considering raising an investment fund denominated in Chinese yuan to more easily take companies companies public on Chinese stock exchanges.

It’s time for an update on New Enterprise Associates, Silicon Valley’s largest venture capital firm.

VentureBeat’s last piece about the decades-old firm was critical. NEA’s tendency to make extremely large bets appeared to be backfiring. Witness its backing of large, fizzling companies like Vonage, Alien and SMIC — and its arguably foolishly stratospheric valued bets on early companies SolFocus and SugarCRM. Was NEA out of control?

Afterward, we got a handwritten letter from NEA’s leading partner, Dick Kramlich, saying our article was inaccurate, but did not explain why. He sent documentation showing how seriously NEA treats SolFocus, for example testifying before Congress about SolFocus’ role in providing alternative energy. We also had a phone conversation with partner Mark Perry about NEA’s strategy. We’ve sat on this for four months, in part because of a scheduled interview with yet another partner Kittu Kolluri failed to come through.

With NEA’s latest win on IronPort (see our story here, about Cisco’s agreement to acquire that security firm), its time to offer the other perspective. SMIC, Alien and Vonage are all unfortunate. But NEA has been making big bets for some time, and they’ve been paying off. Perry, for example, cites Teleatlas, where NEA pumped in $70 million of a total $270 million in financing, and Teleatlas ended up doing well. There was also Myogen and
Pharmion, two public pharma companies. They’re all similar: “Large amounts of capital, relatively high valuations, and in those cases, excellent outcomes,” Perry said. The bottom line: NEA’s recent funds 10 and 11 are performing in the top ten percent of the industry, relative to other funds raised in the same years, he said (something that is very difficult for VentureBeat to confirm, because real industry stats are secret).

As regards SolFocus, Perry said its sky-high valuation was not NEA’s own doing. He said the price had been set before NEA invested: “There were numerous termsheets at prices higher than what we ended up paying,” he said.

Meanwhile, NEA continues to make big, unconventional gambles, most recently on IP Unity. Kramlich calls these “venture growth equity plays,” and signaled that NEA will be doing more of these.

With private equity companies becoming more active lately in venture capital, NEA may find itself squeezed — we’ll follow with interest how it manages in this new environment.