Silicon Valley's Rising Star VC: Jeff Clavier
Is there any investor in Silicon Valley startups that can match the current track record of Jeff Clavier? His self-funded Softech VC fund has had an extraordinary run of success, selling five companies out of 20 investments in less than 4 years.
Truveo (acquired by AOL for a rumored $50 million), Userplane (acquired by AOL for a rumored $35 million), MyBlogLog (acquired by Yahoo for $10 million), Kaboodle (acquired by Hearst for a rumored $30-40 million), Mayas Mom (acquired by BabyCenter for $7 million), Dogster, Kongregate, Edgeio and many others.
From: TechCrunch - Jeff Clavier launches $12m venture fund
And Mr Clavier just turned 40 this month. Can he do it again with other people's money? Past performance is not a guarantee of future success but clearly Mr Clavier is doing something right.
If he succeeded in selling one of two of his portfolio companies that might be considered lucky but his list of successes shows that luck has little to do with his performance as an investor. It is Mr Clavier's approach to investing that makes the difference.
He was one of the first investors to write a blog about investing and Web 2.0 topics. This provided 2 key advantages as an investor:
1- By being an active participant in blogging and online discussion groups he could see early trends and know the people that shape them.
2- He became highly visible within the Web 2.0 community which helped his deal flow tremendously.
Here is Mr Clavier talking about his successes and his investment criteria on a recent VC panel. He is joined by Gordon Ritter, from Emergence Capital Partners, a successful investor in the software as a service space; and M.R. Rangaswami of the Sand Hill Group - successfully sold to CMP; Jai Das from SAP Ventures; Sam Argus from law firm Fenwick & West - moderated by Sean Wise. From TechOne.
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Here is Mr Clavier from his blog "Jeff Clavier's Software Only" :
After 3 years of angel investing in 20+ Consumer Internet startups (and profitably selling 5 of them), I am very excited, and humbled, to announce the launch of my very own VC fund, SoftTech VC II, L.P. Some of you may wonder what is actually the difference between what I have been doing until now – after all I am still referred to as a VC by many – and this new $12M fund.
One major difference: I have taken the step (back to the Dark Side ☺) and have raised outside capital, from a mix of fantastic institutional and private investors. Angels invest their own money, VCs invest capital they have raised from others - as well as their own since it is market practice that Fund Managers also contribute to the fund’s capital. In most cases, it is extremely difficult to raise the first fund of a new firm. Despite great individual track records, it might take a year or two of effort to assemble a syndicate of Limited Partners (this is how people investing in VC funds are referred to) willing to back a new team.
When I left my previous fund (Reuters Venture Capital), I wanted none of that: my passion was working with early stage entrepreneurs, supporting them with time, cash and connections. And since I had zero track record in the consumer internet space, thinking that I could raise outside capital in 2004 would have been a total fantasy. That’s why, like so many entrepreneurs, I decided to bootstrap my own startup – using some of the family’s savings and generating cashflows from a few consulting gigs. It just so happens that the “market” I had decided to enter was early stage investing… in other startups. Last June, serendipity helped me decide, and eventually secure, the next logical step for SoftTech VC. As many friends in the angel and VC community were asking me whether I was thinking of joining an existing firm, or raise my own fund at some point, a few people hinted that they would be really interested in investing in a fund if I was to start one.
A few more discussions and one PowerPoint, later the core foundation of my new fund was there:
* invest in 30 to 40 seed stage startups
* average “bite size” of $250K, ranging from $100K to $500K
* able to lead, co-lead or follow other firms or angel syndicates
* focusing on consumer Internet, but with a great flexibility to enter new sectors opportunistically • open to a few non Silicon Valley deals
* capital efficiency, great teams, differentiated ideas and flexibility on “how big it can become” will be common characteristics shared by the companies we invest in
* working hand in hand with the best firms in Silicon Valley, and the usual suspects in the acquisition gang, to build a successful outcome for everyone involved
* I would be the sole Fund Manager of the fund, with the support of a fantastic advisory board: my friends Jon Miller, Josh Kopelman and Reid Hoffman
The actual size of the fund was the subject of an interesting discussions, tossing around different numbers that all would have made sense: $5M, $10M, $20M,… A number of factors led us (my investors and myself) to decide that $12M was the right amount, and a significant portion of the fund was subscribed in just a few days, with final allocations having been made a short time thereafter. You have two ways to look at how long it took to raise the fund: 3 ½ years of hard work since I started investing, or a few weeks. All this would not have happened without the support and wisdom of the great investors who decided to follow me in this adventure: Jon Miller, Reid Hoffman, Josh Kopelman, Geoff Ralston, Jim Bankoff, Mark Fletcher, MR Rangaswami, Loic Le Meur, Brad Feld, Frank Caufield and his firm Darwin Ventures, Tim Chang and the whole Norwest Venture Partners team. And no, I am not naming everyone – some investors want to remain “stealth” and I obviously will respect it. But thanks to ALL of you.