The venture capital money keeps rolling in, generating new venture capital firms despite predictions a few years ago of a massive consolidation. The latest venture firm to raise money is the new firm, Shasta Ventures, which said today it has raised $210 million. The firm is made up of three younger partners who left established firms ï¿½ Battery, Trinity, NEA — to focus on technology that directly serves consumers.
Remember the prediction by Benchmark Capital partner Bob Kagle, in March 2001? Kagle, the early backer of eBay, said that up to half of the 190 venture capital firms that opened shop since 1998 could be out of business by the end of the downturn. Doesnï¿½t seem to be happening.
The reason, according to National Venture Capital Associationï¿½s Mark Heesen, is because enough firms have managed to hit so-called ï¿½triples,ï¿½ or investments returning decent, albeit not stellar, profits to persuade investors to keep investing. And even if some huge, billion-dollar size firms like Battery and NEA reduce their fund size and trim the number of venture capital partners working for them, those partners are able to launch new firms by raising money from hungry investors. Shasta is the latest example.
The three partners are…
…Rob Coneybeer, 35, Tod Francis, 38, and Ravi Mohan, 45. Their strategy is to apply their three areas of expertise to each of the start-ups they invest in. Coneybeer’s strength is infrastructure, for example chip technology, Francis’ is sales and marketing, and Mohan’s is software. As an example of their intended investments, Francis lists Blue Nile, an online jewelry company he’d invested in while at Trinity, which he said isn’t just a consumer services company, but also invested in infrastructure technology and good software. Driving the three is a common desire to work as a team to invest in early-stage start-ups with consumer-facing technology, Francis told us.
Among the partners’ other accomplishments: Conybeer invested in Growth Networks, which was sold for Cisco, and Mohan invested in Corillian Corporation, which provides online banking software. More here. They incubated the firm while working out of Battery’s offices, and just moved out Jan. 10 to new digs on Sand Hill Road.
Francis predicts new firms will keep launching, but it won’t be a torrent. “Building a new firm is very challenging,” he says. “It’s not easy. You have to be extremely motivated to do this, and sacrifice a good deal… I think youï¿½ll see quite a few break-out firms each year, but not a dozen.”